SELF-CONSUMPTION: A GOOD SKETCH
Friday 12th July 2013, Soraya Saénz de Santamaría and José Manuel Soria take the stage to announce the approval of Royal Decree-Law 9/2013, of 12th July, establishing urgent measures to ensure the financial stability of the electric system, in other words, the basis on which the new electric reform would be sustained.
The objective: to end up with the current imbalance between the incomes and expenses of the electric sector, that is, the tariff deficit, by means of an assortment of rules which should have been approved imminently in order to proceed to the early achievement of it purpose.
Behind the scenes, on 18th July 2013, the great majority of this new rules came out from the Ministry of Industry, Energy and Tourism towards the National Energy Commission, as proposals. Among them there was to proposal of Royal Decree on Self-consumption, currently still not approved. Maybe it was not that urgent.
Late last year, rumor spread that the long-awaited Royal Decree would be approved on the first trimester of 2015, and even the draft that everybody knows could have been submitted to many modifications. Within the sector, there are those who believe it and those who not. However, they all agree in one affirmation: the damage has already been done. The eternal menace of the backup tax has pulled out many future producers of renewable energies on the modality of Self-consumption, being aware of the impact that it could provoke on the lapse of time needed to amortize each project.
Currently, we know that the draft would be applicable to consumers of electrical energy with a contracted power not above 100 kW per supply point or installation, installing inside their internal grid an electrical power generation facility for Self-consumption with an installed power equal or under the referred power and never above 100 kW. It will be also be applicable to consumers, regardless of its contracted power, connected to a power generation facility, in its internal grid or by means of a direct line.
So that, it defines two forms of Self-consumption:
a) Isolated Self-consumption, that is a consumer who has a power generation facility for his own consumption, connected inside the grid of its supply point and not being and not having been before registered in the pertinent register as a power generation facility. In this case, there is only one subject, the consumer.
b) Self-consumption with an associated consumer, that is those consumers associated to a power generation facility registered in the Administrative Register of Self-consumption and connected inside its grid or by means of a direct line. In this case, there are two subjects: the consumer and the producer.
The form of delayed Self-consumption with storage –that is those consumers with a power generation facility for its own consumption, connected inside the grid of its supply point and who are able to store its surplus in batteries- is regulated by the Low-voltage Electro-technical Regulation, approved by the Royal Decree 842/2002, of 2nd August. However, it should not be forgotten that Article 11 of Royal Decree 1699/2011 prohibits, in paragraph 4th, the use of batteries running in parallel with the grid.
Moreover, there are various critics to this modality, among which stand out, on the one hand, the rise of the amount of the investment that they imply, given that they are devices that shall be introduced to the facility and which increase considerably the lapse of time of the amortization.
Lastly, and still about the forms of Self-consumption, in the draft of the Royal Decree people misses the regulation of Self-consumption with net metering, that is the one of those consumers who –normally in the daylight hours, when they have production surplus-, can pour the kilowatt-hours they are not going to use to the grid, in order to recover back the same amount from the grid later on –for example, at night-, when its FV facility is not producing energy. This option, which seems in all likelihood the most efficient and the least costly, has been overlooked by the legislator who, however, mentions in passing a kind of a scheduled net metering by which each our, the energy consumed of the grid and the energy poured will be compensated, something completely useless. Translation: the Self-consumer with surplus of generated kilowatt-hours will have to give them to the grid, and if later on it needs more energy than the amount produced by its installation, it would have to buy it paying the price freely agreed by the parties, this is, the one that the electrical energy trading company imposes.
Anyway, the no-regulation of net metering is not a new practice. Royal decree 1699/2011, of 18th November, regulating the connection to the grid of the small-scale power generation facilities –this is the current Self-consumption legal framework, jointly with the already mentioned Royal Decree 842/2002- established, on its Second Additional Provision, a mandate to the Minister of Industry, Tourism and Trade whereby, in a four-month deadline, shall submit to the Government a Royal Decree proposal regulating the administrative, technical and economic conditions of the consume of electrical energy produced inside the grid of a consumer for its own consume, in other words, to bring about real Self-consumption in the domestic sector by means of the net metering regulation. Once again, lawlessness.
Going ahead with the critics to the Royal Decree proposal, it also establishes the obligation to conclude an access agreement between the consumer and the distribution company, regardless of the Self-consumption form performed (except for isolated self-consumers), and a supply agreement with the electrical energy trading company. These obligations are odd, mainly regarding the obligation to conclude them even if energy will not be poured to the grid.
Furthermore, for all forms of Self-consumption there is an access tax for the consumed energy coming from the grid, as well as a backup tax, for the consumed energy coming from the power generation facility inside the grid (for the first form) or for the consumed energy coming from the power generation facility connected inside the grid or by means of a direct line (for the two modalities of the second form). This last tax is the other strong critique to the Royal Decree proposal because it is absurd to oblige the self-consumers to pay a tax for the kilowatts-hours generated and self-consumed, with the aim of defray the electrical system costs, mainly having in mind that part of this costs serve to maintain the distribution grid, which self-consumers, by definition, do not use.
Therefore, while it is true that a self-consumer can use one day the backup of the system and then, it is not illogical that it defrays some of the system costs as other consumers do, it is completely disproportionate and unfounded that it has to pay even more that the common consumers. In this sense, the National Competition Commission, currently the National Markets and Competition Commission: “All consumers subject to any form of self-consumption are obliged to contribute to the costs and services of the system for the consumed energy, when the power generation or consume facility is connected totally or partially to the electrical system. To that, they will be obliged to pay the same access taxes to the grid, associated charges to the system costs and the provisions of backup services costs, as those corresponding to a consumer not subject to any form of self-consumption described”.
In summary, while waiting for the approval of the Royal Decree on Self-consumption, we can only conclude that the draft that we know, in spite of the good intentions of its Statement of Reasons -“it deals with the achievement of a system of distributed generation by means of sale of surplus mechanisms, instantaneous self-consumption to strengthen the individual power generation in small-scale facilities for its consume in the same location, in those cases where it is efficient for the electrical system as a whole”-, it is a string of legal, administrative and fiscal hindrances to self-consumption development and even more if we take into account the delay of its approval.
As renewable energies defendants we understand that self-consumption with net metering is not only the next target to achieve for the completely development of the sector, but it is also the way to achieve the objectives fixed by the European Directives on Renewables, Energy Efficiency and Energy Performance of Buildings, for which consumers shall play an active role in the new energy model being at the same time generator, consumer, and manger of its demand and its energy efficiency.