Recently, the latest draft of the Royal Decree regulating Net Metering and Self-Consumption in Spain has been published. A decree that, together with the electricity reform, constitutes the latest measures in the disastrous policy on electric energy in this country. The new draft has quickly provoked opinions against from the defenders of net metering and self-consumption. In this post, we analyze the main points of the new draft compared to the previous one, and the consequences if it is approved as a Royal Decree.
To read this article it is convenient to have clear concepts and differences between self-consumption and net metering, which we treat intensively in this post. However, in summary, we will remember that net metering means selling surplus energy and discounting it from the usual consumption, while self-consumption means generating energy solely for one’s own consumption, optionally with the sale of the surplus.
The first draft
In February 2012, the first draft on net metering was presented. This first text contained, in summary, the following measures:
- Net metering was regulated. The producer could sell the surplus and discount it from the usual consumption.
- The net metering producer paid the access tolls of the consumed energy, which represented 38% of the cost of energy. Therefore, they could save 62% of the generated energy that was not consumed (applying net metering).
- The producer had 12 months to offset the energy, after that it was lost.
- The purchase price of the produced kWh was set by the electric company, and it is not regulated, which could lead to a situation of helplessness for the self-generator.
In general, a reasonable text, similar to existing regulations in other countries. The draft did not fully satisfy or benefit either party, which was positive. It presented logical measures and, even though it was, of course, improvable, it constituted a good basis for generating debate, making concessions by both parties, and finally and with luck, reaching an agreement on a middle ground.
The second draft
The second draft of the RD on self-consumption sent to the CNE on July 18, 2013, substantially changes the rules of the game broadly favoring the electric companies. The remarkable points are as follows:
- It regulates self-consumption, instantaneous and surplus injection into the grid, but does not mention net metering at any time.
- It requires applying for a permit and signing a contract and installing two meters, even if surplus is not injected into the grid.
- It creates a registry of self-consumption installations.
- The energy consumed from the grid will pay, as always, the tolls and the cost of energy.
- The self-consumed energy not injected into the grid will pay the so-called “backup toll”. This toll is 27% more expensive than the domestic access toll, and the government reserves the right to raise or lower it.
- The self-generated energy not consumed and not sold is given to the power grid. However, it also must pay the “backup toll” for it.
- The self-generated and sold energy will pay the generation toll established by the electric company.
- The payback period for a self-consumption installation is increased from 12 to 35 years.
- Penalties of up to 30 million euros are established for those who violate these regulations.
Perhaps the most striking of the measures is the establishment of the new “backup toll”, a cost to the user simply for connecting to the grid and enjoying an available power reserve (something for which the electric companies are already compensated). The cost of this fee is 27% of the access toll. It is worth clarifying that, contrary to what is being said on certain pages, this does not mean that the cost of self-consumed energy is 27% higher than that consumed from the grid, since the access toll is not the total cost. What is true is that with this toll the savings from self-consumed energy are reduced to 20%, approximately, compared to that of energy consumed from the grid (compared to 68% with the previous draft). This, together with the rest of the measures, essentially eliminates the profitability of self-consumption installations.
More changes
Going deeper into the recent changes in the electric energy market, we can briefly mention some changes that have been made recently, always to penalize the consumer. In addition to the constant increases in the price of electric energy due to a supposed, and never justified, tariff deficit, users have had to endure the following measures:
On the one hand, the power term, that is, the fixed part independent of the demand that consumers pay, has increased by 77%, while the energy term has decreased. In other words, we pay more just for being connected to the electric grid, regardless of whether we consume or not, and less for energy consumption. This favors the largest consumers, penalizing small consumers, those who save energy, the most efficient installations, and energy self-consumers.
On the other hand, traditional meters are being replaced by electronic meters. The new meter has a monthly cost 50% higher 0.81 euros per month compared to the 0.54 euros per month of traditional meters. A similar increase is observed in three-phase supplies. A cost that all Spaniards pay for a meter verification service that is practically non-existent, with meters of dubious calibration that in case of a defect (how curious!) always over-register.
Conclusion
This blog always tries to be impartial when presenting the reasoning and versions of both renewables and electric companies, recognizing different points of view, and being critical of both when necessary. But, in this case, the new draft can only be classified as an outrage, nonsense, an impudence in every respect, and an insult to the consumer’s intelligence. This decree represents a real setback in terms of sustainability, the environment, energy and economic savings, and investment and development in a field in which Spain should be a leader due to our climate and location.
The first time I heard the idea of the backup toll was at a Conference on self-consumption and net metering given by Iberdrola in April 2012, in the community of Madrid. I confess that it seemed such a crazy and absurd idea to me, that I barely believed it. Imagine my surprise when I saw the same measure proposed in the draft, which should immediately make us suspicious of the origin of these measures.
In my opinion, at this point, it should not escape anyone that this decree is a real surrender of our politicians to the electric oligopoly (I include all parties because I consider them equal in this respect). It is sad that no one is scandalized anymore to hear that a certain politician has been placed in an electric company, or that another politician allegedly receives money from them.
We should start to protest seriously against such unconditional concessions, for example, demanding an audit of generation costs prior to recognizing any type of deficit in the electric market. After all, the electric companies have presented a joint profit of 4,225 million in the first half of 2013. Since they are going to scam us anyway, at least let’s not make us believe something that isn’t true.