Definition
A feed-in tariff (FIT) is a policy mechanism that guarantees producers of renewable electricity a fixed payment for every kilowatt-hour they generate and feed into the grid, typically under a long-term contract of 10 to 25 years. By setting a stable, cost-based price and guaranteeing grid access, a feed-in tariff removes much of the market risk from building solar, wind, or small-hydro capacity, which is why it has historically driven a large share of global renewable deployment.
How it works
The tariff rate is usually set to cover the generation cost of a given technology plus a modest return, and it is often differentiated by source and project size so that, for example, rooftop solar and utility-scale wind receive appropriate rates. The three pillars of an effective FIT are guaranteed interconnection, a long-term purchase commitment, and a payment level pegged to actual generation costs rather than to spot-market prices.
Why it matters to miners
Feed-in tariffs shape the economics of self-generation. An operator who installs renewable capacity may face a choice: export surplus power for the guaranteed tariff, or divert that same energy to on-site mining. Where the tariff is generous, exporting can win; where it has been cut or capped, mining the surplus on site — converting otherwise stranded energy into Bitcoin — often becomes the better use of marginal megawatts. Understanding the local tariff is therefore central to siting decisions.
Feed-in tariffs contrast with the variable revenue of power purchase agreements and with merchant capacity market payments. See also renewable energy certificate for a related incentive instrument.
In Simple Terms
A feed-in tariff (FIT) is a policy mechanism that guarantees producers of renewable electricity a fixed payment for every kilowatt-hour they generate and feed into…