Quick Answer
Net metering and feed-in tariffs are two different compensation models for renewable energy producers, with net metering crediting excess energy to the homeowner's next bill, while feed-in tariffs guarantee a fixed price for the entire amount of energy produced. The key difference lies in the compensation structure and the amount of energy that's compensated.
Understanding Net Metering
Net metering is a compensation model where homeowners with solar grid tie systems can offset their electricity bills by generating excess energy that’s fed back into the grid. In the United States, for example, the average net metering credit ranges from 5-15 cents per kilowatt-hour (kWh). This credit is applied to the homeowner’s next electricity bill, which can result in a significant reduction in energy bills. A typical residential solar system in the US produces around 8,000-10,000 kWh per year, which translates to a credit of $400-$1,500 annually.
Feed-In Tariffs (FITs) Explained
Feed-in tariffs are a payment model that guarantees a fixed price for the entire amount of energy produced by a renewable energy system. FITs are commonly used in Europe and other parts of the world. For instance, in Germany, the FIT rate for solar energy is around 10-15 cents per kWh. This rate is fixed for a period of 20 years, providing long-term financial stability for solar panel owners. The FIT rate can be adjusted based on factors like technology improvements, market conditions, and environmental policies.
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