1. El evento de la energía sostenible, el ahorro y la eficiencia energética Self-consumption in Portugal and Europe José Luis de Oliveira Paulo EnergyIN Mérida, 21 de octubre 2015

2. Self-consumption Definitions Self-consumption: The possibility for any kind of electricity consumer to connect a renewable energy system, with a capacity corresponding to his/her consumption, to his/her own system or to the grid, for his/her own or for on-site consumption, while receiving value for the non-consumed electricity which is fed into to the grid. Net-metering: A simple billing arrangement that ensures consumers who operate renewable energy systems receive one for one credit for any electricity their systems generate in excess of the amount consumed within a billing period. In this case, production and consumption are compensated over a larger time frame (up to one year), and the network should be regarded as a long term storage solution, with the consumer generated electricity being occasionally injected and consumed later on. Source: Solar Power Europe

3. Self-consumption in the EU Self-consumption is not defined nor explicitly mentioned in any of the relevant directives on the EU level Aspects of relevance for self-consumption are contained in various regulations but not explicitly mentioned: Third package for an internal EU electricity and gas market (2009/72/EC and 2009/73/EC) Renewables Energy Directive (2009/28/EC) Energy Performance of Buildings Directive 2010/31/EU Energy Efficiency Directive (2012/27/EU) Source: EASE - European Association for Storage of Energy

4. Self-consumption in the EU Aspects of relevance for self-consumption are contained in various regulations but not explicitly mentioned (cont.): Commission staff working documents: Incorporating demand side flexibility, in particular demand response, in electricity markets (SWD(2013) 442 final) European Commission guidance for the design of renewables support schemes (SWD(2013) 439 final) Future Communication on Retail Energy Market Source: EASE - European Association for Storage of Energy

5. Self-consumption in the EU Self-consumption mechanisms have been promoted in several European countries. In some cases, pure net-metering schemes have been developed (such as in Belgium, Denmark and the Netherlands), while other countries have favored mechanisms promoting an instantaneous consumption of the electricity produced. Various intermediate schemes exist between these two approaches. In Spain, self-consumption (without any specific premium) has been authorized since November 2011 under certain conditions for systems up to 100kW. Discussions are however still ongoing regarding the introduction of a partial net-metering scheme, in which the compensation of electricity flows would be calculated on a yearly basis while some grid costs might have to be paid by the PV system owner. Source: Solar Power Europe

6. Self-consumption in the EU The evolution in Germany towards incentivization of self-consumption started in 2011 with a premium tariff for self-consumed electricity. The remuneration was even higher if a rate of self-consumption over 30% was reached, encouraging prosumers to increase their direct consumption ratio. Since then, the decreased generation cost of PV has prompted German authorities to consider self-consumption incentivization without a premium tariff: with the retail price of electricity in most cases currently higher in the residential segment than the generating cost of a PV system, self-consumption becomes obviously more profitable than an awarded Feed-in-Tariff (FiT). In addition, the review of the German Renewable Energy Act (EEG) in 2012 has introduced a limiting factor for grid injection which is favoring direct consumption: with only 90% of the production eligible for a FiT (for systems above 10kWp), the legislation promotes self-consumption over pure production. Source: Solar Power Europe

7. Self-consumption in the EU In Italy, the country’s fifth energy bill – Vth Conto Energia – introduced a specific self-consumption premium scheme which is in place as from Q4 2012 and is very similar to the scheme introduced in Germany in 2011. The Scambio sul posto scheme is an alternative to Vth Conto Energia. It ensures an economic remuneration for the amount of energy produced and injected into the grid and consumed instantaneously: this is an initial (and complex) attempt to favor direct consumption, featuring a mix of net-metering aspects (especially for grid costs) and self-consumption (for electricity costs). However, to implement the self-consumption in a sustainable way it could be useful to increase the power limit to access to this scheme (for example from 200 kW to 5 MW). Source: Solar Power Europe

8. Overview of self-consumption schemes in Europe Source: Solar Power Europe

9. Self-consumption in Portugal In Portugal the generation of electricity for self-consumption and use associated with the respective production unit, with or without connection to the grid based on renewable or non-renewable technologies is regulated by Decree-Law no. 153/2014, of 20 th October. The law also establishes the legal framework for the generation of electricity, sold entirely to the public distribution grid, through small power plants, from renewable resources. Source: DGEG

10. Self-consumption in Portugal Electricity produced is preferably consumed in the consumer installation Any surplus of instantaneous generation, can be feed into the grid The proposed model assumes the adaptation of the generation capacity of the existing intake system in place, minimizing the electricity feed into the grid Electricity produced is entirely injected into the grid Keeps rate assignment model via auction, simplifying and adding the current scheme of micro and mini generation Keeps generation requirements linked to the existing electricity consumption, in the consumer installation associated New scheme of Distributed Generation Self-consumption Small generation 12 Source: DGEG

