What are Feed in Tariffs?

FITs provides a financial guarantee that anyone generating energy from a renewable source, is able to sell that energy back into the grid for an established price and receive long term payments for each kilowatt produced, above that of the established market price.  Setting the price at pre-established rates provides an incentive with which providers of renewable energy resources, be they home owners of large utilities, are guaranteed profits higher than the market would ordinarily pay,  encouraging individuals to invest in renewable technologies and generation.  Such an incentive increases demand for technologies that are sourced renewably, while driving innovation and ensuring renewable technologies become cost effective in the future.  Through degressions, pre-established rates can be reduced over time, with pricing eventually left to market mechanisms once renewable energy generation reaches parity with non-renewable pricing sources.