THE HISTORY IN SPAIN OF SELF-CONSUMPTION WITH COMPENSATED EXCEDENTS

In the Winter package is the directive 2018/2001 whose article 21 on renewable energy self-consumers includes the following message:

“Member States shall ensure that self-consumers of renewable energy, individually or through aggregators, have the right to:

1. a) generate renewable energy, including for its own consumption, store and sell its surplus of renewable electricity production,,”

A message that has been possible to develop starting from a mature regulatory environment:

• RD 1955/2000 that regulates the activities of production, transport, distribution of electrical energy and RD 1699/11 that regulates small power production facilities. Both establish the technical requirements that the installation must meet depending on whether the contracted power is greater than 100 kW or not. They also establish the connection and access procedure. Moreover, in 1699/11 the obligation to regulate the supply of energy produced within the network of a consumer for his or her own consumption is already established.
• RD 842/2002 of Low Voltage installations, RD 337/2014 of High Voltage installations and RD 1110/2007 of measuring points.
• Law 24/2013, of the Electricity Sector that includes the definition of self-consumption in Article 9 as consumption of electricity from generation facilities connected inside a consumer network or through a direct line of electricity associated with a consumer and distinguishes several modes of self-consumption.
• RD 9/2013 created by the Ministry of Energy for the administrative register of self-consumption of electric energy.
• RD 413/2014 that regulates production through renewable energy.

A very solid regulatory environment if the system is conceived as a conventional network where the sense of energy is one: from generation it is transported to consumption points. An environment that focuses on the relationship of producers with REE and with distributors. It is not clear to proceed for a consumer with respect to its marketer and distributors. In addition, this was further complicated by RD 900/2015 where self-consumption is regulated. RD 900/2015 was a difficult text to understand, insofar as it regulates the administrative, technical and economic conditions of self-consumption. In theory it was a text motivated by the development of distributed generation, but trying to minimize the possible negative impacts of it. Under this premise of reducing the negative impact, the RD 900/2015 caused a brake on renewable energy as detailed in the blog “Self Consumption, Spain strikes back”. Taking as reference the photovoltaic installations we find 3 large obstacles such as:

• The process of legalization of facilities was more expensive and above all much more complex at the bureaucratic level.
• In the type 1 self-consumption modality, the same holder of the supply point must be the owner of all the generation facilities. Most controversial aspect of the DR, since it blocked the possibility of having a self-consumption photovoltaic installation in a community of neighbours, which feeds the homes of each neighbour. The only possibility is to have a community photovoltaic installation to power the common services of the community of neighbours. In addition, this point did not allow energy service companies to offer self-consumption facilities to domestic consumers.
• All self-consumption facilities must pay the tax for the energy generated and self-consumed without it stepping on the electricity distribution network at any time. The well-known “Sun Tax” or backup toll, ie charges associated with the costs of the electrical system and other system services. The justification for taxing self-consumed energy was precisely the support or back-up service provided by the electrical system to ensure that the self-consumer can continue to cover their consumption by buying energy from the electricity grid when there is no sun. Take into account, the back-up support to the system is already paid by all consumers for the energy consumed, by two concepts included in our electricity bill: power term and capacity payments.

After three years of claims to the Administration by professionals in the sector, especially in solar energy, and by potential consumers, the government eliminates the “Sun Tax”. With RDL 15/2018, a highly criticized tax in Europe disappears. In addition, with RDL 15/2018, article 9, modifications are made to Law 24/2013 of December 26 of the Electricity Sector and of RD 900/2015 that finally clarify the doubts and respond to most of the requests that are they were demanding:

• The right to consume electricity without charge is recognized, as well as, the right to shared self-consumption is recognized, and the principle of administrative and technical simplification is introduced.
• Production facilities not exceeding 100 kW of power associated with modes of supply with self-consumption with surpluses will be exempt from the obligation of registration in the administrative register of electrical energy production facilities.
• Self-consumed renewable energy will be exempt from all types of charges and tolls.
• Installations without discharge to a network of up to 100 kW will be executed in accordance with the provisions of the Low Voltage Electrotechnical Regulation.
• The maximum penalty will be the highest between the following two amounts: 10% of the annual billing for electricity consumption or 10% of the billing for the energy discharged to the grid.
• The application of the so-called net balance is included: “… regulations may simplify compensation mechanisms between deficits of the self-consumers and surpluses of their associated production facilities”.

