What are the principles of netmetering and net-billing operations?

Net-metering and net-billing are policies used to promote production of electricity from renewable energy technologies in households.

This enables consumer-producers (prosumers) who are connected to the electricity grid to partly or wholly offset their electricity consumption and/or even to earn some money for the extra energy injected into the system.

Such policies promoting renewable energy sources at the consumer’s level is primarily aimed at reducing the consumer’s bill. Under no circumstances can it be part of a commercial activity with the injection of electricity, not needed by the household, into the power grid.

There are various approaches to net-metering and netbilling developed by various countries and especially in various US states. The operating principles, however, remain the same.

With net-metering there is only one bidirectional counter which can run forward and backward calculating the electricity input and output in kWh. That is, energy transactions are measured per unit of production in kWh. The electricity grid is essentially treated as a battery (storage) that covers all or part of the consumer’s needs when the consumer is unable to meet them.

The electricity injected into the grid has the same nominal value as electricity inputted and consumed, i.e. the retail price. In other words, the cost ratio between imported and exported electricity is 1:1.

With net-billing there are two meters so that exported and imported electricity are counted separately, as they have different values. That is, energy transactions are denominated in monetary terms.

Electricity injected into the grid is valued at a lower price (avoidance cost) and the electricity consumed by the grid is normally priced at the retail price.

Net-metering and net-billing are policy tools in the hands of states to promote renewable energy sources and are regulated by energy regulators to avoid distortions in the electricity market by i mposing appropriate monopoly charges.

Following practices adopted in the US, it has been widely accepted that net-metering is applied to any renewable energy system for power generation below 10kW and netbilling for any renewable energy system for power generation greater than 10kW. Dr. Andreas Poullikkas is President of the Cyprus Energy Regulatory Authority (CERA)