Effects On Electricity Rates
FITs have been shown different effects in the price of electricity per customer. In some cases they have led to a small annual increase, while in other cases to reductions.
Theoretically a feed-in tariff involves a temporary increase in electric rates for a long term benefit. Increases have been attributed as a result of the fact that electricity generated from renewable energy sources is typically more expensive than electricity generated from conventional sources. Costs of approximately four Euros per month per household are recorded in Germany. Despite this cost, a number of analyses have shown that these price increases, however, can be offset by the price-dampening effect that large amounts of lower cost renewable energy sources (such as wind and solar power) can have on spot market prices. This is attributed in large part to what is called the merit order effect. This has led to electricity price reductions in Spain, Denmark, and Germany.
Read more about this topic: Feed-in Tariff
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