3.6. Netbilling Law
Law 20.571 of 2012, which came into force in September 2014, after the promulgation of the regulation approved with S.D. N° 71 of 2014 and its changes of 2016 and later in 2018 with Law 21.118, allows the injection and sale of surplus to end users subject to price regulation, who have equipment for the generation of electric energy by non-conventional renewable means or efficient cogeneration of up to 300 kW of power, both for its own consumption and for the injection of surpluses into the distribution network. This law allows the development of projects to self-supply the demand of a single installation or estate, or larger systems to supply the demand of several installations of the same owner through a surplus transfer mechanism or to supply the installations or estate of several users through a joint ownership model or also called “community systems”. All instalations or estates must be located in the distribution network of the same distributor.
The Law 20.571 has allowed the development of a new market for distributed generation and has been widely accepted, although the regulation is relatively new, the projects of up to 100 kW (before of the change of 2018) add a capacity of 19.93 MW with over three thousand projects throughout the whole country. The vast majority of these projects are very small with installed capacity of less than 5 kW. Figure 17 shows the distribution of projects according to their power range, both in quantity and in their contribution to the total capacity to August 2018.
Figure 17: Distribution of generation projects associated to the Netbilling Law by size and power input of each segment Source: SEC.
The payment of energy injections is based on a net billing system, in which the excess energy injected into the network and the energy consumed from the grid are measured and valued separately, then subtract both valued amounts and determine the net amount to invoice.
The surplus energy injected is valued at the energy price that the distribution companies transfer to their regulated customers plus a component associated with the avoided average losses or cost avoided. This amount is then deducted from the billing corresponding to the month in which the injections are made. The price of valorization of the injected energy does not consider the cost of investment and operation of the distribution network, which is charged to customers when consuming energy from the network. In the case of residential customers with capacity equal to or less than 10 kW, this charge is made at an energized rate, which, added to the price of the energy that is transferred by the distribution company, makes up the final energy consumption rate. The rest of the non-residential tariffs charge this distribution value through charges for power demanded or contracted by the customer. Therefore, depending on the type of consumer regulated rate, the energy injection price will be less than or equal to the energy withdrawal price . The additional works and adjustments that are necessary to allow connection and injection of surplus of the means of generation must be paid by each owner.
The Regulation of Law 20.571 establishes in greater detail the procedure to carry out the connection of the generation equipment and the times in which the distribution company and the consumer must respond, the costs of the additional works that are required for the connection, responsibilities for the measurement and valuation of injections, among other aspects. The injection rates are published by each distribution company and the costs of studies and applications are borne by the user but at very low costs. More information on distribution generation projects oriented towards self-consumption can be found in Annex 4.