Feed-in tariffs (FiT) distinguish between on-site electricity generation and electricity consumption from the grid, through differential pricing. This arrangement requires two separate power meters – one to measure the amount of electricity drawn from the grid and the other to measure the outflow of electricity from the site to the grid. FiT is based on time-bound contractual agreement between the consumer and the utility, wherein the utility agrees to purchase renewable power from the consumer at a price that is typically higher than the prevailing retail price. A pre-defined tariff degression plan reduces the tariff over time.
Feed-in tariff schemes are typically based on a 15-20 yearlong contract where prices are pre-defined above retail with a tariff degression, which effectively reduces your earnings over time. For every kWh you generate you get paid.
Unlike net metering, feed-in tariffs do require prior arrangement and notification. Only six states across the U.S. currently have some form of feed-in tariff scheme as of today: California, Florida, Vermont, Oregon, Maine and Hawaii.