Net-Metering Benefits

for Residential Customers

THE ECONOMIC ADVANTAGES OF A PROPOSED USER-CENTRIC MODEL IN ITALY

Contrary to many expectations, the development of smart (mini-)grids is slow,

­notwithstanding drastic improvements in innovative technologies, and the reasons for this are not strictly
technical. The problem lies in regulatory barriers. Moreover, the current business models accommodate
utilities more so than customers. Net metering is a key enabling factor for smart (mini-)grids. This
article addresses the economic benefits of net metering for residential customers. Energy demands
for individual apartments and common areas are calculated using the daily energy-consump-
tion behavior of occupants for typical days of each month of the year. Photovoltaic (PV) gen-
eration is estimated for a residential building in Italy. The proposed net-metering scheme
is applied on the aggregate energy demand of a selected building. The current energy
billing without modifications is compared to the case in which net-metering tariffs are
applied to the billing. Results show that noticeable savings can be obtained in the
net-metering case.

Role of Prosumers in the Evolving Electrical System

During the last few decades, the power system has been restructured
to achieve different goals. Smart grids are the practical application of
this restructuring process. Despite bright promises, the smart grid
concept has not developed with the speed that was anticipated,
due not to technical reasons but to weaknesses in the business
and underlying social model. Current business models are

©istockphoto.com/alexsi

By Intisar A. Sajjad, Matteo Manganelli,

Luigi Martirano, Roberto Napoli,
Gianfranco Chicco, and Giuseppe Parise

Digital Object Identifier 10.1109/MIAS.2017.2740459

Date of publication: 12 April 2018

1077-2618/18©2018IEEE j uly /AU G U S T 2018 œ IEEE Industry Applications Magazine 39

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 ­ ainly based on the needs of the uti­­
m of minigrids will also depend on the
lity companies, which can limit the evolution and usage of on-site stor-
opportunities for consumers despite The net-metering age systems [8] and electric vehicles
the possibilities offered by smart in applications combined with local
components. Reduced public invest- mode fully enables generation and strategies for demand
ments and the uncertainty about the
actual benefits for users hint toward
customer decision management [9].
The conventional transformation
a different power system architecture making on how of the energy sector with a top-down
by moving from a top-down model approach has not kept up with ex­­
(just energy from the distributors and to deploy locally pectations. The European Energy
just money from the customers) to an
alternate user-centric model.
available resources Union has set out an updated user-
centric vision in [10], stressing the
In the user-centric model, many for electricity need to reduce the obstacles to con-
consumers will become prosumers, sumers and open the sector to aggre-
with generation and control capabil- production and gation and collective schemes.
ities and the bidirectional flows of
both energy and money. This trans-
storage to serve the To encourage industrial innova-
tion and reinforce the sense of com-
formation requires distributed pri- local load. munity social cohesion, it becomes
vate investments. It is also crucial necessary to get users more involved
to overcome some fears of the distrib- in energy control, either directly (if
utors and create better equilibrium adequately sized) or by interposing
between distributors and users [1]. The current debate small-/medium-sized companies between users and the
includes different aspects, up to the extreme scenario in distributors or main producers. This advocates successive
which prosumers tend to become independent of the grid, levels of aggregations in the form of mini- and microgrids.
using local generation and storage to supply their elec- Flexibility from aggregate residential users has been
tricity needs. This extreme scenario, called grid defec- addressed in [11], defining new indicators for the flex-
tion [2], also depends on the availability of technologies ibility levels of aggregate demand to reflect the collective
able to reach the condition of grid parity [3], [4] or a suf- behavior of groups of consumers and for different aggre-
ficiently high market value [5]. In any case, massive grid gation sizes and time steps using available data. In [12],
defection is still unlikely to occur in the next years. In the aggregation of residential customers is considered
addition to incurring investment and maintenance costs to promote participation in demand-response programs
for new equipment, the prosumer would have to guaran- to obtain financial benefits from the exploitation of
tee an appropriate level of quality of service in the local smart appliances and renewable energy sources (RESs).
system, considering internal faults, and a supply continuity The potential benefits of residential load aggregations
at least comparable with the one currently provided by the to reduce greenhouse gas emissions are discussed in
grid connection. [13] by considering the combined optimization of costs
In envisioning a new power system architecture, we and emissions.
can learn from nature. It is accepted that the more resil- One of the key aspects affecting customer involve-
ient natural complex structures having a greater ability to ment in the control of electrical systems is the metering
survive are the ones with ordinate replication of simple mode [14]. Unidirectional metering enables separate
structures. The same is true for social structures, as an metering of the electricity injected into the grid with
aggregate of simpler structures (such as families, condo- respect to consumption. With this mode, the consum-
miniums, and neighborhoods) and complex technological er does not benefit directly from the control of the
networks [6]. local resources aimed at serving the internal demand
With this vision, the power system structure can be from self-production. Conversely, the net-metering mode
traced back to early aggregations of elementary electrical (where bidirectional metering is used on the net power
subsystems, with each including generation, distribution, drawn from/injected into the grid) fully enables cus-
and use inside well-defined small geographical boundar- tomer decision making on how to deploy locally available
ies. Repeated aggregation gives rise to successive micro- resources for electricity production and storage to serve
and minigrids, resulting in complex power systems as a the local load [15]. As shown in [16], the effectiveness of
combination of smaller systems, each one in some way net metering may depend on the averaging time inter-
autonomous and responsible. The web of cells [7] concept val used to gather data from loads and local generation.
has emerged as a way to introduce independent, demand- Strategies for storage deployment under a net-metering
side management control schemes, acting on locally scheme are illustrated in [8].
f lexible devices, to provide network services such as Net metering is already implemented in countries such
dynamic frequency support to the grid. The development as Belgium, Canada, Greece, and Japan [17], with d ­ ifferent

