The distributed generation from renewable sources, whose regulation is being discussed by the Congress of the Nation, implies a revolutionary change in the model of generation, sale, distribution and consumption of electric energy. What are the characteristics of this novel system and what background information exists at local and international level?
Defined by specialists as the first step towards the democratization of energy, distributed generation from renewable sources breaks with the current model in the production, distribution, commercialization and consumption of electricity. Far from the static roles and watertight compartments to which we are accustomed nowadays in the electrical system, a new figure appears on the scene, that of the “prosumer”, that is to say, the user of the electric network that at the same time delivers to that network energy generated by the equipment installed in his / her own home. Professor Bernt A. Bremdal from the Norwegian cluster NCE Smart Energy Markets goes even further in his definition and states that “energy prosumers are not only consumers who also produce energy, but are also sellers of that energy, and active participants in the market “. Among the innovations brought by this new paradigm, the Argentinian Committee of the World Energy Council (in Spanish CACME / Comite Argentino del Consejo Mundial de la Energia) identifies “energy equity and security based on free access to energy resources through technology”, in the context of “an economy physically based on the abundance of energy resources, “ as opposed to the constraints presented by the current model. In its proposal for the federal regulation of the Argentinean market for distributed renewable generation, CACME mentions a series of evolutionary steps that should take us from the electricity grid known nowadays to the “smart grid”; to then advance, through the computerization and automation of its control, to the “intelligent grid” -. Using an analogy with the Internet in the world of information, the point of arrival of this evolutionary chain will be the so-called “energy web”, that is to say, “the infrastructure that will enable the free and decentralized exchange of energy”.
The first step towards the smart grid
Let’s go back to the starting point: what will happen from the regulation of distributed renewable generation? “The energy flows will begin to be bidirectional and, in order to be able to manage them, it will be necessary to place demand monitoring stations in certain points of the network, with censors that allow to measure each flow and to establish the faults that exist in the network” , answers the engineer Julian Tuccillo, director of Operations and Technology of the firm SunGreen and coordinator of the Research Group on Renewable Energies of CACME. “The management of demand implies matching consumption with generation, which in the case of renewables is intermittent,” he adds. I n order to move forward in this first stage, it will be necessary to introduce reforms to the current regulations governing the Argentine electricity market: Act 24 065, enacted by the Executive through Decree Law 1398/92. Under the current regime, despite post-crisis changes in 2001 and the declaration of the economic emergency in 2002, generation activity is defined as of “general interest” and operates under a regime of free competition, while transportation and distribution are considered a “public service” given their nature as “natural monopolies”. The entity responsible for the technical operation of the Argentine Interconnection System (in Spanish-SADI / Sistema Argentino de Interconexion) and the delivery is Compania Administradora del Mercado Mayorista Electrico S.A. (in Spanish CAMMESA -the Argentina´s Wholesale Power Market Administrator), whose Board of Directors is made up of representatives of the National State, generating firms, transportation companies, distributors and large energy users. The CACME project suggests incorporating the figure of “energy traders”, who “could be several private companies that compete with each other to install distributed renewable technology, maintain it, and select, choose and buy in the market energy to the most competitive prosumers”. They would act as “intermediary agents” who would sign energy purchase contracts with the prosumers and then sell that energy to CAMMESA or to the spot market that exists for each type of technology or, alternatively, sign contracts with the large users in the market in different terms. In addition CACME proposes that the energy traders should pay to the distributors in the area a “fee for the injected energy of their prosumers”, so as to cover the cost of construction, maintenance and operation of the networks“, which is technically known as “value added distribution” (VAD).
