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Renewable Portfolio Standard (RPS)

A Renewable Portfolio Standard (RPS) is a policy mechanism that requires utilities and energy suppliers to obtain a certain percentage of their electricity from renewable energy sources. The specific target is usually set by the government or regulatory body and is designed to promote the development and deployment of renewable energy technologies.

Under an RPS, utilities are typically required to gradually increase the share of renewable energy in their overall energy portfolio over a specified period of time. This can be achieved through a combination of generating renewable energy themselves, purchasing renewable energy credits, or entering into power purchase agreements with renewable energy producers.

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RPS policies are often accompanied by compliance mechanisms and penalties to ensure that utilities meet their renewable energy targets. The ultimate goal of an RPS is to reduce greenhouse gas emissions, promote energy independence, and stimulate the growth of the renewable energy sector.

Feed-in Tariff (FiT)

A Feed-in Tariff (FiT) is a policy mechanism that provides financial incentives to renewable energy producers for the electricity they generate and feed into the grid. Under a FiT scheme, renewable energy producers are guaranteed a fixed payment for each unit of electricity they generate, usually for a specified period of time.

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The FiT rate is typically set by the government or regulatory body and is often differentiated based on the type and capacity of the renewable energy technology. The aim of a FiT is to provide a stable and attractive return on investment for renewable energy projects, thereby encouraging their development and deployment.

Unlike an RPS, which focuses on the overall share of renewable energy in the energy mix, a FiT specifically targets the generation of renewable energy. It provides a direct financial incentive for renewable energy producers, enabling them to recover their costs and make a profit, which helps to accelerate the transition to a low-carbon energy system.

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Keywords: energy, renewable, producers, portfolio, utilities, electricity, standard, policy, mechanism