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 characteristics, as discussed in the
section “Net-Metering Applications
and Standards.” The current defini- The benefits and
tions of net metering are one of the
important regulatory barriers that attractiveness
prevent incentivizing end users. The
point of common coupling (PCC) is
of net-metering
generally considered at the supply policies are
point, thus limiting the possibility of
creating additional benefits in inter- strongly affected by
nal sections of the local system.
Legislation and billing mechanisms
electricity pricing
affect the economic benefits of net and legislative
metering and, thus, the attractiveness
of net-metering policies. This article constraints that
addresses the economic benefits of
net metering for residential customers
limit the amount of
and investigates the opportunity of exchanged energy.
varying net metering to fully exploit
its economic benefit. Starting from the
aggregation level seen at the intake of
a microgrid (e.g., a building with local generation), the arti-
cle explores how net metering can be considered for groups
of consumers (e.g., apartments and offices in a building or
groups of houses). Net metering should be applied at dif-
ferent aggregation levels and PCCs to incentivize consumers
and promote local generation. Implementing this concept
requires the presence of new aggregators and building ener-
gy managers, whose tasks are to manage the internal billing
mechanism, even up to that of individual units.
A residential building in Italy, with 70 apartments
and different occupancy levels, is used as a case study. The
energy demands for the individual apartments and com-
mon areas are calculated, using the occupants’ daily energy
consumption behavior for typical days of each month of
the year and during the summer and winter seasons. PV
generation is estimated using the PV Geographic Infor-
mation System (PVGIS), which is an online tool provided
by the Joint Research Centre of the European Commission
[18] for a residential building. Energy-cost savings are cal-
culated for individual customers under different scenarios.
Net-Metering Applications and Standards
Net-Metering Applications
Different regulatory policies, fiscal incentives, and public
financing mechanisms are in place to ­support renew-
able energy generation and integration in the grid. Net
metering is one of these regulatory policies to incentivize
customers [19], in some cases, with the help of adequate
measures to secure the financial stability of the distribu-
tion system operators (DSOs) [20]. Viable options for
making net metering consistent with DSO needs are
under investigation [21]. Net-metering policies are being
used across the globe, such as in the United States,
Europe, Australia, Canada, Japan, South Korea, Brazil,
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Pakistan, and India [17]. The savings
through net metering depend on the
retail electricity rates along with the
characterization of the local gen-
eration and customers themselves
[22]. In the United States, at the end
of 2014, there were approximately
700,000 net-metered customers, the
majority of which were residential
[23]; in February 2016, the number
of net-metered customers reached
1 million [24].
In Europe, the development of net
metering is much slower. There are
a few net-metering programs, with
different impacts on the markets, as
well as nonmarket-based net-metering
programs. From the distribution net-
work operator (DNO) point of view
[25], nonmarket-based net-metering
schemes lead to the prosumers not
paying the supplier for the actual amount of electricity
delivered, creating higher fees for the other customers and
reducing the profit margins of the DNOs. In Denmark,
from 1998 to 2012, an annual net-metering scheme was
available for residential sites with installed PV plants up
to 6 kWp, which was very convenient for prosumers and
replaced in 2013 with 1-h net metering. Additional regula-
tions introduced yearly net metering in Belgium and The
Netherlands, daily net metering in Turkey, and net metering
(in some cases, together with other rules, such as feed-in
tariffs and net billing) in Portugal and Italy. Net metering
has been regarded as a valuable program to replace feed-in
tariffs to promote distributed RESs, especially small-scale
PVs (e.g., residential PVs [26]), because of technical sim-
plicity [27], the possibility of decreasing PV prices, and the
ability to provide a cost-optimum tool to create a self-sus-
tainable market [28]. However, the presence of net-metered
PVs may cause revenue reductions for the utilities and sub-
sequent rate increases for the utility-billed customers [19].
The benefits and attractiveness of net-metering poli-
cies are strongly affected by electricity pricing and leg-
islative constraints that limit the amount of exchanged
energy. The Italian context is summarized in the “Italian
Standards and Regulations for Net Metering” section.
Because of legislative limitations, in the residential case,
net metering applies either to common services only (in
the case of a building) or to a single user (in the case of a
household). Examples of specific households with rooftop
PVs showed the convenience of net metering with respect
to the feed-in tariffs by taking into account household
electricity rates in Cyprus [29] and Spain [30]. In [31], the
authors indicated the opportunity to vary legislative
limitations to better exploit net-metering benefits for
the aggregate demand of an apartment building. Unlike
previous studies, the distinction between the ­electricity
j uly /AU G U S T 2018 œ IEEE Industry Applications Magazine 41

