Net metering rolling credits vs. net billing buyback: An economic analysis of a policy option proposal for photovoltaic prosumers

Giancarlo Aquila, Paulo Rotella Junior, Luiz Célio Souza Rocha, Pedro Paulo Balestrassi, Edson de Oliveira Pamplona and Wilson Toshiro Nakamura

Renewable Energy, 2024, vol. 232, issue C

Abstract: There is a need for a methodology that allows the prosumer to implement a policy of choosing different compensation mechanisms. Thus, we propose the economic equivalence between net metering rolling credit (NM-RC) and net billing buyback (NB-BB) by defining a breakeven price (BP) for NB-BB that equals the Net Present Value (NPV) of these two options and using Discounted Payback Time (DPBT) as a tiebreaker metric. The Brazilian scenario was used for validation. When using the retail price, the NPV values for the NM-RC mechanism were lower in all scenarios (mean NPV of US$ 3958.66 in NM-RC against US$ 4372.17 in NB-BB). It is possible to observe that the BP that equalizes the two mechanisms is generally lower than the tariff charged by the utility (mean BP is US$ 0.1111 while mean tariff is US$ 0.1838), which reveals that offering this choice option does not burden the system. The NM-RC was selected in four cities, and the NB-BB was chosen in three cities. This policy could encourage potential prosumers, who often feel reluctant to invest in PV-DG owing to the long payback period. Thus, the political schemes complementing the compensation mechanism are relevant, especially for continental-sized countries with many utilities.

Keywords: Net metering; Net billing; Policy schemes; Distributed generation; Sustainable electricity (search for similar items in EconPapers)
Date: 2024
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:renene:v:232:y:2024:i:c:s0960148124012229

DOI: 10.1016/j.renene.2024.121154

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