Feed-in premium (FIP) | Sustainability Language

Definition

A feed-in premium is a support mechanism in which renewable electricity generators sell their output on the market and receive an additional premium per unit on top of the wholesale price. The premium may be fixed (constant per MWh) or floating, varying with the market price to stabilise total remuneration within a band. Unlike the feed-in tariff, which replaces the market price with a guaranteed administratively set tariff, the premium model keeps producers exposed to price signals, encouraging output when electricity is most valuable. European energy regulators (CEER) catalogued the FIP alongside feed-in tariffs, green certificates and investment grants as principal renewable-support schemes.

References

Emissions-EUETS.com

premium on top of wholesale price, fixed vs floating design, CEER catalogue of support schemes

Synertics

market exposure under FIPs, relationship to PPAs, policy migration from FiTs

Overview

What it means

FIPs are the halfway house between full subsidy and full merchant exposure: they de-risk investment enough to unlock finance while pushing operators toward market-responsive behaviour. Many EU states have migrated from tariffs to premiums or contracts for difference as renewables matured.

How it is used

Used in EU renewable-energy policy, auction design and corporate PPA structures as a reference for market-integrated support.

Why it matters

The choice between tariff, premium and merchant models determines how much market risk clean-energy investors bear — and therefore the cost of capital and speed of deployment.

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Definition

Current text

A feed-in premium is a support mechanism in which renewable electricity generators sell their output on the market and receive an additional premium per unit on top of the wholesale price. The premium may be fixed (constant per MWh) or floating, varying with the market price to stabilise total remuneration within a band. Unlike the feed-in tariff, which replaces the market price with a guaranteed administratively set tariff, the premium model keeps producers exposed to price signals, encouraging output when electricity is most valuable. European energy regulators (CEER) catalogued the FIP alongside feed-in tariffs, green certificates and investment grants as principal renewable-support schemes.

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