Building Building
Unit Unit 1 Unit i
Appliance Appliance Appliance Appliance
Appliance 1.j1 i.ji
1.1 i.1
FIGURE 1. The aggregation levels of power demands.
rates used for households and those for the common
services of the buildings is taken into account, creat-
ing cases to which net metering is applied. The present
work is the detailed version of [31] and investigates the
opportunity to apply net metering to an aggregation of
users to take advantage of the aggregate energy demand
and a more beneficial billing mechanism. The Italian eco-
nomic context on net metering and billing, detailed in the
“Economic Considerations” section, is considered in the
“Case Study Application” section.
Italian Standards and Regulations for Net Metering
Italian low-voltage (LV) power bills are based on market-
based contracts between customers and utilities or on
authority-regulated tariffs. In the latter case, an authority
body [i.e., Autorità per l’Energia Elettrica il Gas e il Sistema
Idrico (AEEGSI)] makes the decisions [32]. Tariffs and
charges are set by the authority body within the functions
of customer characteristics (residential versus nonresiden-
tial, contractual power, on-peak versus off-peak hours,
and consumption cluster). Newly installed PV systems may
benefit from a choice of net billing or a simplified pur-
chase and resale arrangement.
In net billing, the user, depending on the power bal-
ance in time, either purchases energy from the grid or
sells it to the grid for a refund based on net shared energy
and a compensation of grid service charges. In the sim-
plified purchase and resale arrangement case, the user
may sell energy only to the grid in return for a minimum
guaranteed price equal to the market-based average zonal
price under the present regulation.
Net metering is regulated via decisions by AEEGSI
[33]–[35] and applies to RES power plants (up to 20 kW)
and high-efficiency combined heat and power (up to
200 kW). The Energy Service Manager [Gestore dei Servizi
Energetici (GSE)] is in charge of supervising net metering
and disburses a net-billing grant, which partially refunds
the user for paid power charges. The grant assessment by
GSE is based on power plant and power contract specifi-
cations by considering
●● the minimum between the price of purchased energy
(paid by the user) and the value of energy delivered by
the user (assessed by GSE)
●● shared energy (i.e., the minimum between purchased
and delivered energy) times a unitary compensation (tak-
ing into account grid service charges and some duties)
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●● compensation for excess energy (in case delivered
energy exceeds purchased energy), valued based on
market price.
In the current Italian regulation for a residential build-
ing, if an RES power plant is installed, the remuner-
ated energy is limited only to the common services of
the buildings. The users in the apartments cannot benefit
from the net-metering options.
Building Energy Demand Calculations
Power Demand for Apartments
The overall electric power demand of a building is the
sum of demand for all individual appliances during a
period of time. The use of appliances in time is driven
by the users’ needs and behavior and by environmen-
tal conditions. Ultimately, individual loads statisti-
cally add up, based on typical patterns and taking into
account random time shifts. Power demands can be
aggregated at the unit (e.g., apartment) and building
levels (Figure 1).
Let us consider a period of time for the analysis par-
titioned into time steps and denote the generic time
step with s. The load pattern of each appliance can be
expressed as
P j ^ s h = PNj p j ^ s h,(1)
where the subscript j refers to the jth appliance, P ^ s h is
the active power at the sth time step, PN is the rated power,
and p ^ s h is the power normalized with respect to PN .
The building load PB can be calculated by superimpos-
ing the loads of the i = 1, f, I units, which, in turn, result
from superimposed j = 1, f, J i appliance loads within
each unit
PB ^ s h = / Pi ^ s h = / / Pij ^ s h.(2)
I I Ji
i =1 i =1 j =1
The time evolution of the load patterns for an apartment
depends on the behavior of the occupants, the type of
appliances inside the apartment, and seasonal variations
[36]. In this article, different apartment models presented
in [36] and [37] are used. Some load patterns for different
apartment models on a typical winter day are shown
in Figure 2.
Demand for Common Services Inside the Building
The common areas for demand calculation are the ele-
vators, general building lighting, and general building
auxiliary services (such as thermal, hydro, alarms, and
communications) and spaces for common activities like
halls for indoor sports, meeting rooms, outdoor/indoor
swimming pools, and so forth. The calculation method for
elevator and lighting demand is briefly explained in the
following sections.
 Elevator Demand
For residential buildings across Europe, geared technol- 4

