Self-consumption Renewable Energies

Self-consumption means that a power producer consumes the electricity generated in his own power plant, usually a PV power plant, small-scale wind turbine or CHP plant, mainly for his own purposes and only excess electricity he does not need is fed into the public grid. Legal entities that produce and consume the electricity based on the self-consumption model are also called „prosumers”. The illustration below shows that the electricity generated in the PV power plant is consumed in the first place for the power producer's own purposes and only the excess electricity is fed into the general supply network. The residual electricity required is supplied by a utility company („UC”).

The possibility to cover the electricity requirement from one's own power plant is offered to enterprises and private end consumers. This way of power supply is often privileged as reductions in levies and taxes are offered for this type of electricity. In most cases, the extent of privileging or reduction depends on the installed capacity of the power plant. Operating permits are issued mostly free of charge but often the power plant must be registered with the competent authorities.

Internationally seen, support schemes for self-consumption considerably vary and the degree of funding is very different. Generally, there are 3 variants of the self-consumption model. Differences can be observed in particular as regards exporting not used excess electricity to the grid.

Excess electricity

• can be fed into the grid at no charge yet with no revenue or cannot be fed into the grid at all
• is remunerated per kWh (see Feed-in tariffs)
• or is deducted from the electricity bill based on net metering. With net metering, the electricity volume injected into the grid over a billing period is deducted from the electricity volume drawn from the public grid. It is also theoretically possible for a customer to receive a credit if more electricity is fed into the grid than drawn. Moreover, the regulatory frameworks for the deductibility of electricity cost components (e.g. only electricity generation cost or the entire electricity cost including all other components that are part of the electricity price) vary.

In recent years, the levelised cost of energy (LCOE) for solar power has sharply fallen. This is particularly why self-consumption using solar power plants has become very profitable in many countries – often even without using incentives. The question here is rather whether there are any regulatory hurdles that generally impede or even block the development of decentralised energy generation where it does not match the energy policy of the country.

Self-consumption models are particularly profitable in countries where electricity prices are high, consumers have technological and professional experience (in particular in PV) and there is a regulatory framework in place that incentivises self-consumption. Where financing from commercial banks is additionally available to households or private/public companies, it should be expected that more and more consumers will opt for self-consumption. In addition, the amount of self-consumed electricity can be increased by smart electricity consumption (load shifting), i.e. by switching on electricity consuming devices during the day or at times when the sun is the strongest. Using a battery storage system allows for using electricity generated at times when no electricity is consumed, which increases the share of self-consumed electricity. Moreover, power peaks (e.g. when starting up a production line in a factory) can be reduced through peak shaving by using a storage system. Thus, the storage system takes on various tasks in combination with the self-consumption power plant.

Consumers who produce and consume electricity for their own purposes do not use the electrical grid. Therefore, often no kilowatt-hour rate must be paid as part of the grid charges. This leads to an increase in grid fees for consumers who do not obtain electricity as part of self-consumption, a fact that some consider as a lack of solidarity as regards the refinancing of grid costs.