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

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

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.

Suggested Citation

  • Aquila, Giancarlo & Rotella Junior, Paulo & Rocha, Luiz Célio Souza & Balestrassi, Pedro Paulo & Pamplona, Edson de Oliveira & Nakamura, Wilson Toshiro, 2024. "Net metering rolling credits vs. net billing buyback: An economic analysis of a policy option proposal for photovoltaic prosumers," Renewable Energy, Elsevier, vol. 232(C).
    • Handle: RePEc:eee:renene:v:232:y:2024:i:c:s0960148124012229
    DOI: 10.1016/j.renene.2024.121154
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