Generating energy with a photovoltaic system: self-consumption vs net metering

Estimated reading time: 4 minutes, 26 seconds

For people who decide to install a photovoltaic system, one of the priorities is to maximise savings, and thus it is only natural for them to ask themselves which is the better choice between self-consumption and net metering. But revolutionary changes in the energy market provide even more attractive options to ensure an efficient use of this resource. The best solution is collective self-consumption of energy.

Self-consumption and net metering are frequently discussed in the energy market. In fact, these are the two main modes currently used for consumption of energy produced by a photovoltaic system. What do these terms mean? Which of the two is more advantageous? And above all, with the current changes in the energy market, are these still the only solutions available? What should you do? As always, the wisest answer is: “it depends”.

For a better understanding we need to consider each individual step. Having installed a photovoltaic system, you need to decide how to manage the energy generated by your solar modules.

 

Instantaneous self-consumption

The most immediate option is instantaneous self-consumption: consuming energy produced straight away, serving the demand of your household, business premises or manufacturing facility. This option certainly represents a significant contribution to energy efficiency. With an adequately-sized system, the energy produced may be able to meet all or part of the building’s energy requirements, at least during sunny months and daylight hours.

This is therefore a good approach to energy consumption for properties that are active during the day and consume energy when it is being produced most. In such cases, instantaneous self-consumption allows you to save on bills and cut your carbon footprint.

 

Self-consumption with storage

Alongside instantaneous consumption of self-generated energy, there is also deferred consumption, i.e. self-consumption supported by the presence of a storage system. This second option broadens the scope of the first: a storage unit connected to the photovoltaic system allows self-consumption of green energy that you have produced even when the system itself is normally not generating energy, e.g. in the evenings.

This type of energy management is ideal for those who are out of the house for the whole day and who are not yet fully equipped with smart appliances that can be launched remotely or programmed. It is also well suited for those living in areas that are poorly served by the national grid, such as mountainous regions and small islands.

 

Feeding energy into the grid

Another possibility is to feed excess energy into the National grid and receive payment for it. Every country has its own policy in this regard.

 

The Italian policy for energy fed into the national grid

In Italy, the national energy supplier, GSE, offers the “scambio sul posto” net-metering system, the Italian version of the British Smart Export Guarantee and Australian Feed-in Tariff systems. The reimbursement is calculated based on several factors such as a comparison between consumed and exported kWh, the period of the grid feed, the energy value and the geographical location of the system. This is a Government initiative so you can’t shop around for a better offer, as GSE is the only player. One key advantage is that the tariff is fixed and guaranteed, and you can decide to receive it directly via your energy bill.

 

The UK Government incentive for renewable energy fed into the grid

In the UK, the energy incentive situation has changed over the last few months. From January 2020, the Smart Export Guarantee (SEG) is the new incentive that replaces the old FIT export tariff. The difference lies in who pays the refund: until 2019 it was the Government that paid for energy fed into the grid by small-scale generators. From January, it has become an obligation for every energy retailer with at least 150,000 customers: they have to offer their own tariff that must be greater than £0, but the exact figure is their choice. The SEG payments must be calculated using Export Meter Readings, which allow the public to precisely measure the amount of energy they feed into the grid with a smart meter and receive payment for exactly that amount.

 

The Australian solution to unused electricity

The Australian Government apply a Feed-in Tariff (FiT) to the energy fed into the grid by residential system owners. As in the UK, retailers set the offer amount. However, in this case there are no national rules regarding minimum payment. Almost every state has set a national minimum, except for New South Wales and south-east Queensland. It is necessary to compare energy suppliers’ offers and try to get the best deal possible to ensure that you reduce the payback time of your system.

 

The solution: collective self-consumption and energy communities

It is clear from the picture outlined so far that self-consumption with storage is the best way to cut bills and make use of clean energy. Unfortunately, this system does not guarantee self-sufficiency as each user is isolated and the level of investment required is simply too high.

The solution to this problem arrived officially in Europe in 2018: sharing energy with other users for instantaneous self-consumption. In other words, the future lies in the creation of networks of users that trade green energy at agreed, highly competitive prices: so-called energy communities. With increasing numbers of users registered on platforms that manage solar energy trading, these smart communities will become the norm for the energy market, and most probably not only in the residential sector.

Deciding how to manage the energy generated by your photovoltaic system certainly requires a keen awareness of your consumption habits and your energy profile. You should consider your needs, get to know your habits and then act accordingly.

REGALGRID OPINION

The progressive migration from net metering to collective self-consumption is the natural evolution of an electricity market that is finally seeing an increasing alignment of renewable energy inputs and withdrawal points on low-voltage grids. This is the long awaited revolution of the energy market: the passage from a large-scale, centralised model to a small-scale, distributed one.

European Directive 2018/2001 and national laws transposing its provisions remove obsolete and out-dated restrictions, rewarding collective self-consumption and incentivising positive actions and choices that promote environmental sustainability and a healthy circular economy. This is the direction that Regalgrid has been moving in for a number of years, investing enormous efforts in ensuring that the technology for optimisation of collective self-consumption is ready, available and already field tested at the moment of entry into force of national laws supporting the creation of energy communities.

Regalgrid is capable of interfacing and controlling any photovoltaic inverter with or without associated storage units, profiling consumption in real time and maximising collective self-consumption of users connected to the network that have equipped themselves with a Regalgrid SNOCU unit and the programme most suited to their needs. Everybody benefits, whether consumers or prosumers, grid operators or energy traders.