Power Demand (kW)

ogy is generally used [38]. We consider geared traction 3
elevators for our calculations. The energy consumption for
the elevators depends on many factors, e.g., motor power, 2
load, elevator rise height, and speed. Generally, the aver- 1
age energy is measured in terms of standby energy con-
0
sumption and the actual consumption during ascending 0 4 8 12 16 20 24
and descending operation. To measure these parts, the Time (h)
standard procedure described in [38] and [39] is used. (a)
4

Power Demand (kW)

Mathematically, the annual energy consumption can be
calculated using 3
2 # MLF # TDF # E cycle # ^1 - BF h # n 2
E= + E s,(3)
1, 000
1
where
0
0 4 8 12 16 20 24
E s = c 8, 760 - TDF # H # n m #
Ps (4)
, Time (h)
3, 600 # v 1, 000
(b)
MLF is average motor load factor, TDF is average travel Economy Standard Luxury
distance factor, E cycle is energy for a single elevator opera-
tion cycle (Wh), BF is balancing factor, n is the number of FIGURE 2. A comparison of load patterns for different apartment
annual trips, E s is standby energy (kWh), H is rise height models for a typical winter day in (a) family apartments and
of the elevator (m), v is elevator speed (m/s), and Ps is the (b) couple apartments.
standby power (W).
The average values used in the previous equations to
calculate the annual energy consumption of the elevator
Table 1. The average characteristics for residential
are listed in Table 1. These values are useful for a general- geared elevators [37], [38]
ized analysis on a number of buildings. Actual values are
Parameters Values Parameters Values
needed for a precise analysis. For a simplified calculation
of daily energy consumption, we assume that the daily MLF 0.35 n 62,300
load profile of the elevators is the same throughout the TDF 0.3 H 17 m
year [31] using a typical summer or winter day and typical
E cycle 50.4 Wh v 1 m/s
elevator usage.
BF 0.5 Ps 163.8 W
Lighting Demand
In buildings, most of the energy consumption is from
lighting. To simplify the calculation, we take an approxi-
1,500
mate lighting load of 150 W/floor for a stair. It is
Energy (Wh)

assumed that the lighting load is switched on and off via 1,000
available sunlight. The availability of sunlight is taken
from the measurements of PV generation for each month 500
of the year, and the resultant daily demand pattern
for a residential building with nine floors is depicted 0
0 2 4 6 8 10 12 14 16 18 20 22 24
in Figure 3.
Time (h)
Jan. Apr. July Oct.
Total Load Feb. May Aug. Nov.
The total demand for the common services of a building Mar. June Sept. Dec.
can be calculated by adding the demand of an elevator,
lighting load, and auxiliary services. Figure 4 shows the FIGURE 3. The daily energy demand pattern of lighting load for a
energy pattern of common services of a building with one single stairway with nine floors.
elevator and lighting for a single nine-floor stairway.
areas. The PV generation at a time-step duration of
Estimation of PV Generation 15 min is calculated for a building in Rome, Italy, using
Building-applied and building-integrated PVs are typical the PVGIS. Table 2 contains the PV system parameters. The
cases of dispersed generation, especially within urban parameters for average daily solar irradiance are calculated

