A FIT is a policy mechanism designed to accelerate investment in renewable energy technologies. Producers of renewable energy are paid a set rate for the electricity they produce, usually differentiated according to the technology used (wind, solar, biomass, etc.) and the size of the installation. It achieves this by offering long-term contracts to renewable energy producers, typically based on the generation cost of each of the different technologies.
For example, if a PV system is installed on a home in Germany it would initiate a FIT program. This creates a reciprocal energy agreement with your utility — the utility would buy the power you produce at whatever the FIT rate was at the time of the agreement for a period of 20 years. You then buy any additional power (mostly at night) from the utility. Since the FIT price is higher than the retail power price, this arrangement allows you to get a stable return on your investment and makes any borrowing of money very easy.
http://www.renewableenergyworld.com/rea/news/article/2011/11/feed-in-tariffs-the-proven-road-not-takenwhy?cmpid=WNL-Friday-November25-2011