Billing, prices, subsidies and incentives
Once the problem of regulatory regulation is resolved, the price remains to be determined. For this, two transactional methodologies are discussed: on the one hand, the “net metering”; and, on the other hand, the “net billing”. In the former system, the most usual one, the energy generated and injected into the network by the prosumer is taken into consideration and the energy consumed is deducted; the result of that balance is multiplied by the price of energy to determine the rate to be paid by the prosumer. The key is to define how often to measure this balance of energy, since the result varies if measured in an hourly manner than if it is done monthly. As far as CACME is concerned, “hourly reading is a more accurate and fair way to calculate the net balance, because it takes into account all the energy that comes in and goes out for the calculation of the rate.” The second scheme, net billing, consists of calculating first the monetary value of the energy generated and consumed by the prosumer, and then establishing the difference between the two amounts that is reflected in the final rate. The measurement, as in the model above mentioned, can be hourly or monthly. A pilot case of this methodology is the one that has been used in Chile since the effective date in October 2014 of the legislation of self-generation based on non-conventional renewable energy or efficient cogeneration. In the case of residential consumers whose connected power is less than 100 kilowatts or their demand is limited to that same figure, the distributing company pays the prosumer for the surplus injected into the network with the same price as the sale of the energy by the same concessionaire of the electricity distribution service. At this point, incentives to the prosumer also come into play. Known in English as feed-in-tariffs, they are nothing more than differential prices that are paid to small generators so that they can recover the investment in their renewable systems in a relatively short term. When are they advisable? When there is no network parity, that is to say, when it costs less to consume power from the electricity network than to generate it from such systems in prosumers ´ homes. According to CACME, these types of incentives should be applied “with criteria of calculation and allocation of adequate costs and they should be revised over time.” In that sense, Julian Tuccillo warned, “the ideal point is that the price variables of generation are free for the market to balance them and that it is reached naturally to the network”, because “in markets where the network parity has been forced, with long incentives and not sufficiently revised, the mechanism has failed“.
Pioneering initiatives in the provinces
The pioneer district in the field of distributed generation is the province of Santa Fe, whose provincial distributor EPE issued in October 2013 the Resolution 442, which enables the operation in parallel to the network of customers that have low voltage generation units from renewable energy sources. On the other hand, on April 2016, the province launched the “Prosumers” program (Programa Prosumidores), which facilitates the repayment of the investment in these types of facilities through a feed-in-tariff that was set forth in 5.50 pesos per kilowatt hour. It will be in force for a period of eight years for those who join the program, for which an annual quota of 100 projects was established in the first two years of this initiative. Subsequently, in June 2014, it was Salta’s turn, whose Legislature passed the Act 7824, which set forth the administrative, technical and economic conditions for the application of the “net metering” energy supply modality, which authorizes to inject their surplus to the electricity network to those users who have equipment of generation of electrical energy by non-conventional renewable means or of facilities of efficient cogeneration. The Act was regulated by the provincial Public Services Regulatory Authority (in Spanish ENRESP / Ente Regulador de los Servicios Publicos) and currently benefits users with a low voltage supply of between 30 and 100 kilowatts, who must remain for a minimum of five years in the system. It is also established a differential tariff / rate regime by type of equipment: solar / photovoltaic, wind, hydraulic and biomass. In turn, in November 2014, the Legislature of San Luis passed the Act IX-0921-2014, which contemplates, among others, the figure of the “ distributed self-generator”, which is authorized to connect to the grid to inject energy from renewable sources and is granted a tax credit for up to 50% of provincial taxes for the execution of the project during four fiscal years. As for Mendoza provincial distributor EPRE, it regulated in March 2015 the technical conditions for the operation and billing of surplus energy injected to the electricity grid. It is established that generating equipment must use renewable energy sources or efficient cogeneration facilities. The regulation also adopts the net metering model measured on a monthly basis and leaves two alternatives open: A) a “single bill” in which the energy received from the network and the energy injected to the same by the prosumer are presented; B) a “special energy purchase agreement” entered into between EPRE and the prosumer consisting of the separate issuance of the respective invoices for energy received and energy injected to the grid. The last two provinces that have passed rules on distributed generation from renewable energies in the last year are Neuquen – Act voted last July, which includes differential rates according to the characteristics of the equipment and also provides loans for their purchase – and Tucuman. The peculiarity of this last rule, passed by the Legislature of Tucuman last October, is that it defines the “prosumers”, that is to say, those users of electrical energy that have a system of distributed generation based on the use of renewable sources of energy and inject that energy into the distribution network. The next step, claimed by user associations and companies in the renewable sector, will be the approval of a national legislation by the National Congress, which would fundamentally regulate this modality in the case of users of Edenor and Edesur, subject to Jurisdiction of the National Electricity Regulatory Entity (in Spanish Ente Nacional Regulador de la Electricidad / ENRE)