The latest draft of the Royal Decree regulating Net Metering and Self-Consumption in Spain has recently been published. A decree that, together with the electricity reform, constitute the latest measures in the disastrous policy regarding electrical energy in this country. The new draft has quickly sparked opposition from advocates 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 useful to have a clear understanding of the concepts and differences between self-consumption and net metering, something we cover extensively in this post. However, to summarize, we will recall that net metering means selling surplus energy and deducting it from regular consumption, while self-consumption means generating energy solely for one’s own use, optionally with the sale of 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 deduct it from regular consumption.
- The net metering producer paid the grid access charges for the energy consumed, which represented 38% of the energy cost. Therefore, they could save 62% of the energy generated and not consumed (by applying net metering).
- The producer had 12 months to compensate the energy, after which it was lost.
- The purchase price of the produced kWh was set by the electricity company, and was not regulated, which could lead to a situation of vulnerability for the self-generator.
Overall, a reasonable text, similar to existing regulations in other countries. The draft did not fully please or benefit either party, which was positive. It presented logical measures and, although, of course, improvable, it constituted a good basis for generating debate, making concessions from both sides, and finally, hopefully, reaching a middle-ground agreement.
The Second Draft
The second draft of the Self-Consumption Royal Decree, sent to the CNE on July 18, 2013, substantially changes the rules of the game greatly favoring the electricity companies. The notable points are as follows:
- It regulates self-consumption, instantaneous and with excess fed into the grid, but does not mention net metering at any point.
- It requires applying for permission, signing a contract, and installing two meters, even if no energy is fed into the grid.
- A registry of self-consumption installations is created.
- Energy consumed from the grid will pay, as always, the grid charges and the energy cost.
- Self-consumed energy not fed into the grid will pay the so-called “backup toll”. This toll is 27% more expensive than the domestic grid access charge, and the government reserves the right to raise or lower it.
- Self-generated energy not consumed and not sold is given away to the grid for free. However, it will also have to pay the “backup toll”.
- Self-generated and sold energy will pay the generation charge established by the electricity company.
- The payback period for a self-consumption installation increases from 12 to 35 years.
- Fines of up to 30 million euros are established for those who fail to comply with these regulations.
Perhaps the most striking measure is the establishment of the new “backup toll”, a cost to the user simply for being connected to the grid and enjoying a reserve of available power (something for which the utilities are already compensated). The cost of this fee is 27% of the grid access charge. It should be clarified 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 energy consumed from the grid, since the grid access charge is not the total cost. What is true is that with this toll, the savings from self-consumed energy are reduced to about 20%, compared to energy consumed from the grid (versus 68% with the previous draft). This, together with the rest of the measures, essentially eliminates the profitability of self-consumption installations.
More Changes
To delve deeper into recent changes in the electricity market, we can briefly comment on some recent changes, always to penalize the consumer. In addition to the constant increases in the price of electricity due to an alleged, and never justified, tariff deficit, users have had to endure the following measures:
On one hand, the power term, i.e., the fixed part independent of demand that consumers pay, has increased by 77%, while the energy term has decreased. That is, we pay more just for being connected to the electrical grid, regardless of whether we consume or not, and less for energy consumption. This favors large consumers, penalizing small consumers, those who save energy, more efficient installations, and self-consumers of energy.
On the other hand, the replacement of traditional meters with electronic meters is underway. The new meter has a monthly cost 50% higher 0.81 euros per month compared to 0.54 euros per month for traditional ones. 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 overcharge.
Conclusion
This blog always tries to be impartial when presenting the reasoning and versions of both renewables and utilities, recognizing the 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, a nonsense, a sheer effrontery, and an insult to the consumer’s intelligence. This decree represents a clear step backward in terms of sustainability, the environment, energy and economic savings, and investment and development in a field where 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 (link here). I confess that it seemed like such a crazy and absurd idea to me that I hardly gave it any credit. 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 be clear to everyone that this decree is a true surrender by our politicians to the electricity oligopoly (I include all parties because I consider them equal in this regard). It is sad that we are no longer scandalized to hear that a certain politician has been placed in an electricity company, or that another politician allegedly receives money from them.
We should start protesting seriously against such unconditional concessions, for example, demanding an audit of generation costs prior to recognizing any kind of deficit in the electricity market. After all, the electricity companies have reported a combined profit of 4,225 million in the first half of 2013. Since they are going to scam us anyway, at least they shouldn’t make us swallow such nonsense.