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 where Pn is the rated power of the PV system (e.g., from 1
Energy Demand (Wh) 2,000 to 100 kWp), NOCT is the normal operating cell tempera-
1,500 ture (45 °C), h dc -ac is the inverter efficiency (95%), and c
is the power temperature coefficient (0.007). The power
1,000
generated by the PV system is shown in Figure 5.
500
Balance
0
0 2 4 6 8 10 12 14 16 18 20 22 24 For a grid-connected building, the power grid can be
Time (h) used as a buffer entity, toward a net-zero energy building.
Jan. Apr. July Oct. Conceptually, it can be considered a smart (mini-)grid.
Feb. May Aug. Nov.
Mar. June Sept. Dec. Economic Considerations
The energy bill calculation procedure suggested by
FIGURE 4. The daily energy demand pattern for common services of AEEGSI, used by all of the DSOs in Italy with slight
a building. modifications, is followed here. In general, the main com-
ponents of an energy bill include fixed, contract power,
energy, and network costs; costs related to the compo-
Table 2. The PV system parameters for calculating nents called A (covering the general costs for the electrical
generation system) and UC (covering further costs of the electrical
service); and taxes [revenue/excise tax and value-added
Number Parameters Value tax (VAT)].
1 PVGIS radiation database Classical PVGIS There are different tariffs for different types of custom-
ers with respect to the contract power agreements. In this
2 PV technology Crystalline silicon
article, the case study includes a residential building, so
3 Estimated system losses 14% the related energy billing tariffs are briefly presented.
4 PV module mounting Freestanding
position and tilt angle with 34c Two-Level Tariff for Small Residential Customers
On 1 January 2012, AEEGSI introduced the application
of two-level tariffs to residential customers who have
installed smart meters. The price of electricity varies,
60 depending on the time it is used during the day. The
PV Generation (kW)

50 level F1 corresponds to the energy price in peak hours

40 (between 8:00 a.m. and 7:00 p.m. Monday through Friday,
30
other than national holidays), and F23 corresponds to the
20
10
energy price during off-peak hours (between 7:00 p.m.
0 and 8:00 a.m. Monday through Friday and the entire day
0 2 4 6 8 10 12 14 16 18 20 22 24 for weekends and national holidays).
Time (h)
The two-level tariff is further categorized into two
Jan. Apr. July Oct. tariffs, D2 and D3. The D2 tariff is for residential users
Feb. May Aug. Nov.
whose contract power agreement is lower than or equal
Mar. June Sept. Dec.
to 3 kW, and the D3 tariff is for residential customers
with more than 3 kW contract power or for nonresiden-
FIGURE 5. The PV generation profile for a typical day of each month tial customers having contract power lower than or equal
of the year for a PV system with 100 kWp. to 3 kW.

for the grid-connected PV systems. These parameters Tariffs for Other LV Customers
include global irradiance on a fixed plane ^G h and the These tariffs are designed for the customers other than
average daytime temperature profile ^Td h . individual residential users connected to the LV sys-
The ac power generated by the PV system is calcu- tem, e.g., building services, garages, and small-business
lated by using the following expressions, also taking into ­buildings. This tariff is termed BTA (an Italian acronym
account the various sources of losses to characterize the for “LV other uses”) and is divided into six subcategories
PV system efficiency [39]: (BTA1–BTA6) based on the contract power. The energy
demand for the common services of a residential building
Pac = 0.92 Pn G h dc -ac ^1 - c TTc h /1,000,(5) is billed using the BTA4 tariff. Three different time-of-
use rates (F1–F3) for a day are normally used to calculate
TTc = 25 - ^Td + ^NOCT - 20 h G/800 h ,(6) the billing amount. In other cases, if the energy meter

