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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 Law 21.118, , and finally the update of the regulation with the S.D. N°57 of 2020. This Law 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, individually or collectively 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.

Laws 20.571 and 21.118 have allowed the development of a widely accepted distributed generation market, the projects total a capacity of approximately 56.2 MW, with 6946 projects throughout the country. The vast majority are very small projects with installed powers of less than 5 kW. Figure 19 presents the distribution of projects according to their power range, both in quantity and in their contribution to total capacity of December 2020.

Figure 19: 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.

TThe surplus energy injected is valued at the energy node price that the distribution companies transfer to their regulated customers plus a component associated with the lower losses of the distributor due to these injections. 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 11. 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 21.118[25] 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.