A Feed-in Tariff is an incentive program that stimulates the renewable energy sector through government legislation. It requires electricity utilities to buy renewable energy at above market rates (set by the government) from anyone who wishes to produce renewable electricity. This has been shown to be one of the most effective ways to jump-start renewable energy production and adoption by rewarding small and medium scale producers as well as industrial scale producers of green power.

Although overall electricity prices rise slightly in the short-term, in the longer term they stabilize as prices become increasingly independent of conventional fuel costs. For anyone who generates power under a feed-in tariff program, the income more than offsets any electricity price increases.

Germany has been extremely successful at rapidly transitioning toward renewable energy systems through feed-in tariffs. Using feed-in tariffs, Germany currently generates 12.5% of its electricity from renewable sources, while employing more than 215,000 people in the renewable energy sector, according to the German Federal Ministry of Economics and Technology.

Feed-in tariffs exist in more than 20 other countries as well. They are the
most common policy for encouraging renewable energy systems, in part because feed-in mechanisms achieve larger deployment at lower costs than other policy mechanisms such as quotas, direct incentives or voluntary goals.