The New Framework for Net Billing in Greece
The New Framework for Net Billing in Greece
September 2024
Gus J. Papamichalopoulos, Senior Partner, Antonis Koumpias, Senior Associate, and Melina Kolovetsiou, Associate
Kyriakides Georgopoulos Law Firm
Introduction
The installed capacity of Renewable Energy Sources (hereinafter, “RES”), especially from rooftop solar photovoltaic projects (hereinafter, “PVs”), has seen a rapid increase in recent years, driven by a significant drop in the cost of solar power technology. In addition, electricity price volatility has driven prices on the Day-Ahead Market to peak at up to €900/MWh, also impacting retail prices. This volatility, driven by factors such as high demand and inadequate network infrastructure, pressures energy-intensive industries to lower operating costs in order to maintain their competitiveness.
The Net Billing Framework
Further to the above, the Greek government introduced, by virtue of Ministerial Decision no. ΥΠΕΝ/ΔΑΠΕΕΚ/93976/2772¹ (hereinafter the “MD”), the regulatory framework for the “net billing” model of self-consumption. Net billing establishes a market-based compensation mechanism, whereby the surplus electricity generated by the self-consumption RES project and which is injected to the grid is compensated at market rates.²
Key Features of the New Framework
I. Eligibility Criteria
Any natural person or legal entity, whether public or private, can participate in a net billing scheme, including Energy Communities under Law 4513/2018, Renewable Energy Communities, and Citizens’ Energy Communities³.
Under the net billing framework, the RES project can be owned either by the self-consumer (e.g. an industry) or a third party which may also undertake the installation, operation and maintenance thereof, provided that said third party has been authorized by the self-consumer to exercise such control over the project.
II. Net Billing and Virtual Net Billing
In net billing, the RES project must be installed either on the same site with the consumption facility, an adjacent site, or non-adjacent site which is connected with the RES project through a direct interconnection line.
As regards virtual net billing, at least one of the consumption facilities must not be interconnected with the RES project’s generating units.
A significant innovation of virtual net billing, distinguishing same with net metering, is that the RES project may be installed in any region in Greece, regardless of the location of the consumption facility.
Both in net billing and virtual net billing, when the RES station is installed by a third party and not by the self-consumer, the RES project may be linked to one or more consumption sites that do not belong to the self-consumer, provided that these sites are owned by the same third party that manages the RES project. In this case, the third party shall not be classified as self-consumer under the MD, hence the income generated by the surplus electricity injected to the grid will not benefit such third-party, but only the self-consumer (i.e. the industry).
III. Ownership of the Project’s Installation Site
Self-consumers must either be the owners of the installation site of the RES project or have secured usage rights (e.g. through lease, free concession, etc.), as well as the written consent of the property owner regarding the installation of the project.
IV. Capacity Limits
The installed capacity of each RES project can be up to 100% of the agreed capacity of the consumption supply/ies.
V. Compensation of injected energy
In both net billing and virtual net billing, the surplus energy injected to the grid is compensated based on the Day-Ahead Market Clearing Price. This process involves the competent grid operator, the electricity supplier and the RES aggregator.
Initially, the competent operator notifies the supplier, self-producer, and RES aggregator of:
- The Absorbed Energy⁴ per Clearing Period.
- The Injected⁵ and Generated Energy⁶ per Clearing Period⁷.
In net billing, the RES aggregator calculates the monetary value of the surplus energy⁸ injected to the grid per Clearing Period based on the Day-Ahead Market Clearing Price. Then, the RES aggregator shall pay to the self-consumer the monetary value of the total Surplus energy on a monthly basis based on the current market rate, after deducting its service charges.
In virtual net billing, the RES aggregator calculates, based on the Day-Ahead Market Clearing Price, the monetary value per Clearing Period of the:
- Surplus energy
- Injected energy
- Netted energy⁹
The RES aggregator pays on a monthly basis:
- To the supplier, the monetary value of the total netted energy,
- To the self-consumer, the monetary value of the surplus energy, after deducting its service charges.
In both net billing and virtual net billing, the supplier issues electricity consumption settlement bills to the self-consumer for the netted supply.
In terms of available revenue structures, the self-consumer is also entitled to enter into bilateral Power Purchase Agreements (PPAs) for the surplus energy with an off-taker or secure operating aid in which case it shall receive a feed-in (sliding) premium on top of the price secured through market transactions.
VI. Storage
The MD allows for the integration of a storage system into the renewable energy (RES) project of a self-consumer. In case a separate converter is installed for the storage system, the converter’s nominal capacity (in kVA) must not exceed the RES project’s nominal capacity (in kW).
VII. Net Billing Agreement
A Net Billing Agreement is concluded between the self-consumer and the supplier for a duration of 20 years from the activation of the RES project connection.
A Virtual Net Billing Agreement is similarly concluded between the self-consumer and the supplier for a duration of 20 years from the energization of the RES project.
If the Net Billing Agreement is terminated, a final settlement is carried out, and a new Net Billing Agreement is concluded for the remaining period until the completion of the 20-year term from the energization of the RES project.
Conclusion
Net billing schemes encourage self-consumers to interact with the grid, incentivizing decentralized energy generation and promoting grid optimization. Unlike other self-consumption models, the key distinction of net billing, particularly when compared to net metering, is that it offers incentives that are more closely aligned with market forces. Surplus electricity fed into the grid is compensated at market rates, reflecting the true value of renewable electricity at the time it is injected into the grid.
Self-consumers can adjust their energy consumption pattern or integrate battery storage systems to maximize their earnings from distributed renewable generation, by responding to time-based compensation tariffs. These incentives promote grid flexibility, as they encourage self-consumers to supply electricity to the grid when there is a high demand, so that they benefit from increased prices, and draw electricity from the grid when electricity supply is high and, hence, prices are low.
Finally, while this isn’t a direct financial benefit, self-consumers gain from promoting environmental sustainability by lowering their carbon footprint. This aligns with corporate social responsibility objectives, potentially improving their market image and appealing to various stakeholders.
Footnotes:
¹ Government Gazette 5074/B’/05.09.2024.
² When the project is not owned by the self-consumer, the generated electricity may be sold at a fixed price agreed between the project owner and the self-consumer.
³ In case of virtual net billing by Energy Communities, the right to participate is exercised by natural or legal persons who are members of the Energy Community, as well as by vulnerable consumers or citizens living below the poverty line, regardless of whether they are members of the Energy Community, provided that these consumers meet the criteria set out in the decision of the Ministerial Decision no. YPEN/GDE/89335/5599 (GG B’ 4447/B’/2021).
⁴ The term “Absorbed Energy” refers to the amount of electrical energy supplied from the Grid or the System that enters the consumption supply and is used within it.
⁵ The term “Injected Energy” refers to the amount of the generated electrical energy that enters the Grid or the System and is measured at the point where the RES project is connected.
⁶ The term “Generated Energy” refers to the amount of electrical energy produced by the RES project and measured by a distinct meter at the RES project.
⁷ Specifically, in virtual net billing and in case multiple consumption supplies are involved, the injected Energy is allocated to each consumption supply according to a predefined rule (allocation percentages) before net billing is applied.
⁸ “Surplus Energy” equals to the injected Energy during the application of net billing. The term also refers to the amount of energy that emerges from subtracting the absorbed Energy of the consumption supply from the injected energy of the RES project. This applies in the context of virtual net billing when the result of the subtraction is positive.
⁹ For virtual net billing, netted energy is defined as the lesser of the absorbed energy and the injected energy for each Price Disparities Clearing Period (15 minutes). When injected energy exceeds the absorbed energy, the netted energy equals the absorbed energy, resulting in surplus energy. Conversely, if absorbed energy surpasses injected energy, netted energy equals the injected energy, leading to a chargeable energy balance.
September 2024
Gus J. Papamichalopoulos, Senior Partner, Antonis Koumpias, Senior Associate, and Melina Kolovetsiou, Associate
Kyriakides Georgopoulos Law Firm
Introduction
The installed capacity of Renewable Energy Sources (hereinafter, “RES”), especially from rooftop solar photovoltaic projects (hereinafter, “PVs”), has seen a rapid increase in recent years, driven by a significant drop in the cost of solar power technology. In addition, electricity price volatility has driven prices on the Day-Ahead Market to peak at up to €900/MWh, also impacting retail prices. This volatility, driven by factors such as high demand and inadequate network infrastructure, pressures energy-intensive industries to lower operating costs in order to maintain their competitiveness.
The Net Billing Framework
Further to the above, the Greek government introduced, by virtue of Ministerial Decision no. ΥΠΕΝ/ΔΑΠΕΕΚ/93976/2772¹ (hereinafter the “MD”), the regulatory framework for the “net billing” model of self-consumption. Net billing establishes a market-based compensation mechanism, whereby the surplus electricity generated by the self-consumption RES project and which is injected to the grid is compensated at market rates.²
Key Features of the New Framework
I. Eligibility Criteria
Any natural person or legal entity, whether public or private, can participate in a net billing scheme, including Energy Communities under Law 4513/2018, Renewable Energy Communities, and Citizens’ Energy Communities³.
Under the net billing framework, the RES project can be owned either by the self-consumer (e.g. an industry) or a third party which may also undertake the installation, operation and maintenance thereof, provided that said third party has been authorized by the self-consumer to exercise such control over the project.
II. Net Billing and Virtual Net Billing
In net billing, the RES project must be installed either on the same site with the consumption facility, an adjacent site, or non-adjacent site which is connected with the RES project through a direct interconnection line.
As regards virtual net billing, at least one of the consumption facilities must not be interconnected with the RES project’s generating units.
A significant innovation of virtual net billing, distinguishing same with net metering, is that the RES project may be installed in any region in Greece, regardless of the location of the consumption facility.
Both in net billing and virtual net billing, when the RES station is installed by a third party and not by the self-consumer, the RES project may be linked to one or more consumption sites that do not belong to the self-consumer, provided that these sites are owned by the same third party that manages the RES project. In this case, the third party shall not be classified as self-consumer under the MD, hence the income generated by the surplus electricity injected to the grid will not benefit such third-party, but only the self-consumer (i.e. the industry).
III. Ownership of the Project’s Installation Site
Self-consumers must either be the owners of the installation site of the RES project or have secured usage rights (e.g. through lease, free concession, etc.), as well as the written consent of the property owner regarding the installation of the project.
IV. Capacity Limits
The installed capacity of each RES project can be up to 100% of the agreed capacity of the consumption supply/ies.
V. Compensation of injected energy
In both net billing and virtual net billing, the surplus energy injected to the grid is compensated based on the Day-Ahead Market Clearing Price. This process involves the competent grid operator, the electricity supplier and the RES aggregator.
Initially, the competent operator notifies the supplier, self-producer, and RES aggregator of:
- The Absorbed Energy⁴ per Clearing Period.
- The Injected⁵ and Generated Energy⁶ per Clearing Period⁷.
In net billing, the RES aggregator calculates the monetary value of the surplus energy⁸ injected to the grid per Clearing Period based on the Day-Ahead Market Clearing Price. Then, the RES aggregator shall pay to the self-consumer the monetary value of the total Surplus energy on a monthly basis based on the current market rate, after deducting its service charges.
In virtual net billing, the RES aggregator calculates, based on the Day-Ahead Market Clearing Price, the monetary value per Clearing Period of the:
- Surplus energy
- Injected energy
- Netted energy⁹
The RES aggregator pays on a monthly basis:
- To the supplier, the monetary value of the total netted energy,
- To the self-consumer, the monetary value of the surplus energy, after deducting its service charges.
In both net billing and virtual net billing, the supplier issues electricity consumption settlement bills to the self-consumer for the netted supply.
In terms of available revenue structures, the self-consumer is also entitled to enter into bilateral Power Purchase Agreements (PPAs) for the surplus energy with an off-taker or secure operating aid in which case it shall receive a feed-in (sliding) premium on top of the price secured through market transactions.
VI. Storage
The MD allows for the integration of a storage system into the renewable energy (RES) project of a self-consumer. In case a separate converter is installed for the storage system, the converter’s nominal capacity (in kVA) must not exceed the RES project’s nominal capacity (in kW).
VII. Net Billing Agreement
A Net Billing Agreement is concluded between the self-consumer and the supplier for a duration of 20 years from the activation of the RES project connection.
A Virtual Net Billing Agreement is similarly concluded between the self-consumer and the supplier for a duration of 20 years from the energization of the RES project.
If the Net Billing Agreement is terminated, a final settlement is carried out, and a new Net Billing Agreement is concluded for the remaining period until the completion of the 20-year term from the energization of the RES project.
Conclusion
Net billing schemes encourage self-consumers to interact with the grid, incentivizing decentralized energy generation and promoting grid optimization. Unlike other self-consumption models, the key distinction of net billing, particularly when compared to net metering, is that it offers incentives that are more closely aligned with market forces. Surplus electricity fed into the grid is compensated at market rates, reflecting the true value of renewable electricity at the time it is injected into the grid.
Self-consumers can adjust their energy consumption pattern or integrate battery storage systems to maximize their earnings from distributed renewable generation, by responding to time-based compensation tariffs. These incentives promote grid flexibility, as they encourage self-consumers to supply electricity to the grid when there is a high demand, so that they benefit from increased prices, and draw electricity from the grid when electricity supply is high and, hence, prices are low.
Finally, while this isn’t a direct financial benefit, self-consumers gain from promoting environmental sustainability by lowering their carbon footprint. This aligns with corporate social responsibility objectives, potentially improving their market image and appealing to various stakeholders.
Footnotes:
¹ Government Gazette 5074/B’/05.09.2024.
² When the project is not owned by the self-consumer, the generated electricity may be sold at a fixed price agreed between the project owner and the self-consumer.
³ In case of virtual net billing by Energy Communities, the right to participate is exercised by natural or legal persons who are members of the Energy Community, as well as by vulnerable consumers or citizens living below the poverty line, regardless of whether they are members of the Energy Community, provided that these consumers meet the criteria set out in the decision of the Ministerial Decision no. YPEN/GDE/89335/5599 (GG B’ 4447/B’/2021).
⁴ The term “Absorbed Energy” refers to the amount of electrical energy supplied from the Grid or the System that enters the consumption supply and is used within it.
⁵ The term “Injected Energy” refers to the amount of the generated electrical energy that enters the Grid or the System and is measured at the point where the RES project is connected.
⁶ The term “Generated Energy” refers to the amount of electrical energy produced by the RES project and measured by a distinct meter at the RES project.
⁷ Specifically, in virtual net billing and in case multiple consumption supplies are involved, the injected Energy is allocated to each consumption supply according to a predefined rule (allocation percentages) before net billing is applied.
⁸ “Surplus Energy” equals to the injected Energy during the application of net billing. The term also refers to the amount of energy that emerges from subtracting the absorbed Energy of the consumption supply from the injected energy of the RES project. This applies in the context of virtual net billing when the result of the subtraction is positive.
⁹ For virtual net billing, netted energy is defined as the lesser of the absorbed energy and the injected energy for each Price Disparities Clearing Period (15 minutes). When injected energy exceeds the absorbed energy, the netted energy equals the absorbed energy, resulting in surplus energy. Conversely, if absorbed energy surpasses injected energy, netted energy equals the injected energy, leading to a chargeable energy balance.