Even with these changes achieved, there were two issues to resolve:

• Analysis, reduction or cancellation of the “fixed term” of the electricity bill, a concept whereby the user pays monthly more than 50% of the electricity bill, regardless of the electricity consumption of his home.
• RD 15/2018 clearly indicates that the “energy discharged to the grid” must have its compensation. However, the creation of the procedure to be used for this compensation of the energy discharged to the grid, the so-called net balance, is pending.

The issue of compensation was addressed thanks to RD 244/2019. Moreover, it is the first text that clarifies the regulations for photovoltaic self-consumption in Spain.

RD 244/2019: REMINDER OF THE NORMATIVE KEYS

As discussed in the previous blog about self-consumption, RD 244/2019 completes the regulatory framework promoted by RDL 15/2018. The regulations highlight three main axes:

1. Reduces and simplifies administrative procedures, especially in the case of small self-consumers (installations up to 15kW or up to 100kW, in case of self-consumption without surpluses).
2. It introduces the figure of collective self-consumption in such a way that several consumers can associate with the same generation plant, distributing the energy with fixed coefficients, which will allow, with a simple process for the client, self-consumption projects with a greater use of energy.
3. Explain a variant of the net balance. It explains the compensation of the energy produced and not consumed in installations of 100 kW maximum under the concept of “simplified compensation of surpluses”.

It is on this third point that Magnus wants to focus his attention, so that the reader has a clear vision of the benefits that RD 244/2019 has brought to consumers. The difference between the previous compensation “net balance” and the new definition of RD 244/2019lies on: in the first one, the surplus energy of our solar panels would be accounted for and offset watt to watt (for each watt discharged to the network you can recover a watt from the power grid when needed). In the second one system proposed in the latter RD, meanwhile, this compensation is not going to be watt to watt, but it is going to be an economic compensation for spilled watt that will be deducted from the electric bill.

Being able to be an individual or collective self-consumption, there are different modes of supply with self-consumption that can benefit from compensation:

We remind that, in the economic regime with simplified compensation, the excess hourly energy will be compensated depending on:

• If we have a supply contract with a free marketer, it will be valued at the hourly price agreed between the parties. In this regard, it seems normal that the agreed price corresponds to the hourly price of the pool minus a small margin of management by the marketer.
• If we have a supply contract to the PVPC with a reference marketer, it will be valued at the average hourly price, Pmh; obtained from the results of the daily and intraday market at hour h, less the cost of the CDSVh deviations, defined in articles 10 and 11 of RD216 / 2014.

It is important to underline that, in no case, the economic value of the excess hourly energy may be greater than the economic value of the hourly energy consumed from the network during the billing period, which may not exceed one month. In addition, the surplus energy will not pay the toll to the generation nor its economic value will be subject to the Tax on the Value of the Production of Electric Energy (7% tax).

In other words, surplus energy only compensates for the part corresponding to the cost of energy that is part of the energy term (pool plus other unregulated costs). The energy consumed to the network has a greater value than that generated, as for the first, one certain costs are added, such as the interruptibility service, capacity payments and other adjustment services.

Futhermore, in the case of collective self-consumption, the DR also opens the door for a consumer to take advantage of his neighbor’s surpluses and co-participates in self-consumption, if he is not consuming his proportional share of energy. The shared self-consumption formula opens the door to the implementation of dynamic distribution coefficients. This means that the energy generated in a shared system can be shared between users depending on who is consuming at all times, and therefore a better use of the installation.

INVOICE FOR PV SELF-CONSUMER WITH EXCEDENTS AND COMPENSATION

The following is a numerical example of the simplified compensation mechanism for individual self-consumers with surpluses and compensation that IDAE shows in the Self-Consumption Processing Guide:

Installation with the following features:

In the example, it has been assumed that at the end of the period the consumer has reduced from 400 kWh to 280 kWh since the rest has been given by the self-consumption facility. On the other hand, 380 kWh of surpluses have been generated in the same period that have been compensated according to the information of the person in charge of reading. At each hour the distributor makes a net hourly balance between the network consumption and the surpluses, so that in one hour there may only be surpluses or network consumption, regardless of the actual energy flows that have occurred in that hour.