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 installed on the premises is capable of storing time-of-use Case Study
energy consumption, then there is a uniform rate for a The building under study is located in Rome, Italy, and
complete day. For the sake of simplicity, we have used the has nine floors and 70 residential apartments. The resi-
uniform energy billing rate for BTA tariffs. dential units are subdivided into four types with respect
Apart from the common services energy-cost calcula- to the occupancy. The descriptions of the types and num-
tions, in this article, the BTA6 tariff is used to estimate ber of apartments and other facilities for the building are
the energy cost for the aggregate demand of the complete presented in Table 3.
building that includes demand for all of the apartments The individual and aggregate demand patterns for each
and common services. The details for each component of apartment and the combination of all apartments for each
the energy bill can be found at the AEEGSI website [41]. month of the year are generated from the procedure in [36].
In general, the total annual energy cost can be writ- The total energy consumption for the aggregation of each
ten as apartment type in one year is summarized in Table 4.
The building has three stairways with three elevators
Cost = C f + C p + C e + C n + C A, UC + tax,(7) that jointly account for the common services demand.
The demand for the elevators and the lighting of com-
where C f is the fixed annual cost for sales and network mon areas, e.g., stairways, is calculated as indicated in the
services (€/client); C p is the annual cost for contract power “Demand for Common Services Inside the Building” section,
(€/kW); C e is the annual energy cost (€/kWh); C n is the using the rise height H = 27 m for each elevator and the
network charges for metering, transmission, and distribu-
tion services for annual energy (€/kWh); C A, UC is the cost
for RES promotion, research and development, decommis- Table 3. The composition of the apartments in
sioning of nuclear power plants, quality of service, and so the building
forth (€/client, €/kWh); and tax is the revenue/excise
(€/kWh) and VAT (percentage of the sum of all of the Apartment Apartment Number of Contract
above components, including revenue/excise). Type Class Apartments Power (kW)
Family Economy 7 3
Tariff for Net Billing apartment
Standard 19 3
The economic benefit of net billing is paid by GSE
because of the annual balance between the amount of Luxury 9 6
energy taken from the grid and the amount fed into the Couple Economy 17 3
grid. The annual economic contribution (premium) paid apartment
Standard 8 3
by GSE for the exchange in energy is calculated as
Luxury 10 6

premium = min ^O E , C Ei h + CU sf # E s,(8) Common Lighting Three stair­ 10

area and elevator ways with
three elevators
where O E is the price of energy purchased from the grid
(calculated using the single national price), C Ei is the
price of energy fed into the grid (calculated using the
Table 4. A comparison of annual energy consumption
regional day-ahead market price), CU sf is the unit price
per apartment or common service
for exchanged energy, calculated based on the network
energy charges and A and UC components of the energy Unitary
purchase tariff (e.g., D2, D3, BTA4), and E s is the amount Apartment Apartment Annual Energy
of exchanged energy, equal to the minimum energy taken Type Class Consumption (kWh)
from the grid and fed into the grid.
Measured 3,332
apartment
Annual Net Energy Cost and Savings
Family apartment Economy 2,673
The annual net balance for energy cost is calculated as the
difference between the cost of energy taken from the grid and Standard 4,429
the premium received for the energy fed into the grid, i.e., Luxury 8,195
Couple apartment Economy 2,090
net balance = cost - premium.(9)
Standard 3,441
Luxury 5,855
Case Study Application
In this section, we present a case study based on a cus- Common services 8,355 (per unit
tomer’s energy usage data for a residential building with (stairway lighting stairway-elevator)
and elevators)
different types of apartments and PV generation.

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 corresponding values v = 1.5 m/s, (LDC), and energy consumption were
E cycle = 75 Wh, n = 78, 514, and the calculated for one month. Figure 6
other values taken from Table 1. The results show that, shows an example comparison of the
PV generation from 10 to 100 kWp is simulated and measured load pattern.
used to assess the economic benefits. under present Italian Figure 7 shows the monthly LDC for
PV generation patterns are deduced
as explained in the “Estimation of
regulations, as PV the measured apartment together
with the LDCs of simulated apart-
PV Generation” section for the site in capacity increases, ments of different types. The charac-
Rome, Italy. teristics of the measured apartment
The energy cost for the individu- net metering is are similar to the family economy
al apartments is calculated using the
tariff D2 or D3 in accordance with
beneficial up to a point apartment class. This is confirmed
by the results shown in Figure 8 for
the contract power, as mentioned in because of regulatory the monthly energy consumption for
Table 3. The energy cost for common measured and simulated apartments.
area consumption is calculated using energy constraints. The energy consumption of the mea-
the tariff BTA4. The energy cost pre- sured apartment is compared in the
sented in this article includes the rev- winter case to the consumption of the
enue/excise and 10% VAT. family apartments. Additional con-
The average energy cost in the summer is less than firmation comes from the annual energy consumption
in the winter due to the absence (or partial presence) of (Table 4) and daily energy consumption per apartment
boiler load. However, for luxury apartments, the situation (Table 5), where the annual consumption of the measured
is different due to the presence of air-conditioning load dur- apartment is taken from the bill. The comparison of the
ing the summer. average energy bills for summer and winter is shown in
Figure 9. All costs are expressed in monetary units (m.u.).
Experimental Activity
Scenarios
Measurements To demonstrate the effect of net metering, two case study
To validate the simulation results, an experimental review scenarios are considered: case 1, demand metering (with-
of an apartment inhabited by a family with young chil- out PV generation), and case 2, net billing using local PV
dren was conducted. The total energy consumption of the generation. Case 2 is further divided into the following:
apartment was sampled every quarter hour for 33 days in ●● case 2a, considering only common services demand

