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for instance, are awarded a lower per-k Wh price, while technologies such as tidal power are offered a higher price, reflecting costs that are higher at the moment.

In addition, feed-in tariffs often include "tariff degression", a mechanism according to which the price (or tariff) ratchets down over time.

This led to an escalating schedule of fixed purchase prices, designed to reflect the long-run avoided costs of new electrical generation.

By 1992, private power producers had installed approximately 1,700 MW of wind capacity in California, some of which is still in service today.

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This was interpreted as a threat by many large utilities, particularly monopolistic suppliers., feed-in tariff policies had been enacted in over 50 countries, including Algeria, Australia, Austria, Belgium, Brazil, Canada, China, Cyprus, the Czech Republic, Denmark, Estonia, France, Germany, Greece, Hungary, Iran, Republic of Ireland, Israel, Italy, Kenya, the Republic of Korea, Lithuania, Luxembourg, the Netherlands, Pakistan, Portugal, South Africa, Spain, Switzerland, Tanzania, Thailand, Turkey and the United Kingdom.In 2008, a detailed analysis by the European Commission concluded that "well-adapted feed-in tariff regimes are generally the most efficient and effective support schemes for promoting renewable electricity".The purpose of the National Energy Act was to encourage energy conservation and develop new energy resources, including renewables such as wind, solar and geothermal power.Avoided costs were designed to reflect the cost that a utility would incur to provide that same electrical generation.

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