COMMUNITY, NETWORK COMPANY AND SUPPLIERS PROTOCOLES

The DR also establishes terms for the System Operator and the National Commission for Markets and Competition (CNMC) that are very relevant in terms of the application of the self-consumption compensation and instrumentation mechanism:

• The System Operator must send in a month a proposal to modify the operating procedures of the system and the Regulation of measurement points that are necessary for adaptation to the RD.
• In three months, the CNMC will establish the adaptation of formats and communication protocols between distributors, marketers and Autonomous Communities in everything related to this RD.
• Distributors and marketers will have one month to adapt their systems since the approval of the rules derived from the previous two points.

On the one hand, the CNMC has already published the resolution with the necessary communication protocols so that electricity distribution and distribution companies can do the calculations.

The CNMC has approved a new format of information exchange files between autonomous communities,  and electrical distributors for the transmission of information on electric self-consumption. Below is an example of the flowchart of the communications or messages exchanged by the affected agents based on the A1 file for the modification of a self-consumption installation in BT and <100kW (As a consequence of the REBT -regular electrotechnical for low voltage- via installer)

In conclusion, from now on, the distributors, when they receive information on the registration, cancellation or modification of the self-consumption, will be obliged to modify “ex officio” the consumer access contracts for facilities with generation less than 100 kW.

On the other hand, the mechanisms for applying self-consumption with surpluses and compensation are already public with the resolution of November 9, 2019 of the CNMC and with the resolution of December 11, 2019 of the Secretary of State to adapt operating procedures of the system. From these resolutions, the supplier must pay attention in the purchase of the points with self-consumption in OMIE. The supplier must estimate the energy they can consume and produce these points of self-consumption in order to subtract self-consumption from the program and not generate deviations. Therefore, the supplier that work with this type of self-consumers will acquire less energy, paying lower payments for it, mainly associated with the price of the wholesale market or pool managed by OMIE.

Likewise, the supplier is responsible for the balance of the surplus hourly energy of consumers under the simplified compensation mechanism is considered. In order for the supplier to act as the subject of responsible liquidation of the balance sheet, distributors must communicate to the System Operator the information of the production facilities that are under by the simplified compensation mechanism (the supplier and the duration of the relationship). At that time, according to section 11.2 b): “In cases a and b above, the distributor will assign the excess hourly energy or, in the case of collective self-consumption, the individualized excess hourly energy of each CUPS, to the purchasing unit of the associated marketer to that CUPS. ” That is to say, in the case of surpluses with simplified compensation it is not necessary to create a separate programming unit. REE indicated a modification in the deviation formula so that the surpluses in the consumption activity of the supplier are taken into account and that the deviations can be settled such that:

DESV = (MEDBCu + MEDACSSPu – PHLu)

Where:

• MBCu = Measure raised to central bars of each production or acquisition unit u, as established in section 14.2.
• MEDACSSPu = If applicable, measured, with positive value, of the surpluses of self-consumers assigned to the purchasing unit or, in accordance with the provisions of the P.O. 14.8.
• PHLu = Liquidated schedule of each of each production or acquisition unit or, as established in section 14.1.

This must be taken into account in the purchasing unit of the supplier’s portfolio. In other words, the supplier will also have to estimate the possible surpluses to subtract them from its purchase program at OMIE. A subtraction that can reach 0 at certain times if your portfolio has a very high volume of individual self-consumers with surpluses under the simplified compensation modality or collective self-consumers.

On December 11, 2019, the resolution of the Secretary of State for Energy came out, approving certain operating procedures for its adaptation to RD 244/2019, of April 5, which regulates the administrative conditions, technical and economic self-consumption of electric energy but we are still waiting for other procedures to be approved. Specifically we have to see how the development of dynamic distribution coefficients for collective self-consumption through the network and how the value of the proximity toll for the self-consumers through the distribution network is asset. A toll that can redefine the payback of photovoltaic installations. Even so, we can decree that all the well-defined elements are already in place to get into the adventure of photovoltaic self-consumption.

Marta Merodio | Energy Consultant