the last months of 2016 via an energy meter with 64-b reso- ●● case 2b, considering only common services demand but

lution (minimum ­definition 0.1 Wh) and class 1 accuracy apartment demand is billed at aggregation level, i.e., a
installed in the apartment switchboard. nonresidential tariff applies to collective consumption
●● case 2c, considering the aggregate demand of the

Data Processing whole building, again with a nonresidential tariff that

From the sampled energy consumption, the load pattern applies to the overall consumption (apartments and
(with a time step of one-quarter hour), load duration curve common services).

4
3
Measured
Apartment Power Demand (kW)

Simulation (11.4 kWh/d)

Family Economy
Measurement (11.4 kWh/d)
3 Family Standard
Family Luxury
Month LDC (kW)

2
Couple Economy
Couple Standard
2 Couple Luxury
1

0
0 6 12 18 24
0
Time (h) 0 25 50 75 100
Time (%)

FIGURE 6. A comparison of simulated and measured apartment load FIGURE 7. The one-month load duration curves for measured and
patterns. simulated apartments.

46 IEEE Industry Applications Magazine œ j uly/AUGUST 2018

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 Current Italian regulations are
considered in case 2a (used as the 800 800
base case for comparison). A simple

Consumption (kWh)

Consumption (kWh)
600 600

Monthly Energy

Monthly Energy
modification of the net-billing con-
cept is used in cases 2b and 2c (i.e.,
net billing is applied on the aggre- 400 400
gate demand of the whole building
rather than the demand for common 200 200
services only). The BTA6 tariff is
used to calculate the cost of ener- 0 0
Measured Eco. Std. Lux. Eco. Std. Lux.
gy taken from the grid to serve the (a) (b)
aggregate demand of the building.
800 800
The comparisons of the results for
the case study scenarios are shown
Consumption (kWh)

Consumption (kWh)
600 600
Monthly Energy

Monthly Energy
in Figures 10 and 11 and Table 6.

Discussion 400 400

A reduction in the net energy expen-
ditures for the scenarios present- 200 200
ed in case 2 (with PV generation)
in comparison with case 1 (without PV 0 0
Eco. Std. Lux. Eco. Std. Lux.
generation) is indicated in Figure 10. (c) (d)
Case 2a presents the net balance for
the expenditures under current Ital- FIGURE 8. The monthly energy consumption for measured and simulated apartments in (a)
ian regulations for energy billing. winter, family apartments; (b) winter, couple apartments; (c) summer, family apartments; and
(d) summer, couple apartments. Eco.: economy, Std.: standard; Lux.: luxury.
There is a reduction in the net bal-
ance for the expenditures up to a cer-
tain limit for the installed capacity of the PV generator, maintenance of the PV system. Therefore, in practice, this
but, after that, there are no economic benefits because the solution does not exhibit actual convenience.
present regulation restricts the sale of energy to the grid For case 2b, if net metering is applied by consider-
to a maximum given by the annual energy taken from the ing only the demand of common services and the apart-
grid. An alternative to overcome this situation may be local ment demand is metered and billed on the aggregate
storage, but this option is not considered in this article. level, there are savings of about €220–270/year for indi-
Another important aspect is the average annual savings vidual customers. Even if no PV generator is installed,
for the individual customers (apartments) to install PV gen- there is a benefit of about €220/year for each apartment.
erators. Figure 11 demonstrates this parameter. For case However, the problem with this kind of scenario is the
2a, the maximum savings are about €50/year per customer, limit for the installed capacity of PV generation (as indi-
not accounting for the costs related to the installation and cated in case 2a).

Table 5. A comparison of daily energy consumption 250

per apartment
Energy Cost (m.u.)

