Over 60 members of the parliament have signed a bill proposing an introduction of net billing of small-scale electricity production in Finland. According to the bill, if a consumer is producing electricity by e.g. solar panels and supplying it to the network, transferring costs of electricity and taxes should be compensated to the customer hourly, on top of the price of electricity.
Growth in small-scale production is good for the advancement of renewable energy and reliability of delivery. 60 % of the members of Local Power offer solar panel solutions to their customers, with these panels enabling consumers to produce their own electricity. Almost 90 % of local companies are also buying surplus electricity from the customers.
However, the task of network companies is to maintain the electricity network and guarantee the most secure delivery of electricity possible. It does not matter whether the customer is producing or consuming electricity. Even if the customer is only producing electricity, the network still needs to be maintained and developed. Transfer fees are collected from customers in order to pay for these costs.
Almost every electricity supplier in Finland buys surplus electricity from customers, with the price defined by the Nordic electricity exchange. It is technically possible to measure the net production and consumption of a small-scale producer within an as proposed in the bill. However, smart electricity meters used in Finland measure the consumption of electricity and the amount of electricity supplied to the network hourly, but cannot measure net hourly values. There are no meters capable of doing this on the market yet. Hourly netting therefore needs to take place in the measurement data management system of network companies, not directly at the meter. According to an assessment made in 2013, this change would cost 4.5 million euros and take approximately two years to implement. It is also unclear whether the Measuring Instrument Directive would allow net billing.
Including a small-scale producer’s transfer fees in hourly netting could in practise mean that the transfer fee would decrease, even if the load the client causes to the network increased. By supplying 10 kWh to the network and buying the same amount of electricity, a small-scale producer would not pay transfer fee at all for that hour. Nonetheless, 20 kWh of electricity would be moving in the network. According to the bill, that 20 kWh would also be tax-free.
In this scenario, the more a small-scale producer supplies electricity to the network, the more they can receive electricity from the network without paying transfer fees and taxes. The network company would still have to pay to maintain the network for this “free” movement. As a consequence, there would be pressure to make other network users pay for increased costs in the form of increased transfer fees. If the state made less money from taxes collected from electricity transfers, it would not take long for the state to come up with something else to tax.
If desired, netting small-scale production would be possible in the future. However, it should be taken into consideration that small-scale production also increases network burdens. If small-scale producers do not participate in sharing these costs, other users will be forced to pay. As usual, there is no such thing as a free lunch.