Method for analyzing the economic viability of net energy metering regulation based on risk analysis

• Published in: Energy for sustainable development Vol. 69; pp. 11 - 30
• Main Authors: Figueiredo Komeno, André Seiki, de Leles Ferreira Filho, Anésio, Domingues, Elder Geraldo, Vieira, Daniel, de Rezende Raggi, Livia Maria
• Format: Journal Article
• Language: English
• Published: Elsevier Inc 01.08.2022
• Subjects: Cost-benefit analysis; Economic viability analysis; Net energy metering policy; PV systems; Risk analysis; Economic viability analysis; Cost-benefit analysis; PV systems; Risk analysis; Net energy metering policy
• ISSN: 0973-0826
• DOI: 10.1016/j.esd.2022.05.009

Net energy metering (NEM) systems have been promoting the growth of photovoltaic (PV) distributed generation worldwide. However, the economic and financial sustainability of this policy has been questioned due to the possibility of triggering the utility death spiral. In this context, this study presents a method to quantify the economic impact of NEM policies considering utilities and non-adopter consumers' points of view. The proposed method employs a cost-benefit risk analysis to obtain the present value of accumulated utility cash flows. Electricity tariff, PV system unit price, and PV systems average installed power varying based on the Monte Carlo method are considered in the computational simulations. The Bass diffusion model is utilized to forecast the number of PV adopters. A univariate sensitivity analysis is carried out to determine how the key parameters affect the economic analysis. The method was applied in a case study that contemplates 98% of the Brazilian distribution market, considering three different scenarios of PV adoption. The results showed that, if the current NEM policy continues, the payback of micro- and mini-PV systems will decrease significantly over the years, culminating in a high average present value of the accumulated cash flow. This method allows researchers and policymakers worldwide to reassess their NEM regulations to stimulate the sustainable development of PV systems and to avoid cross-subsidies between prosumers and other consumers. •Net metering costs in Brazil are identified using risk analysis.•Number of prosumers is forecasted for three scenarios employing the Bass method.•Net metering resulted in financial losses for utilities in the analyzed scenarios.•Self-consumption rate is the main parameter in determining net metering impact.