Feed in Tariff Contracts
A grid tied hydro powered electric operation system can be either net metered or connected as part of Feed in Tariff (FIT) program. With either of these connections types you are still connected to your local electricity distribution lines.
Grid Tied Feed in Tariff (FIT) systems involve connecting your hydro system to the power lines and selling electricity to the power company.
In certain jurisdictions there are Feed in Tariff (FIT) programs that allow individuals and companies to supply power to the grid and get paid specified amounts of money per Kwh usually for a defined contract period. These contract periods are for extended periods of time and usually indexed to inflation in some way and are designed to encourage investment in renewable energy by providing a reliable and known revenue source.
The electricity produced by your system is metered the same as a house and you are paid for the electricity produced. The advantages of selling under a FIT program once approved is the reliable guaranteed revenue stream and contract period to pay for your investment.
The disadvantage is that if you use electricity also, you will likely be paying for electricity at the normal rate the same as everyone else, and this rate is likely higher than what you will be paid under the FIT program. So for example, you may be selling electricity to the grid for one price, and then buying it back to use at a higher price. However, if you are able to generate a lot more electricity than you can use, a FIT contract is the only way to sell your electricity. Ensure that you have a FIT contract before installing a system if you are interested in selling electricity to the grid.
Here is how the Ontario Energy Board describes the FIT and MicroFIT programs.
Feed-in Tariff (FIT) & microFIT
Under this initiative introduced by the Ontario Power Authority (OPA) in September 2009, eligible generators can sign a contract with the OPA for 20 years (40 years for hydroelectric facilities) to sell electricity and receive a guaranteed price per kilowatt hour.
Two programs were introduced, FIT and microFIT. The programs are designed for projects that generate electricity from a renewable resource such as wind, water, solar energy, and bioenergy (biomass, bio-gas, or landfill gas). The microFIT program is for projects with a capacity of 10 kilowatts or less. The FIT program is for larger projects.
The OPA will pay generators a guaranteed price per kilowatt hour for electricity produced from a renewable resource.