cost-covering if the payment for the electricity fed into the grid
earns a return on the invested capital that is equal to that of other
types of investment.
If the system is efficiently managed, a reasonable return should be
earned and the cost for buying and installing the system, all
operating costs (measurement costs, maintenance, repair and
insurance as well as dismantling costs at the end of the system's life
cycle) and the cost of funding (interest on debt) should be covered.
The payment is made by the receiving grid operator directly to the
supplying plant operator. Financing is secured by allocating to the general electricity tariff.
The cost-covering feed-in tariff was first proposed by the German
Association for the Promotion of Solar Power (SFV) in 1989 as a market
introduction tool for photovoltaic systems. It was initially introduced in
the German cities of Aachen, Hammelburg, and Freising, followed by 40
other German cities. The concept was finally adopted in the German
Renewable Energy Sources Act in 2000.