New policies in Central America are connecting small-scale renewable energy users to the grid—but not in the direction you might expect.
Net metering policies allow owners of small-scale distributed renewable energy systems to feed power produced by their installations back into the grid. Under net metering, utility customers who own such systems can install a bi-directional meter that records both incoming and outgoing power and calculates the net difference. If customers produce more electricity than they use, they receive compensation from the utility company, often in the form of avoided costs or by receiving a pre-selected payment per kilowatt-hour (kWh).
Net metering is a low-cost, low-risk policy and has been successfully implemented in many countries around the world. The right of utility customers to produce renewable energy and connect their systems to a distribution network – in conjunction with other polices that promote renewables such as tax concessions and financial assistance —is helping individuals and communities to introduce renewables into the grid on a small scale. In Central America, Panama, Costa Rica, and Guatemala have already introduced net metering policies to promote renewable energy deployment.
In Costa Rica, the total share of renewables in electricity generation declined recently by 0.7 percent between 2010 and 2011, and fossil fuels have met a growing portion of the country’s increasing electricity demand. To combat this trend, the state-owned Instituto Costarricense de Electricidad (ICE), with support from the Ministerio de Ambiente, Energía y Telecomunicaciones(MINAET), launched a net metering pilot program in October 2010 aimed at promoting small-scale renewable energy, while boosting job creation, and promoting energy independence. This pilot program also takes advantage of recent legislation providing fiscal incentives for renewable energy equipment. Perhaps more importantly, MINAET’s 2011 Directriz No. 14, which mandates that electricity sector institutions such as the regulatory agency Autoridad Reguladora de los Servicios Públicos (ARESEP) and the ICE promote small-scale renewable installations for self-consumption through pilot programs, was instrumental in the development of the net metering program.
Costa Rica’s Net Metering Pilot Program allows small-scale distributed renewable energy generators to connect directly to ICE’s grid network. As part of the program, ICE installs bi-directional meters. Any net surplus in power production can be carried over to the next billing cycle (in this case, a one-year period to account for the seasonal variability of renewable energy sources) as a kWh credit. Because the program is intended to encourage electricity generation for self-consumption, credits can only be used to offset consumption; utility customers are not entitled to any payment or additional compensation for producing more than they use. This two-year program, open exclusively to ICE’s clients (other electricity distributors in the country are expected to follow suit in the future), has a limit of 5 megawatts (MW) of total capacity, of which 1 MW is allocated for residential customers and the remaining 4 MW for commercial and industrial customers. The program policy is ‘first come-first served,’ applies only to ICE’s customers, and covers technologies including solar, biomass, wind, hydropower, and cogeneration systems.