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Annex 4.4 Business models for self-supply

The saving of electricity provided by generation can constitute a good business opportunity, depending of the patterns of consumption and the primary generation resource available in the area, the required investment and the cost of financing, the electricity cost of the network and the percentage of self-consumption. There are 3 business models for the self-supply that can be exploited and that are applicable to both small-scale generation under the Netbilling Law and PMGD projects and projects with no surplus to the network and are as follows:

a) The consumer buys the plant or generation equipment
b) The consumer rents the plant or generation equipment or signs a lease agreement
c) ESCO Model (Energy Service Company)

Each of these business models with their main advantages or disadvantages is briefly described below.

Under this model, the customer or user of energy is the owner and operator of the plant, which is why it is responsible for the electrical production, equipment and maintenance of the plant. The main barrier of this business model is the initial investment required. In the case of projects under the Netbilling Law, which are aimed at residential, commercial or small-scale generation, customer may often not have the initial capital or simply do not wish to take the risk of the investment. In the case of PMGDs, if it is aimed at self-supply, consumers are often not experts in the development of these projects and do not want to take the risk.

In general, the business model of buying the plant or the generation equipment is oriented to companies with a high degree of knowledge of the electricity sector whose main turn is the sale of energy to the system and not self-supply.

Under a model of renting the generation equipment the customer pays a monthly fee to the company that owns the equipment. This company makes the initial investment and is responsible for the equipment. However, the customer is responsible for the electrical production. This business model represents less risk than the first model of purchase of generation equipment. In the case of projects under the Netbilling Law, which are aimed at residential, commercial or small-scale generation, this means an additional monthly cost that is often difficult to predict if it will be able to be covered by energy savings.