New regulation increases pressure on EU Member States transposing Art. 21 REDII
Spain has turned into first mover and top runner in transposing the EU-Member States´ obligation set by Article 21 of the new EU-Renewable Energy Directive to create an “enabling framework that promotes and facilitates the development of renewables self-consumption”.
The recently adopted “Regulation on the administrative, technical and economic requirements for self-consumption of renewable energy” includes some groundbreaking provisions that set a high standard for other EU-Member States:
- administrative, bureaucratic and technical simplifications,
- equal treatment of individual and joint self-consumption among neighbors – in the same building and (virtually) in buildings within a radius of 500 m from the installation
- right to remuneration for excess electricity fed into the grid through simple “net billing”.
First transposition of Art. 21 Renewable Energy Directive
The Spanish regulation is the first transposition of Article 21 EU-wide. Art. 21 is one of the core “prosumer” articles in the Clean Energy Package. Together with Art. 15 Internal Market Directive (“Active Consumers”) it is the EU´s formula for a prosumer-centric energy system.
Art. 21 sets a large number of rules. Amongst others it bans discriminatory and disproportionate procedures and charges. Simple administrative, bureaucratic and technical requirements are key to turn consumers into prosumers as consumers are not experts. It also establishes the right to remuneration for the self-generated renewable electricity fed into the grid which reflects the market value.
Administrative, bureaucratic and technical simplification
The Spanish regulation follows the corresponding EU´s obligations. Small-scale projects below 15 kW do not need to negotiate or file for grid access or access points with the DSO. A notification to the DSO is enough to oblige the DSO to take over all necessary administrative steps.
And regarding metering the regulation allows implementing a simple bidirectional meter. (Smart) Metering is of crucial importance in the context of joint self-consumption. Too expensive and to complex smart meters can be a show stopper.
Remuneration for fed-in excess electricity through “net billing”
The regulation establishes the right to a remuneration for the electricity fed into the grid (under prior legislation it went unpaid for) from installations below 100 kW. The compensation is not considered a commercial activity anymore that would create a need to charge and declare VAT. The compensation – hence bureaucracy – is shifted to the utility that supplies the electricity that is not covered by self-consumption. Rather than directly compensating citizens – the utilities clear the compensation on the power bill (net billing).
There is free choice for self-consumers regarding compensation for fed-in excess electricity:
- contracting with “Comercializadoras reguladas”: then the compensation amounts to the wholesale market value; or
- contracting with “Comercializadoras de Mercado libre”: then the compensation is open to negotiation.
Breaking news: joint self-consumption – even “virtually”
The “breaking news” character of the Spanish approach lies in the fact that in some regards it voluntarily goes far beyond the EU-obligations. Firstly, it treats joint self-consumption between different neighbors equal to individual self-consumption. Secondly, it includes even neighbors who live some hundred meters away from the renewable installation, even if the renewable electricity needs to be transported via the distribution grid. This joint “virtual” self-consumption significantly enlarges the scope and number of participants.
That is of crucial importance as Art. 21 explicitly entitles Member States to treat joint self-consumption differently from individual self-consumption. For example, the German “Landlord-to-Tenant-Supply Act” treats the consumption of electricity on a building by tenants living in the same building as supply. Hence, landlords become suppliers with the same (bureaucratic) obligations as huge suppliers with 100.000 customers.
“Static” allocation of shared self-consumption and compensation
The allocation of shared self-consumption and compensation for fed-in excess electricity follows a simple “static” approach: every participant has a fix quota of generation and is compensated according to it, calculated in hours. If there is no fix allocation of generation, the share will be according to the contracted power of every house (“potencia contratada en cada casa”). For example, in a building with 20 units with a 20 kW installation, the generation is divided equally – if there is no further agreement – as if every neighbor owned a 1 kW installation. Drawback of this simple approach: the individual share cannot be enlarged by using the share of neighbors who are not at home, so the energy is “lost”. But the regulation already opens a door to a more dynamic solution, allowing to consume all the generated electricity without being limited to the quota. But this is left to a ministerial “orden”.