Presented to: Electricity Control Board of Namibia

Author: Patrick Curran and Gerrit W. Clarke

Date: 18 December 2012

Reference no. P003734

Version: V1

Review of Net Metering Practices

Document type: Report

Client: Electricity Control Board of Namibia

Client contact: Mr. Pinehas Mutota

Contact details: Manager: Economic Regulation, Electricity Control Board

P O Box 2923, 8 Bismarck Street, Windhoek, Namibia

Tel: +264 61 374 320, Fax: +264 61 374 305

Cell: +264 81 124 0566, Email: pnmutota@ecb.org.na

Draft: 18 December 2012

Authors: Patrick Curran and Gerrit W. Clarke

QA Jonathan Curren

Authors contact details:

Email: gerritclarke@gmail.com Tel/Fax: +264 (0)61-210284

Cell: +264 (0)81-127 2304

Email: patrick.curran@camcoglobal.com Telephone: +27 (0)11-253 3400

Disclaimer: This report has been prepared for the above named client for the purpose agreed in Camco Clean Energy's terms of

engagement. Whilst every effort has been made to ensure the accuracy and suitability of the information contained in this

report, the results and recommendations presented should not be used as the basis of design, management or implementation

of decisions unless the client has first discussed with Camco Clean Energy their suitability for these purposes and Camco Clean

Energy has confirmed their suitability in writing to the client. Camco Clean Energy does not warrant, in any way whatsoever, the

use of information contained in this report by parties other than the above named client.

Camco Clean Energy 2012. All rights reserved.

mailto:pnmutota@ecb.org.namailto:gerritclarke@gmail.commailto:patrick.curran@camcoglobal.com

Review of Net Metering Practices 2

Contents

1 Introduction ............................................................................................................... 1

1.1 Project Background ................................................................................................ 1

2 Overview of Net Metering ......................................................................................... 2

2.1 Distributed Generation ........................................................................................... 2

2.2 Definition of Net Metering ....................................................................................... 2

2.3 Development of Net Metering Policies and Rules ................................................... 4

3 Net Metering Practices ............................................................................................. 5

3.1 Key Considerations ................................................................................................ 5

3.2 Policy ..................................................................................................................... 5

3.3 Technical................................................................................................................ 14

3.4 Commercial ............................................................................................................ 26

4 Case Studies ............................................................................................................. 28

4.1 USA ....................................................................................................................... 28

4.2 Denmark ................................................................................................................ 28

4.3 Thailand ................................................................................................................. 29

4.4 Brazil ...................................................................................................................... 29

4.5 California ................................................................................................................ 30

4.6 Mexico ................................................................................................................... 31

4.7 Morocco ................................................................................................................. 31

4.8 Kenya ..................................................................................................................... 31

4.9 South Africa ........................................................................................................... 32

5 Conclusions .............................................................................................................. 33

Bibliography ........................................................................................................................... 35

Appendix A: IRECs Net Metering Model Rules, 2009 ...................................................... 36

Appendix B: Eskom Small-scale Renewable Energy Standards and Specifications..... 42

Review of Net Metering Practices 1

1 Introduction

1.1 Project Background

Recent studies have indicated that Namibia has a substantial renewable energy resource base, which has a strong potential and a role to play in the countrys power supply. The White Paper on Energy Policy of 1998 recognizes the benefits of renewable technologies with regard to sustainability and security of supply. Studies have also revealed different regulatory provisions that may be applied to govern the supply of electricity derived from renewable energy resources.

Of late, many homes, farms and business owners are considering the installation of alternative forms of electricity generation facilities and connecting them to their utilitys electrical network. These facilities are intended to reduce the amount of energy purchased from the utility as well as providing some environmental benefits.

The purpose of net metering rules is to allow electricity users with roof top based PV and wind energy systems to offset part of their conventional electricity requirements. Further, net metering is intended to encourage private investment in renewable energy resources, stimulate economic growth in the country, contribute to energy security, and enhance diversification of Namibias energy resources, in line with the objective of the White Paper on Energy Policy of 1998.

The Electricity Control Board (ECB) has therefore appointed Camco Clean Energy from South Africa as the consultant to assess the application of net metering and to develop net metering rules for roof top and inverter based solar photovoltaics (PV) and micro wind energy converters. Camco Clean Energy has appointed Blueprint Consult from Namibia to manage the project including stakeholder consultation and for the technical aspects of the project.

The assignment is funded by the Renewable Energy and Energy Efficiency Partnership (REEEP) through the Renewable Energy and Energy Efficiency Institute (REEEI) at the Polytechnic of Namibia together with the ECB.

The project has two main objectives and these are:

Assessing the technical application of net metering within Namibia; and

Developing the rules for net metering and interconnection of roof top, inverter based solar PV and micro wind energy converters used for partial load displacement.

This report provides an overview of net metering practices and key issues in the following areas:

Policy;

Technical; and

Commercial aspects.

This study also provides case studies to illustrate international best practice with regards to net metering.

Review of Net Metering Practices 2

2 Overview of Net Metering

2.1 Distributed Generation

Distributed generation (also called on-site generation, dispersed generation, embedded generation, decentralized generation, decentralized energy or distributed energy) generates electricity from many small energy sources. Most countries generate electricity in large centralized facilities, such as fossil fuel (coal, gas powered), nuclear, large solar power plants or hydropower plants. These plants have excellent economies of scale, but usually transmit electricity over long distances and the fossil fuel types can negatively affect the environment, both locally and globally. Distributed generation may give lower environmental impacts and improved security of supply, but at a higher generation cost.

Distributed generation systems are predominantly installed, owned and operated by entities other than traditional centralised electric utilities. In particular they are often privately owned by homeowners, small-businesses and farmers. Most distributed generation technologies are of the renewable energy type (solar, wind, biomass, hydro, etc.).

There are 3 generic methods of compensation for distributed, private generators:

Net metering - compensation is always at the retail rate, and allows producers to use electricity at a different time than when it was generated. Excess generation (periodically) is treated separately, and the compensation rates range from lost, to avoided cost, to retail rate. This is commonly used for relatively small generation sizes (lower kW range).

Feed-in tariff (FIT) - compensation is usually above retail rate, and as the percentage of adopters increases, the FIT is reduced to the retail rate. Compensation is initially set at the average or levelised cost of generation for a particular technology including an adequate profit. This is commonly applied for relatively medium sized generation stations (hundreds of kWs to tens of MW)

Power Purchase Agreement compensation is agreed on between the buyer and sell