State action could rely on feed-in-tariff schemes. These have been used successfully to support the small-scale and large-scale renewable energy in Australia and overseas.

Tariffs in their traditional form rely on the government to set a guaranteed rate of return for renewable generated electricity fed into the grid. While they provide for investment security, overly generous tariff setting, potentially causing unnecessary costs for consumers, has been a consistent critique of the use of tariffs for renewable energy support.

Newer hybridised mechanisms such as contracts-for-difference could provide opportunities for providing cost effective renewable energy support beyond the federal renewable energy target. These contracts combine the best features of tariffs (certainty for project developer) with the best features of certificate schemes (competitively-priced projects).

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