How long will a FIT be valid?

Under Sec. 7 of the RE Act of 2008, the ERC may set a period, not less than 12 years, during which an approved FIT applies. Thus, if a new solar producer is granted a FIT of P18/kwh in 2012, and the set period is 20 years, that producer can sell power to the grid at that FIT price for that long period.

The law allows the ERC to set a different period for different FITs subsequently approved, and to approve new and reduced FITs in later years. For example, under the rule on degression, the ERC may set a lower FIT for solar of, say, P12/kwh in 2014 if at that time the cost of solar production has fallen because of technology advances. (Degression is the rule that FITs approved later on for later installations are expected to be lower because of cost-reducing innovation.)

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