200
Apartment Apartment Unitary Daily Energy 150
Type Class Consumption (kWh)
100
Measured 9.1
apartment 50
Family Economy 7.3 0
apartment Winter Summer
Standard 12.1 Season
Luxury 22.5 Family Economy Couple Economy
Couple Economy 5.7 Family Standard Couple Standard
apartment Family Luxury Couple Luxury
Standard 9.4
Luxury 16.0 FIGURE 9. A comparison of average monthly energy costs for
different apartment types during summer and winter.

j uly /AU G U S T 2018 œ IEEE Industry Applications Magazine 47

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 Table 6. The net energy-cost savings in comparison
100,000
Expenditures (m.u.) with the current net-metering regulations (case 2a)
80,000
PV Installed Savings (# Savings of Case 2a)
Net Energy

60,000 Capacity
40,000
(kW Peak) Case 2b Case 2c

20,000 10 8.52 9.21

20 5.43 6.19
0
0 20 40 60 80 100 30 5.42 6.94
PV Installed Capacity (kWp)
40 5.41 7.66
Case 1 Case 2a
50 5.40 8.34
Case 2b Case 2c
60 5.39 8.96
70 5.38 9.56
FIGURE 10. A comparison of net energy cost for different case
studies. 80 5.37 10.12
90 5.36 10.67
100 5.35 11.20
700
Annual Savings/Apartment (m.u.)

600
500
400
300
200
100
0 sidering the no-PV case as the reference scenario.
0 10 20 30 40 50 60 70 80 90 100
PV Installed Capacity (kWp)
Case 2a
FIGURE 11. A comparison of annual savings for each apartment with
different PV system capacity.
The third and most important option is net metering for
the aggregate demand of the whole building. Figures 10
and 11 show that this option is most beneficial for custom-
ers with savings higher than in previous scenarios (present
regulations). Also, PV generation with higher capacity can
be installed to benefit customers. The only additional costs
are PV system installation and maintenance. In this case,
the savings for individual customers are about €270–570/
year. Table 6 summarizes the results of the comparison of
savings with respect to case 2a. The net savings are with
the minimum value of 8.52 times that of case 2a for case 2b
and 9.21 times that of case 2a for case 2c. If we consider a
PV system with installed capacity of 100 kWp, then the sav-
ings increases to 11.20 times that of case 2a.
Conclusions
Net metering is vital to the goals of future power systems
and will highly benefit customers and local generation.
The economic advantage of implementing net metering
in residential buildings was assessed in this article. An
energy and economic model of a case study household
(simulating power demand, PV generation, and billing and
net-metering policies) was used to calculate energy expen-
ditures and savings. Several scenarios were considered,
depending on the presence of PV generation and the level
of net metering implemented. A sensitivity analysis has
been performed with respect to PV installed capacity, con-
The results show that, under present Italian regulations,
as PV capacity increases, net metering is beneficial up to
Case 2b Case 2c a point because of regulatory energy constraints. Imple-
menting billing at the aggregate level (still considering
only common service demand) allows for a much greater
benefit (approximately 75% of the expenditure and a ten-
fold annual saving), even when there is no PV. Still, a limit
to effective PV capacity exists. Implementing net meter-
ing for the whole building is the most beneficial option,
allowing for the greatest PV capacity (stretching to half the
expenditure and a 20-fold annual savings). The authors
suggest advanced net-metering policies as a key factor to
move toward the goals of smart grid development.
Author Information
Intisar A. Sajjad is with the University of Engineer-
ing and Technology, Taxila, Pakistan. Matteo Manganel-
li (matteo.manganelli@uniroma1.it), Luigi Martirano,
and Giuseppe Parise are with Sapienza University of
Rome, Italy. Roberto Napoli and Gianfranco Chicco are
with the Politecnico di Torino, Italy. Sajjad and Manganel-
li are Members of the IEEE. Napoli is a Life Memeber of the
IEEE. Martirano is a Senior Member of the IEEE. Chicco is
a Fellow of the IEEE. Parise is a Life Fellow of the IEEE.
This article first appeared as “Net Metering Benefits for

48 IEEE Industry Applications Magazine œ j uly/AUGUST 2018

horized licensed use limited to: NATIONAL INSTITUTE OF TECHNOLOGY TIRUCHIRAPALLI. Downloaded on November 19,2022 at 14:29:56 UTC from IEEE Xplore. Restrictions app
 Residential Customers” at the 2015 IEEE 15th Internation-
al Conference on Environment and Electrical Engineering.
This article was reviewed by the IAS Renewable and Sus-
tainable Energy Conversion Systems Committee.
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