As mentioned above, FiTs create a price-based incentive system. They are linked to the amount of electricity produced(generation based). The policy maker sets a fixed price for a unit of renewable electricity(kWh) fed into the grid. Different prices can be defined for different RE technologies. Thus, FiTs allow for a technology-specific promotion of renewable energies, which can incentivize different technologies. These in turn improve due to economies of scale and scope. Because this means that not only the cheapest technology option at a given time and in a given country will receive support, it allows for policy-driven development of a portfolio of RE options. FiTs can thus help meet ambitious long-term RE expansion goals by incentivizing an array of technologies rather than one or two low-cost options only. 7 To limit the amount – and thus also the cost – of supported renewable expansion, a policy maker can define technology specific limits – e.g. a threshold for Megawatt (MW) installed – which, if surpassed, trigger reductions in tariffs or even exclude the support for any further MW installed. Alternatively or additionally, the policy makers can fine-tune the rate of RE expansion by regularly adjusting the tariffs(see below). Key Determinants for a Successful Feed-in Tariff The following key characteristics of FiT design have been identified 8 as crucial to trigger RE investments because they cater to investors` desire for certainty, transparency and longevity: • Stable policy environment; • Low administrative barriers; • Guaranteed grid access; • Long duration of FiT contracts. Already in 2007, Resch et al. saw indications that“a long-term and stable policy environment is actually the key criterion for the success of developing markets for Electricity from Renewable Energy Sources. As can be observed in a country like France, high administrative barriers can significantly hamper the development of 7 Diekmann et al.(2012), p. 16. 8 Zhang(2013), pp. 3 sq.; Resch et al.(2007), pp. 26, 28; see also World Future Council(2007), p. 5. 6