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German Grid-Storage Policies

Power stations do not operate at full capacity at all times, therefore generation is not the same as capacity. Capacity mechanisms (CM): A mechanism that rewards market participants for available capacity, on top of revenues generated by selling electricity in the wholesale market. These payments are meant to ensure security of supply by incentivising sufficient investment in new capacity or preventing the retirement of existing capacity. CMs take many forms and are sometimes referred to as capacity remuneration mechanisms.

Renewable energy sources receive government, industry and consumer support. This can take the form of direct subsidies, tax rebates, and consumer surcharges.

Feed-in Tariff

The Feed-in tariff (FIT) is a government-backed, and usually consumer-funded, financial instrument to ensure price parity for renewable energy producers compared to largescale power producers. FITs have proven to be the most effective government incentive program for renewable technologies: countries which have adopted FITs have been shown to have the largest growth rates in renewable energy technology deployment.

Half of the world’s PV installations are due to FITs (Peters & Weis, 2008). FITs for PV are being utilized around the globe: in early 2009, 45 countries and 18 states/provinces/territories had FITs (REN21, 2009). In Germany, a FIT program has been offered to PV operators for nearly two decades. The tariff is altered throughout the years to spur innovation and effectively stimulate the market (EEG, 2007).

The success of the FIT enabled Germany to reach its goal of having a 12.5% renewable energy supply three years early, in 2007 (EEG, 2007; Peters & Weis, 2008) and encouraged 18 other EU countries to adopt similar programs (EEG, 2007). Another country to successfully pursue FITs was Spain: in 2008, Spain saw a five-fold increase in PV capacity from the previous year. Germany and Spain possessed 5.4 and 3.3 GW of PV power capacity in 2008, representing the majority of the world’s 13 GW total (REN21, 2009). Other countries/regions with FIT programs in include California, Ireland, Portugal, the Slovak Republic, Switzerland, Turkey, Bulgaria, Greece, France, Kenya, the Philippines, Poland and South Africa (REN21, 2009).