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The Price Objective

Economic and financial features

Renewable energy sources face huge discrimination as a result both of the subsidies enjoyed by fossil fuel and nuclear energy, and of the failure to internalise the negative external effects, namely the pollution that conventional energy sources cause. To invest in supplying electricity from renewable energy sources therefore requires clear incentives, in the form of carefully-designed tariffs guaranteed over a long period. 

Predictability of income over a long period is one of the main advantages of a FIT law. It provides investment opportunities even for those without a significant equity base, such as small and medium-sized enterprises and private households. Setting the tariff (or price) for a long enough period to amortise project costs will attract a wide range of producers.

To achieve the Price Objective legislators need to: