COMMISSION STAFF WORKING DOCUMENT Best practices on Renewable Energy Self-consumption Accompanying the document Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions Delivering a New Deal for Energy Consumers
Date: 2015-07-15
Institutions: Directorate-General for Energy, European Commission
Subjects: consumer protection, energy consumption, energy efficiency, energy law, energy saving, energy supply, measuring equipment, price of energy

EN 

   EN 

   EUROPEAN COMMISSION  Brussels, 15.7.2015  SWD(2015) 141 final   COMMISSION STAFF WORKING DOCUMENT Best practices on Renewable Energy Self-consumption Accompanying the document Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions Delivering a New Deal for Energy Consumers {COM(2015) 339 final}  
 
 
BEST PRACTICES ON RENEWABLE ENERGY SELF-CONSUMPTION 

1. 

INTRODUCTION 

The  Energy  Union  strategy1  places  consumers  at  the  core  of  the  EU  energy  policy, 
encouraging  them  to  take  full  ownership  of  the  energy  transition,  to  benefit  from  new 
technologies  to  reduce  their  bills  and  participate  actively  in  the  market,  while  ensuring 
protection  for  the  vulnerable  ones.  At  the  same  time,  the  achievement  of  the  Energy  Union 
requires  a  fundamental  transformation  of  Europe's  energy  system.  Renewable  energy  is 
essential  for  this  transformation  to  take  place  as  it  contributes  to  all  of  the  Energy  Union 
objectives: the delivery of security of supply, a transition to a sustainable energy system with 
reduced  greenhouse  gas  emissions,  industrial  development  leading  to  growth  and  jobs  and 
lower energy costs for the EU economy.  

Thanks to technology development and  innovation driven by EU and national policies, over 
the last few years we have seen the realization of effective renewable energy technologies, for 
both large and small-scale use, alongside considerable cost reductions2. As a result, businesses 
and  households  can  increasingly  produce  and  consume,  some  or  all,  their  own  electricity, 
either  instantaneously  or  in  a  deferred  manner  through  decentralized  storage,  behind  the 
connection  point  with  the  grid  (i.e.  the  meter).  Through  the  process  of  'self-consumption', 
passive  consumers  are  therefore  becoming  active  'prosumers'  (i.e.  producers  and  consumers 
of renewable energy).  

The emerging self-consumption model opens new cost-containment opportunities for energy 
consumers,  particularly  for  Small  and  Medium-Sized  Enterprises  (SMEs),  which  are  faced 
with high electricity prices, allowing them to increasingly control their energy bills. Amongst 
residential consumers, new behavioural patterns are emerging ranging from in particular roof-
top solar photovoltaic (PV) systems owned by individual households or third parties, to self-
consumption  projects  developed  by  RES  COOP  (i.e.  citizen-led  renewable  energy 
cooperatives).  This  document  gives  insight  into  lessons  learned  from  national  schemes  on 
self-consumption  of  renewable  energy  (see  Annex)  and  illustrates  best  practice  in  this 
relatively  new  policy  area.  It  focuses  on  micro  and  small-scale  renewable  energy  systems, 
typically with an installed electricity capacity below 500 kW3. 

2.  SAVINGS FROM SELF-CONSUMPTION 

The  self-consumption  model  is  based  on  the  fact  that  in  a  growing  number  of  countries 
renewable electricity – chiefly solar PV – has achieved grid parity, that is the situation where 
an expected unit cost of self-generated renewable electricity matches or is lower the per-kWh 
costs  for  electricity  obtained  from  the  grid,  i.e.  the  variable  part  of  a  consumers’  electricity 
bill.  Under grid parity, consumers can save money by generating their electricity rather than 
buying it from the grid.  

1   Framework  Strategy  for  a  Resilient  Energy  Union  with  a  Forward-Looking  Climate  Change  Policy, 

COM/2015/080 final. 

2   For example, the costs of solar PV modules dropped by 80% between 2008 and 2012. 
3   This document is without prejudice to the application of State aid rules.  

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Where  the  consumption  patterns  align  well  with  onsite  renewable  generation,  high  rates  of 
self-consumption4    and  self-sufficiency5can  be  achieved  jointly.  In  this  situation,  renewable 
energy self-consumption can result in a number of benefits for both consumers and the whole 
energy  system.  It  can  facilitate  consumer  empowerment  by  allowing  active  participation  in 
and profit from energy markets, as well as encouraging smarter consumption patterns6. Self-
consumption can also lower energy system costs e.g. solar PV generation in sunny countries 
can help reducing grid peak demand for electricity driven by air conditioning. By generating 
and  consuming  electricity  locally,  system  losses  can  be  reduced7.  Finally,  self-consumption 
can make an important contribution to finance the energy transition8.  

Box 1: Self-consumption benefits for commercial consumers 

An Italian food processing company located in the province of Rome , with an annual consumption of 
about 850.000 kWh and a demand profile shifted strongly in the daytime, has installed a roof-top PV 
system  with  a  capacity  of  320  KWp,  producing  about  420.000  kWh  per  year.  Thanks  to  the  self-
consumption  mechanism,  this  SME  is  able  to  use  89%  of  the  solar  PV  electricity  produced  onsite 
(self-consumption  rate),  resulting  in  an  annual  electricity  bill  saving  of  about  35%  and  in  a  annual 
reduction  of  CO2  emissions  by  over  200  tons.  A  German  plastics-manufacturing  facility  located  in 
Hessen,  with  an  annual  electricity  consumption  of  ~320,000  kWh  and  a  roof-top  PV  system  with  a 
capacity of 63 kWp, has been able to directly self-consume  ~87% of the electricity generated onsite 
(i.e.  60,000  kWh)  -  see  Figure  1.  As  a  result,  the  company  reduced  its  electricity  bill  by  over  15% 
(~50,000 kWh/year).  

Figure 1: Sample daily self-consumption profile in a German plastics-manufacturing facility 

Source: Kraftwerk 2015,  Q-cell 2015 

Commercial and residential consumers 

Commercial consumers (e.g. department stores, office buildings, SMEs) can attain high rates 
of  renewable  electricity  self-consumption  (e.g.  50%-80%).  This  is  primarily  due  to  the 
relatively  good  match  between  the  energy  consumption  profile  and  the  onsite  renewable 

4  The self-consumption rate is the amount of electricity actually consumed onsite as a percentage of the total 

electricity produced. 

5   The degree of energy self-sufficiency measures how much of the total electricity needed by the consumer 

can be obtained from their own renewable energy system. 

6  Research  has  generally  found  that  both  energy  reductions  and  load  shifting  activities  have  taken  place  in 

households following an installation of micro generation  of solar PV. 

7   The  PV  parity  study  found  that  the  losses  reduction  is  between  0.25%  and  0.75%  depending  on  the 

characteristics of the distribution networks and the share of solar PV generation.  

8   Bloomberg New Energy Finance estimates that in Europe small-scale solar systems will increase their share 
of the electricity capacity mix to 22% by 2040, from 6% in 2014 (BNEF 2015). In Italy, analysts project for 
the coming years an additional installed capacity of solar PV self-consumption systems of 1 GW/year, worth 
€ 1.5 billion /year (SunCity 2015). 

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generation  curve  (see  Figure  1).  As  a  result,  commercial  self-consumption  systems  are 
increasingly  viable  in  a  growing  number  of  Member  States  (e.g.  Germany  and  Italy),  given 
that PV solar rooftop system can produce electricity at a price of €95-100 MWh – which is 
less than retail electricity tariffs for commercial consumers.  

With  demand-side  response  and  decentralized  energy  storage  (see  section  3),  the  self-
consumption rate of an average Central European household running a PV system can go up 
to 65-75%. In absence of such flexibility measures, however, residential consumers are more 
likely to obtain self-consumption rates in the range of 30% (see Box 2). The excess electricity 
injected into the grid may create new challenges for the operation of the electricity network, 
that can be addressed through the application of smart grid technology. 

Box 2: Self-consumption benefits for residential consumers 

Considering  a  single  family  household  with  an  annual  consumption  of  4,000  kWh,  typically  a  30% 
annual self-consumption rate can be obtained with a PV system with a capacity of 3.5 kWp, 3 kWp 
and 2.75 kWp, respectively in the North, Centre and South of Italy. Assuming a total installation cost 
of 2,200 €/KW + VAT of 10%, under the existing net metering scheme an household can save (for all 
cases) about €720 per year on its electricity bill, with a pay-back period of about 7-9 years, depending 
on the region. In Germany, by installing a 4 kWp PV system, a typical four-person family household 
with  an  average  annual  electricity  consumption  of  3,600  kWh  could  save  almost  680  €  each  year 
(~316 € from self-consuming 30% of the electricity produced onsite plus ~360 € in additional income 
from the selling of surplus electricity into the grid). 

Figure 2: Effects of electrical storage on direct self-consumption. Source: Fronius, SMA 2015. 

There is an important potential for renewable energy production in apartment buildings that 
can be realised if.self-consumption is allowed also at a multi-dwelling building level, and if 
cost-efficient  procedures  are  in  place  for  residual  electricity  needs.  Furthermore,  access  to 
capital  and/or  financing  is  a  key  determinant  of  whether  or  not  residential  consumers  can 
enjoy the benefits of self-consumption. Therefore, business models and financial instruments 
need  to  be  developed  to  make  self-consumption  widely  accessible  to  consumers  from  all 
income levels, including special programmes for vulnerable consumers. 

Furthermore,  it  should  be  highlighted  that  complex  and  burdensome  administrative  and 
authorisation  procedures  still  represent  an  important  barrier  for  the  competiveness  of  small-
scale  self-consumption  projects.  On-line  information  platforms  and  applications  are  so  far 
used in only a few Member States (e.g. Portugal, Hungary, Italy and Sweden). While several 

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Member States have introduced facilitated notification procedures for small renewable energy 
installations such as roof-top PV installations9, additional national action is required. 

3. 

SELF-CONSUMPTION – A DRIVER FOR FLEXIBILITY 

As  explained  above,  consumers  have  an  interest  in  maximising  the  rate  of  energy  self-
consumption in order to increase their energy savings and reduce their exposure to electricity 
prices  .  In  the  context  of  a  smart  grid  environment,  self-consumption  has  therefore  the 
potential  to  drive  consumers'  uptake  of  flexibility  measures,  while  at  the  same  time  help 
facilitating the system integration of variable renewable energy10. Flexibility can be realized 
through two main set of measures: a) demand-side response and b) energy storage, including 
thermal and electricity storage (see Figure 2). 

Demand-side response  

Demand-side response can be applied to distribute a part of a consumer's energy demand to 
hours of onsite renewable energy generation so as to increase the self-consumption rate, while 
also avoiding demand peaks. A common application of DSR in commercial buildings is the 
installation of smart thermostats that regulate electricity demand to avoid high peaks. In some 
cases, it might not even be necessary to install any device, since the re-arranging of energy-
intensive  processes  from  the  evening/night  to  day  hours  might  be  sufficient  to  distribute 
energy consumption to better match onsite renewable generation. 

Demand-side  response  in  households  can  involve  the  use  of  smart  appliances  (e.g.  washing 
machine,  tumble  dryers,  dishwasher,  refrigerator  etc.).  It  is  estimated  that  the  volume  of 
controllable smart appliances in the EU by 2025 will be at least 60 GW  – shifting this load 
from peak times to other periods can reduce peak-generation needs in the EU by about 10%11. 
Research has found that an effective use of demand-side response may yield annual savings in 
the  order  of  €60-80  billion  by  203012.  However,  multiple  factors  condition  the  ability  of 
households to participate actively in demand-side response markets13.  

Functioning  electricity  wholesale  and  retail  markets  will  incentivize  demand-side  response  
via  the  price  signals,  as  prices  will  be  low  in  periods  of  abundant  generation  and  high  in 
periods with high demand and limited supply. Automated load shifting through demand-side 
response  measures  could  be  enabled  through  home  energy  management  infrastructure  (e.g. 
gateways/smart  energy  boxes,  that  can  coordinate  supply  and  -ready  home  equipment  for 
demand-side  response  using  a  smart  meter14).  Consumers  self-generating  renewable  energy 
should  therefore  not  only  be  enabled  and  encouraged  to  adapt  their  consumption  to  the 
availability  of  their  electricity  production  but  also  to  offer  flexibility  to  the  wider  energy 
system, including through aggregators.  

9   Renewable energy progress report, SWD(2015) 117 final. 
10  The PV Parity project has found that self-consumption extended by storage and demand response can reduce 
the additional system costs of the EU integration of solar PV at high penetration levels by around 20%. 

11  Seebach, 2009, Costs and benefits of smart appliances in Europe.  
12   DNV-GL 2014, Integration of renewable energy in Europe. 
13    Working Group on consumers as energy market actors (2015), Interim report. 
14   Commission Recommendation on preparations for the roll-out of smart metering systems, 2012/148/EU. 

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Energy storage 

Energy  storage  installed  by  consumers  helps  storing  excess  onsite  renewable  generation  in 
period  of  low  demand  (e.g.  when  residential  consumers  are  not  at  home)  for  use  in  periods 
when energy demand is high and renewable production is low (e.g. peak-time in the morning 
and in the evening). Thus, storage can enable consumers to capture and utilize the electricity 
generated  by  their  renewable  energy  systems  more  effectively  by  decoupling  time  of 
generation  and  consumption,  while  also  supporting  the  grid,  e.g.  by  reducing  local  voltage 
fluctuations as well as congestion problems.  

Energy  storage  includes  power-to-heat  systems  such  as  hot  water  boilers  or  more  efficient 
heat  pumps  that  can  cost-effectively  convert  excess  electricity  to  heat  (normally  by  heating 
water)  to  be  stored  for  later  use.  The  potential  for  power-to-heat  solutions  is  potentially 
significant.  If  the  EU  Member  States  replaced  the  current  installed  base  of  night  storage 
heaters, this could provide 55 GW of controllable demand by 2050 (18 GW for hot water and 
37 GW for retrofitting all traditional Night Storage Heaters)15. This can be compared to the 
current  storage  capacity  of  51  GW  in  the  EU,  which  is  mainly  provided  by  pumped  hydro 
systems. 

Stationary batteries represent another increasingly common storage option. For instance, the 
integration  of  a  family-size  PV  system  with  a  battery  with  a  peak  capacity  of  1.5  kWp  and 
two  hours  of  storage  capacity  (3  kWh)  can  increase  the  self-consumption  rate  from  30%  to 
45% and even 75%, depending on the demand profile. As a result of technology development 
and  economies  of  scale,  battery  costs  have  declined  significantly  in  recent  years  (down  by 
50%  since  2011),  and  an  additional  reduction  by  50%  or  more  is  projected  by  202016. 
Decentralized electricity storage can be also provided by the increasing penetration of electric 
vehicles (EVs) and plug-in hybrids17.  

Most benefits for the grid arise when distributed storage is managed to reduce the peak power 
of  the  decentralized  renewable  energy  installations,  such  as  in  Germany  where  battery 
incentives  are  linked  to  grid-optimal  solar  PV  feed-in18.  Furthermore,  distributed  storage 
systems could be adopted on a neighbourhood or community basis, thereby reducing the cost-
per-kWh  and  allowing  individual  regions  to  integrate  higher  volumes  of  distributed, 
consumer-driven renewable energy. 

Besides  the  above-mentioned  flexibility  measures,  smarter  renewable  generation  can  help 
facilitating  the  market  integration  of  distributed  renewable  energy  generation.  As  shown  by 
the  MetaPV  project19,  intelligent  control  of  PV  inverters  by  distribution  system  operators 
(DSOs) can increase the capacity of the network for hosting distributed generation by 50%. In 
Germany, new-built small-scale PV systems (with a capacity below 30 kWp) should either be 

15  KEMA,  2013,  Potential  for  smart  electric  thermal  storage  contributing  to  a  low  carbon  energy  system. 

Estimate based on EU-27 data. 
IRENA, 2015, Battery storage for renewables; market status and technology outlook. 

16 
17  A 10% EVs market share with an amount of 50 % of electric vehicles simultaneously connected to the grid 
via typical 3.6 kW-household sockets could offer a peak power/load of 7.6 GW and about 22 GWh per day 
for load shifting in Germany (based on daily trips and a mid-sized battery electric vehicle with a 25 kWh 
battery). JRC, 2013, Projections for electric vehicle load profiles in Europe based on travel survey data.  
18  The German energy storage incentive programme provides PV owners of systems up to 30 kW with a 30% 

rebate and low interest loans from the German development bank (KfW). 

19  MetaPV Study, 2014, Cost-effective integration of photovoltaics in existing distribution grids. 

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able to be curtailed remotely, or must permanently limit power injection into the grid to 70% 
of rated AC capacity, the rest being either self-consumed or curtailed. This kind of capacity-
based regulation is also applied in many U.S. net metering schemes. 

Best practice includes: 

  Establishment  of  simplified  authorisation  procedures, 
notification, for small-scale renewable energy projects. 

including 

through  simple 

  Allowing renewable energy self-consumption and decentralized storage. 

  Promotion  of  demand  side  flexibility,  including  demand-side  response  and  distributed 

energy storage, through price signals (e.g. dynamic pricing) and other incentives. 

  Deployment  of  adequate  smart  meters  and  allow  for  aggregators  to  facilitate  consumer 

participation in the wholesale market. 

4.  CONTRIBUTING TO THE GRID 

Renewable  electricity  that  is  self-consumed  is  often  exempted  from  grid  costs  and  other 
system  charges.  On  the  one  hand,  this  may  be  understandable  as  such  electricity  remains 
within the customer’s premise without touching the public network. On the other, unless the 
generated  electricity  is  self-consumed  during  peak  hours,  Distributed  System  Operators' 
(DSO)  costs  may  not  decrease.  In  fact,  the  latter  are  driven  by  the  peak  capacity  (i.e.  the 
maximum amount of electricity installed that distribution grids need to deal with) and not by 
the  variations  in  the  distributed  volumes  of  electricity20.  Consequently,  concerns  have  been 
raised  about  the  risk  that  a  large-scale  deployment  of  self-consumption  could  impact  the 
remuneration  of  DSOs  and  generally  the  electricity  tariffs  of  consumers21,  particularly  in 
countries with high volumetric grid tariffs (see Box 3) 

The  various  grid  tariff  structures  provide  different  incentives  for  energy  consumers.  A 
progressive  volumetric  tariff  encourages  self-consumption,  as  it  increases  the  per  kWh 
electricity price that can be substituted by self-consumed electricity. Furthermore, it provides 
the strongest incentive to save electricity, which is an important EU policy objective. Time-
of-use volumetric tariffs incentivise self-consumption to react to system conditions indicated 
by the tariff, thus leading to a reduction of the daily/seasonal peak consumption. 

Under  capacity-based  tariffs,  network  costs  for  the  consumer  are  only  reduced  if  self-
consumption  reduces  the  peak-load  taken  from  the  grid.  The  transition  to  capacity-based 
tariffs  might  also  require  transitional  measures  to  mitigate  financial  implications  on  low-
consuming  customers.  For  instance,  when  such  tariffs  were  applied  to  Dutch  households  in 
2009, the differences in bills for household customers caused by the move from volumetric to 

20  The main driver for network investments is the peak power at connection point and grid segment levels: the 
network is generally dimensioned in a way that enables the DSO to cope with all demand withdrawn from 
and production injected into the grid at any time throughout the year and at any point while still adhering to 
all (security and technical) parameters.  

21  Rate increases attributed to prosumers should be put in perspective with rate increases attributable to other 
sectors. Many countries, for example, provide subsidized electricity rates to energy-intensive manufacturing 
industries which other ratepayer classes must absorb through higher rates. Such industrial cost shifting can 
significantly outweigh the magnitude of cost shifting attributable to residential prosumers. 

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capacity  tariff  were  compensated  as  much  as  possible  by  changes  in  the  applicable  energy 
taxes22.   

Box 3: Network charges models 

Network tariffs are price components paid by electricity consumers to finance the past and future 
costs  of  building,  and  the  cost  of  operating  the  electricity  grid.  They  are  raised  by  the 
Transmission  System  Operators  (TSO)  and  Distributed  System  Operators  (DSO)  and  are 
regulated in the context of the EU Electricity Directive (2009/72/EC). The latter leaves room for 
Member  States  to  develop  their  own  grid  tariff  methodology,  reflecting  the  particularities  of 
national electricity systems. Apart from the fixed component that is typically charged for services 
such as metering and other administrative costs, tariff structures generally are reduced to one, or a 
combination, of the following basic alternatives: 

  Capacity tariffs depend on the peak load as grid costs are mainly capacity driven. Therefore 
consumers with high peak loads pay the highest network costs. Different models of capacity 
tariff exist: a) flat: a fixed charge based on connection capacity (kVA) or measured capacity 
(kW);  b)  variable:  different  capacity  with  different  tariff  per  level;  and,  c)  time-of-use: 
different  tariffs  in  line  with  the  available  grid  capacity  (peak/off-peak),  requiring  a  smart 
meter.  

  Volumetric  tariffs  are  charged  for  each  kWh  of  electricity  consumed  from  the  grid  and  are 
easier  to  implement  with  conventional  meters.  Volumetric  tariffs  can  be:  a)  proportionate: 
consumers  pay  per  kWh,  independent  of  volume  level;  b)  progressive:  the  tariff  per  kWh 
increases  with  an  increasing  consumption  level;  c)  regressive:  the  tariff  per  kWh  decreases 
with  an  increasing  consumption  level;  and,  d)  time-of-use:  different  tariffs  in  line  with  the 
available  grid  capacity  (peak  /off-peak).  A  day/night  tariff  is  possible  without  smart  meter 
whereas more complex peak and off-peak tariffs are only possible with smart meters.  

Hybrid models combining both capacity and volumetric tariff also exist. For instance in Spain 
and  in  Italy  the  electricity  distribution  grid  tariff  for  household  customers  consists  of  three 
components:  a  flat  component  (€/point  of  delivery),  a  component  billing  the  connection 
capacity  (€/kW),  and  a  progressive  volumetric  component  (€/kWh).  For  an  average  Italian 
household  consumer,  about  80%  of  the  whole  electricity  bill  is  volume  related  and  20% 
capacity  based.  The  combination  of  volume  and  capacity  elements  is  also  currently  applied 
for industrial consumers in other countries like Belgium, France and the Netherlands.  

Most EU Member States currently charge grid costs through volumetric grid tariffs, although 
there  is  increasing  interest  in  charging  part,  or  all,  of  such  costs  through  the  capacity 
component  of  the  tariff.  For  instance,  in  2009  the  Netherlands  introduced  capacity-based 
network  tariffs  for  residential  consumers.  In  July  2015,  the  Belgian  region  of  Flanders  has 
imposed a specific grid fee for self-consumption systems up to 10 kWp (approx. €70 per kW 
of installed solar PV). Furthermore, in Italy self-consumption projects are gradually called to 
contribute to the grid costs, depending on their capacity23. In Portugal, when self-consumption 

22  With the introduction of capacity tariffs, the fixed amount of tax reduction was increased with (nearly) the 
same  amount  of  the  new  capacity  tariff,  while  the  volume-based  tax  was  also  increased  with  (nearly)  the 
same amount of the volumetric tariff of 2008. 

23   While  micro-generation  projects  are  fully  exempted,  systems  with  a  capacity  equal  or  above  20kWp 
(connected  to  low-voltage  grid)  will  pay  approximately  €36/year,  while  projects  of  200  kWp  or  above 
(connected to the medium voltage) will pay about €237/year. Source: Qual'energia 2015. 

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systems  will  reach  the  equivalent  of  3%  of  the  total  installed  power  capacity,  new  projects 
will have to contribute in part to the grid cost according to a given formula. 

Overall,  given  the  large  variety  of  tariff  structure  models  across  the  EU  and  given  the 
differing local conditions, there may not be one-size-fits-all solution. Tariff setting should be 
based on objective and non-discriminatory criteria, which apply consistently to all users who 
are in the same situation. The different models should also correctly reflect the impact of the 
consumer  on  the  electricity  grid24,  while  ensuring  that  regulated  assets  contribute  to  the 
energy transition by supporting the EU policy objectives on energy efficiency and renewable 
energy. 

Best practice includes: 

  Avoidance of discriminatory charges for self-consumption projects. 

  Acknowledging the different national conditions, ensuring that possible future grid tariff 
reforms  promote  both  renewable  energy  and  energy  efficiency  objectives,  are  based  on 
objective  and  non-discriminatory  criteria  and  reflect  the  impact  of  the  consumer  on  the 
electricity grid, while guaranteeing sufficient funding for grid and system costs. 

  Ensuring  predictable  conditions  by  announcing  caps  of  installed  capacities  after  which 

grid cost exemption are revised. 

  If  modifications  to  the  tariff  structure  are  deemed  necessary  and  appropriate,  take  into 
account the need to ensure stability for previous investments in self-consumption projects. 

5.  VALUING SELF-CONSUMPTION 

Grid parity assessments for direct self-consumption assume the optimal situation that 100% of 
the  produced  electricity  is  self-consumed,  which  is  usually  not  the  case  for  residential  or 
commercial consumers. Therefore, consumers producing renewable energy may still need to 
feed the non-consumed electricity into the grid and receive value for it in order for the project 
to be viable (in many MS small renewable generators are eligible for some kind of premium 
tariff - see Annex). The following approaches on how to value prosumers' excess electricity 
can be identified. 

Self-consumption and feed-in tariff/premium approach 

Here prosumer receives support for non-consumed electricity that is fed into the grid. In order 
to  encourage  consumers  to  look  for  ways  to  increase  their  direct  consumption  of  self-
generated  electricity  over  injecting  it  into  the  grid,  only  electricity  self-consumed  above  a 
given rate (e.g. 30%) can receive a premium tariff. This approach can work as a bridge to grid 
parity,  however  past  experience  with  feed-in  tariffs  shows  that  there  is  a  need  for  close 
monitoring of the development of renewable  energy markets  so as  to  to adjust tariffs to  the 

24   Article 16(8) of the Renewable Energy Directive requires Member States to 'ensure that tariffs charged by 
transmission  system  operators  and  distribution  system  operators  for  the  transmission  and  distribution  of 
electricity  from  plants  using  renewable  energy  sources  reflect  realisable  cost  benefits  resulting  from  the 
plant’s connection to the network. Such cost benefits could arise from the direct use of the low-voltage grid'. 

9 

 
 
 
 
 
 
 
 
 
                                                            
declining costs in order to avoid overcompensation and limit the overall financing cost of the 
support. 

This model was applied in 2009-2012 in Germany, with the introduction of a premium tariff 
for self-consumed electricity generated from roof-top PV systems (up to 500 kW). The rapid 
decrease  in  generation  cost  of  PV  has  prompted  the  German  authorities  to  eliminate  the 
premium  tariff  and  value  the  self-consumed  electricity  at  the  retail  price25.  Until  July  2013, 
under  the  'Fifth  energy  account',  Italy  also  had  a  premium  dedicated  to  self-consumption 
similar  to  the  one  in  Germany.  In  the  UK,  smaller-scale  PV  systems  (<30kWp)  eligible  to 
receive a Feed-in-Tariff are given not only a generation tariff for the PV production (that is 
self-consumed) but also a bonus for the excess electricity fed into the grid. 

Net metering approach 

Net  metering  is  a  regulatory  framework  under  which  the  excess  electricity  injected  into  the 
grid  can  be  used  at  a  later  time  to  offset  consumption  during  times  when  their  onsite 
renewable generation is absent or not sufficient. In other words, under this scheme, consumers 
use  the  grid  as  a  backup  system  for  their  excess  power  production.  Generally,  net  metering 
approaches have limited the system size to which it is applicable, with limits ranging from 20 
kW  to  2  MW  or  expressed  in  proportion  to  customer’s  power  capacity  use.  The  applicable 
billing period can extend from one hour over long periods of time (e.g. one billing period) or 
one year, renewable.  

Net  metering  schemes  have  proved  to  be  effective  to  jump-start  distributed  generation 
markets  and  are  progressively  being  introduced in  a  number  of  Member  States.  Outside  the 
EU, net metering forms the basis of support for solar PV across most US states (43 of them) 
and  Australian  states.  From  the  consumer  perspective,  net  energy  metering  is  attractive  and 
easy  to  apply  and  to  understand,  as  it  relies  on  the  use  of  one  single  meter.  From  a  system 
perspective, however, net metering raises concerns when large deployment levels are reached. 
This is because remuneration of the excess production from onsite renewable energy systems 
is  made  at  a  retail  price  that  in  most  cases  exceeds  the  value  of  that  generation  to  the 
electricity system.  

Under  this  model,  consumers  with  self-generation  are  using  the  grid  to  artificially  store 
electricity  produced  at  one  point  of  time  to  consume  it  at  another  point  of  time,  without 
reflecting the value of electricity which may vary substantially between the time periods. An 
alternative approach is provided by the Italian 'net billing' scheme which calculates the value 
of  the  excess  electricity  fed  into  the  grid  (at  wholesale  price).  Such  value  can  be  used  as  a 
credit for subsequent period or is paid to the consumer26. 

25   Feed-in-Tariff for small-scale systems are currently lower than the retail electricity price (~13 €cent /kWh vs 

~29 €cent /kWh). 

26   The  amount  of  the  net  billing  grant  includes  an  energy  component  that  varies  with  the  value  of  energy 
exchanged and a service component, updated regularly, that depends on the cost of services and the energy 
exchanged.  Net  metering  is  only  possible  when  the  owner  of  the  renewable  energy  system  and  the  self-
consumer are the same entity (i.e. it is not possible to have net metering when the plant’s owner is a third 
party). 

10 

 
 
 
 
 
 
 
 
 
                                                            
This challenge explains why a number of countries in the EU and states in the USA27 have put 
different forms of limits to their net metering programmes. For instance, following a surge in 
net-metering deployment in 2012, Denmark reformed its system to allow netting withdrawals 
with  injections  only  on  an  hourly  basis  –  resulting  in  much  less  netting  to  occur.  In  the 
Netherlands, yearly-based net-metering is allowed for ‘small users’. This applies to systems 
up  to  15kWp  with  a  grid  connection  limited  to  80A  in  three  phases,  but  compensation  is 
received  for  only  a  maximum  of  5000  kWh28.  In  Belgium,  all  regions  have  chosen  a  net-
metering  scheme  for  systems  up  to  10kW  (10kVA)  but  no  remuneration  is  foreseen  for  the 
excess electricity generation that is injected into the grid. 

Self-consumption and market value approach 

As the market design is reformed, further self-consumption deployment will occur on a pure 
market  basis:  the  electricity  that  is  not  self-consumed  but  injected  into  the  grid  would  be 
rewarded  at  a  market  price.  By  offering  a  lower  tariff  for  electricity  injections  into  the  grid 
during  certain  parts  of  the  day,  for  instance,  consumers  could  be  incentivized  to  consume 
more  of  their  electricity  onsite.  If  sufficiently  high,  price-based  incentives  could  begin  to 
increase the generation and consumption in a way that is more optimal for the grid, deferring 
or avoiding altogether the need for upgrades and investments. 

From  a  policy  standpoint,  this  approach  may  be  the  most  sustainable.  From  a  consumer 
perspective, it can also be attractive particularly for commercial and industrial customers that 
can reach high self-consumption rates. For instance, in Italy for a commercial customer with a 
large  rooftop  solar  PV  system  (1  MW)  this  approach  appears  today  already  as  an 
economically  attractive  scheme29.  However,  more  research  is  needed  to  assess  the 
implications  of  such  a  model  on  the  financial  viability  of  self-consumption  systems  for 
residential consumers.  

Variable  renewable  energy  systems  cannot  always  recuperate  their  investment  costs  on  the 
energy  market  alone.  Furthermore,  getting  the  true  market  prices  for  numerous  but  small 
installations  may  entail  significant  transaction  costs30.  This  could  be  done  through  market 
aggregators, but  more often it is  done with  rates that  average  market prices  – possibly with 
time-of-use  variations.  Under  the  recent  Portuguese  self-consumption  regulation,  electricity 
injected in the grid will be paid at 90% of an average Iberian spot price to cover integration 
costs. 

27 

In  California,  the  largest  US  solar  market,  a  bill  is  about  to  implement  a  new  net-metering  scheme, 
introducing time of use rates by 2019, i.e. creating a variable cost for kWh depending on actual wholesale 
price of electricity. Some important, and very sunny, US states (e.g. Arizona, Colorado, and New Mexico) 
have not put any limit. 

28  This requirement naturally limits the size of a system to meet this consumption in order to maximize the rate 
of return. Excess electricity generation can be sold at a price similar to wholesale prices (€0.05/kWh). 
29    The Italian self-consumption scheme (Sistema Efficiente di Utenza) allows the direct sale of electricity to the 
final residential or commercial consumer, although in most cases the excess renewable electricity will be fed 
into the grid and receives a much lower price than the retail price. 

30  Furthermore, when there is a large premium between the retail electricity price and the price paid for excess 
electricity generation, consumers have an incentive to size the renewable energy systems to  maximise the 
proportion of self-consumption versus injection into the grid, if the systems are still expensive as compared 
to the market price. This can be fostered with investment in a relatively small renewable system. However, 
the benefit of this smaller system option should be weighed against the transaction costs involved and the 
customer’s own internal rate of return. 

11 

 
 
 
 
 
 
 
                                                            
Best practice includes: 

  Monitoring of  market  developments  and  overall  system  impacts  in  order  to  ensure cost-

effectiveness and avoid overcompensation. 

  Preference for self-consumption schemes over net metering schemes. 

  Limiting  net-metering    to  phase-in  periods  and  regular  review  in  a  transparent  and 

predictably way. 

  Avoidance  of  retroactive  changes  to  support  for  existing  self-consumption  projects  to 

guarantee investment security. 

  Phasing in of short-term market exposure by valuing surplus electricity injected into the 

grid at the wholesale market price. 

6.  CONCLUSIONS 

The rapid decline of renewable electricity investment costs is creating new opportunities for 
consumers  to  become  energy  producers,  allowing  them  to  profit  from  and  contribute  to  the 
efficient  functioning  of  the  energy  market.  As  grids  and  markets  become  smarter,  this 
emerging  model  of  self-consumption  is  set  to  play  a  growing  role  in  reducing  consumers' 
energy  bills,  particularly  of  commercial  consumers  such  as  SME,  and  promoting  market 
integration  of  variable  renewable  electricity.  Member  States  can  proactively  anticipate  and 
accommodate  the  emergence  of  this  self-consumption  model,  while  promoting  energy 
security, efficiency and decarbonisation. 

12 

 
 
 
 
 
 
  
 
ANNEX 1: OVERVIEW OF NATIONAL SCHEMES FOR SELF-CONSUMPTION OF RENEWABLE 
ENERGY 

1. Self-consumption (SC) schemes. Various sources, including information provide by MS.  
Member 
State 
Austria  

Remuneration for self-consumed or surplus 
electricity sold to the grid 
Private purchase agreement (PPA) 

Grid and system cost contribution 

Croatia  
Denmark 

PV system <300 kWp, 80% at the FiT rate  
FiT (0.08 €/kWh) 

Cyprus 

PV system< 500kWp, 5 MW yearly cap (under 
revision), no compensation 

Germany 

Germany 

Finland 

< 90% production: applicable FIT or FIP rate 
> 90% production, either: 
a) average spot market price for solar energy (4-5 
€ct/kWh) 
b) income from electricity sale (market or PPA) 
plus management premium of 1.2 €ct/kWh 
(decreasing to 0.7 €ct /kWh by 2015) 
PV system > 100 kWp (from 2016): market price 
< 90% production: applicable FIT or FIP rate 
> 90%production, either: 
a) average spot market price for solar energy (4-5 
€ct/kWh) 
b) income from electricity sale (market or PPA) 
plus management premium of 1.2 €ct/kWh 
(decreasing to 0.7 €ct /kWh by 2015) 
PV system > 100 kWp (from 2016): market price 
Private purchase agreement (PPA) 

France 
Italy 

Under discussion 
<20 MWe: private purchase agreement (PPA) 

Latvia 
Malta 
Portugal 

Regulation still to be adopted 
Private purchase agreement (PPA) 
Average Iberian electricity market price minus 10%  

Spain 
Slovakia 

United 
Kingdom 

Up to 100 kWp, regulation still to be adopted 
Household with voltage level <0.4/0.23kV, 
connection capacity<16 A  
No compensation for excess power 
PV and wind systems < 50 kWp: generation tariff + 
export premium of 4.77p £/kWh  for up to 50% of 
excess power fed into the grid 
> 50 kWp and < 5 MWp : Feed-in-tariff   

13 

>25 MWh/y pay 1.5 € cent/kWh on 
SC electricity  
Exempted 
< 50kW: no taxes or PSO charge 
> 50kW: no RES surcharge 
Fixed Network charges: 
H. Voltage 1,31 € cent/kWh  
M. Voltage 1,63 € cent/kWh 
L. Voltage 2,01 € cent/kWh  
RES levy 0.5 € cent/kWh 
Public service obligation 
0,134€cent/kWh 
Before 01/08/2014 : exemptedAfter 
01/08/2014 :  exempted if < 10 kWp 
and  < 10 MWh/year  
If >10 kWp or > 10 MWh/y : subject 
to reduced RES-surcharge: 
30% by end 2015 
35% by end 2016: 
40% by end 2017 
Before 01/08/2014 : exempted.  
After 01/08/2014 :  exempted if < 10 
kWp and  < 10 MWh/year.  
If >10 kWp or > 10 MWh/y : subject 
to reduced RES-surcharge: 
30% by end 2015, 35% by end 2016,  
40% by end 2017 

<100 kVA or 800.000 kWh, 
exempted from electricity tax, 
electricity transfer fee, and VAT 
- fixed part of the grid charge applies 

< 20kW, exempted from grid and 
system costs 
20-200kW partially exempted 
>200kW exempted only from system 
costs 

Exempted 
If SC systems capacity <1% of total 
power capacity (TPC): SC exempted 
>1% and <3%, SC pays 30% grid 
fees, >3%, SC pays 50% grid fees  

Regulations still to be adopted 

Exempted 

 
 
 
 
2. Net metering schemes. Various sources, including information provide by MS. 

Member 
State 
Belgium  

Cyprus  

Denmark  

Greece 
Italy 

Hungary 

Latvia  

Eligibility requirements 

RES systems connection 
 <10 kVA (5 kVA in 
Brussels) ~ +/-12 kWp 
Household and municipal 
PV systems < 3 kW 

Non-commercial RES 
systems <6 kW 
PV systems <20 kWp 
RES systems:  
<200kW (after 
31/12/2007) 
<500kW (after 1/01/2015) 
Household and 
commercial RES systems 
<50 kW, connection size 
<3x63A 

Household RES systems 
<11 kW, with installation 
<400V and <16A per 
connection 

Netting 
period 
Yearly 

Yearly 

Hourly 

Yearly 
Yearly 

Negotiated 
with DSO 
(monthly, 
half-yearly 
or yearly) 
Yearly 

Electricity compensation  Capacity cap 

All categories of PV 
owners. 

N/A 

- Retail price 
- Subsidy of 900 
Euro/kW for vulnerable 
consumers 
Retail price 

Retail price 
Net-billing system: 
remuneration based on 
time-of-use price 

Retail price, which is 
free from system 
charges. 

10 MW per year 

N/A 

N/A 
N/A 

N/A 

Retail price 

N/A 

Netherlands  Connection size  

Yearly 

Retail price 

N/A 

Poland 

<3x80A 
RES systems <40kW 

Half-
yearly 

< 10 kW : Feed-in tariffs 
(15 years): ~ €0.18 per 
kWh per below 3 kW; 
€0.11 per kWh for below 
10 kW projects. 

300 MW for 
systems <3kW; 
500 MW for 
systems <10 kW 

Sweden 

RES systems connection 
size <100A 

Yearly 

> 10 kW and < 40 kW: 
100% of the average 
sales price of electric 
energy on the 
competitive market in the 
preceding quarter 
Tax reduction: 0,60 SEK 
(~6 €cent) per kWh of 
RES reduction, but at 
least an equal amount of 
electricity should be 
bought from the grid. 
Tax reduction for 
delivery up to 30 MWh/y 

For up to 30000 
kWh, or 18000 
SEK per year 

14