With the economic crisis and budget cuts, the need for a reform of the electricity system is more current than ever. Numerous news stories are heard on the subject and, in particular, there is a debate between the large electricity companies and small producers, who demand a law regulating self-consumption and net metering. But what are these concepts?
These two terms refer to different modalities in which a consumer can generate their own energy, for example, through a photovoltaic panel, a wind generator, a cogeneration unit, or other technologies.
Differences between Cogeneration and Self-Consumption
Currently (in summary) a consumer cannot feed energy into the grid. To do so, they must register as an electricity producer. After registering, the producer sells all the energy produced at an agreed price and, on the other hand, buys all the energy they consume. This process doesn’t seem to make much sense, does it?
Self-consumption brings a bit of common sense to this situation. It involves generating your own energy and consuming it on-site. If at any time you need more energy than you can generate, you buy the rest from the grid.
Net metering represents a further step in the concept. It involves consuming the energy you produce, and selling the excess to the grid. Globally, you only buy the energy you consume on a net basis, that is, the difference between what you buy and what you sell.
There is a debate and opposing positions between small producers in favor of net metering and the large electricity companies. Below, I summarize, as neutrally as possible, the arguments each side puts forward.
Pro Net Metering View
Supporters of net metering label electricity companies as lobbies, powerful groups that, taking advantage of their economic power, pressure and bribe politicians to support their positions and gain competitive advantages. Their main points are as follows:
- Net metering represents a decentralized and democratic generation system, where any consumer can produce their own energy.
- Transmission losses are eliminated, which can represent up to 50% of the energy, making it more efficient.
- Most of the sources used are renewable, so they are clean and virtually inexhaustible.
- They reduce the country’s energy dependence, as they rely less on imports of fossil fuels or uranium.
View According to Electricity Companies
Electricity companies also give their view of the problem and, to be fair, they are right on certain points. Among their main arguments, the following stand out:
- They are required to make huge investments in power plants and transmission networks, to guarantee supply to everyone at all times. However, for example, on a sunny day, no one may consume their energy, but they are forced to have the installed capacity for cloudy days and nighttime periods. This also creates duplication in installed electrical capacity.
- As consumption decreases, they argue, these fixed costs will have to be borne by the remaining consumers, creating differences between users. They suggest implementing a self-consumption compensation tariff, i.e., a levy on those who do not consume energy.
- Generation with small equipment means a lower quality of supply, as the connection and disconnection of elements generates harmonics and other distortions in the grid.
- Balancing the electrical grid becomes incredibly complex. A power plant does not turn on instantly; it takes hours or even days. Currently, electricity companies have precise forecasts that allow them to schedule turning on and off, pumping of hydroelectric plants, etc. Balancing a decentralized grid can become impossible.
- Large power plants, due to their size, have all possible improvements to increase their efficiency. Therefore, the question arises whether a decentralized system is truly more efficient than a centralized system with transmission losses.
- They question the environmental benefit of having a huge number of small generators, compared to a few large ones, due to the environmental costs of manufacturing, installation, recycling, and maintenance.
Summary and Personal Opinion
From my experience, when setting up a domestic photovoltaic system, most of the cost falls on the batteries. Self-consumption is an effective way to eliminate this cost and, if the installation is properly sized, it is beneficial for the environment. Installations should be sized moderately, to avoid wasting energy and to guarantee the profitability of the installation. It makes no sense to establish a compensation tariff for self-consumption, i.e., for energy that the user doesn’t even end up consuming.
On the other hand, net metering is also a bit ‘cheeky’, this time on the part of small producers. The overall balance is that they demand the grid to be their ‘battery’, feeding in excess energy that, a few hours later, they themselves will consume. It is logical that electricity companies are against it, as they are required to become a giant electrical warehouse, a grid regulator, responsible for supply quality, and a guarantee of supply, while their profits are cut. On the other hand, with net metering, decentralized generators tend to be ‘less moderate’ in size because, unlike in the case of self-consumption, the excess energy generated is sold, contributing to the amortization of the investment.
However, what is truly sad is that these debates always take place in economic terms, and not so often from the perspective of efficiency and environmental impact.
And you, what do you think? Are the small producers right or the big electricity companies? If you want, you can give us your opinion by leaving a comment.
