This German success story is a result of numerous factors – one might say a holistic approach.
One of the important pillars of this success story is the 2001 German Renewable Energy Act, which introduced the concept of a Feed-in-tariff (FIT) and right to connect (RTC) formula to the world – a concept entailing: 1) the paying of above-market rates for renewable energy sources over a specified time period, combined with 2) a requirement that all sources of renewable energy production within a given utility’s region must be connected to, and given priority within, the network.
This concept makes sense economically in that all new sources of energy cost more than existing sources that were developed some time ago and may be fully paid for. Over time, the plan calls for a reduction of FIT rates for new renewable power entries to the grid, thus providing incentives for manufactures to invest in innovation to lower costs.
Attesting to the success of the formula is the fact that the German model has since been emulated by 19 of the 27 EU states and 40 jurisdictions around the globe, including China. Up until recently, Ontario offered such a system.