11. Source Renewable & non renewable Renewable Power limit Connected load <100% of the contracted power consumer installation Connected load <100% of the contracted power for the consumer installation Connected load up to 250 kW Power Requirements Annual generation must be lower than consumption needs Sale of instant surplus to SoLR 1 Annual generation <2x installation consumption Sale of the entire power to SoLR 1 Remuneration Pool value for instant surplus generation, less costs On an yearly basis, the surplus generated compared with consumption needs is unpaid Tariff achieved at auction for entire generation On an yearly basis, the surplus generated over the 2x consumption requirement of the installation is unpaid Compensation Between 30% and 50% of their value of CIEG 2 when the accumulated power of self- consumption units exceed 1% of the installed capacity in the national grid n.a. 1. SoLR – Supplier of Last Resort 2. CIEG – Costs of energy policy, sustainability and general economic interest Self-consumption in Portugal Self-consumption 12 Small generation

12. Source Renewable & non renewable Renewable Metering Compulsory metering for load connected to the public grid over 1.5 kW Compulsory metering for all loads as a key element in the billing process Licensing process Process managed through an electronic platform Mere prior notice: between 200 W and 1.5 kW Registration + certificate of operation: between 1.5 kW and 1 MW Process managed through an electronic platform Registration + certificate of operation Mandatory inspections Others No annual quota of power assigned Maximum annual quota of power attributed (e.g. 20 MW assigned yearly) Self-consumption in Portugal Self-consumption 12 Small generation Source: DGEG

13. Self-consumption in Portugal Source: DGEG The production unit (UPAC) preferably produced to meet consumer needs The produced electricity is instantly feed into the consumer installation The surplus produced is feed into the public grid, avoiding waste The generation unit is installed in place of consumption The connected load of the UPAC must be less than the contracted power in the consumer installation The power of the UPAC can not exceed twice the power connection Main characteristics Working Model (Power > 1.5 kW)

14. Self-consumption in Portugal Source: DGEG Main characteristics (cont.) Generation and Consumption Diagram Domestic Consumer (without battery storage)

15. Self-consumption in Portugal Source: DGEG The instant production surplus is paid to the price of the pool less 10% (to compensate grid feeding costs) Renewable UPAC, with capacity below 1 MW 1, has the option to sell the surplus energy to SoLR (contract 10 + 5 years). Other cases through bilateral contracts Self-consumption can benefit from future transaction of Guarantees of Origin. The energy feeding into the grid does not entitle GO The billing scheme may be extended in time to streamline administrative procedures and avoid small amounts on invoices (e.g. a single annual invoice) Remuneration of electricity feeding into the grid Whenever “Pool” Incentive for UPAC is properly sized to consumption level Ensures faster payback Illustrative example Formula of remuneration of surplus feeding into the grid 1. DGEG can change limit, by order 2. LCOE – Levelized cost of energy

16. Self-consumption in Portugal UPAC with power greater than 1.5 kW and with consumer installation connected to the public grid are subject to payment of a compensation, that will allow to recover a portion of CIEG included in the tariff for overall use of the system The compensation to be paid only becomes effective when the total power of UPAC exceed 1% of total installed capacity in SNE After reaching 1%, compensation becomes payable by new UPAC installed as follows: 30% of CIEG -> while the accumulated power of UPAC installed does not exceed 3% of the total installed capacity in SEN 50% of CIEG -> when the accumulated power of UPAC installed exceeds 3% of total installed capacity in SEN Source: DGEG Compensation paid to the system SNE – National Electric System

17. Self-consumption in Portugal The monthly compensation to be paid is fixed at the beginning of operation of the UPAC and lasts for a period of 10 years The monthly compensation is fixed and focuses on the installed capacity of the UPAC The compensation is determined by the DSO and billed by the SoLR, and can be issued on an annual basis, if the amounts involved are small in size (e.g. € 20) Source: DGEG Compensation paid to the system (cont.) DSO –Distribution System Operator

18. Self-consumption in Portugal Source: EDP Comercial EDP SOLAR ENERGY Now, more than ever, the sun rises for everyone

19. Figure: Photovoltaic Power Plant, Amareleja, Alentejo Thank You! ENERGYIN HEAD OFFICE: Largo Dr. Justino Freire 4 2560-236 Torres Vedras, PORTUGAL Tel: +351 261 316 482 jose.paulo@energyin.pt www.energyin.pt