What Is Net Billing and How Does It Work in Ukraine?
If a solar power plant (SPP) generates more electricity than a business consumes at a given moment, the surplus can be fed into the grid and sold. In Ukraine, this model operates through the self-generation mechanism, commonly referred to as Net Billing. In this case, the business obtains the status of an active consumer.
The Basic Principle of Net Billing
Net Billing is a financial settlement mechanism for electricity that a facility takes from the grid and supplies back to it. Commercial metering records hourly imports and exports. The cost of electricity consumed is determined by the electricity supply agreement, while the value of exported electricity is determined by a power purchase agreement under the self-generation mechanism.
For non-household consumers, except small non-household consumers, electricity is sold to an electricity supplier at a freely agreed price. The settlement period is a calendar month. The agreement may provide for mutual offsetting of the value of electricity supplied to and consumed from the grid or for separate settlements.
How Is Net Billing Different from the Green Tariff?
The green tariff provides for a special purchase price under a separate support mechanism. Under Net Billing, there is no fixed guaranteed price: for a business, the price is determined by the agreement and market conditions. The same generating facility cannot operate simultaneously under Net Billing and the green tariff.
Which Businesses Can Sell Surplus Solar Energy?
The mechanism is available to non-household consumers for whom electricity generation and sales are not their primary business activities. The solar power plant is installed primarily for self-consumption, while surplus electricity is supplied to the grid.
The permitted export capacity is specified by the system operator in the distribution or transmission connection point passport. Increasing this capacity may require technical conditions and a connection procedure.
How Is Surplus Electricity Sold to the Grid?
The solar power plant first supplies the facility’s own load, while surplus electricity is fed into the grid through a bidirectional metering system. The commercial metering system records hourly electricity exports and imports, after which the supplier calculates the value of the electricity according to the terms of the relevant agreements.
If a BESS (Battery Energy Storage System) is used, daytime surpluses can be stored in batteries. The stored energy can then be used in the evening, during periods of peak consumption, or supplied to the grid at another time. This increases the share of solar generation consumed on-site and provides greater flexibility in managing electricity exports. For energy that the BESS receives from the grid, separate commercial metering is applied when calculating grid-related services.
What Does a Business Need to Switch to Net Billing?
The business needs a solar power plant capable of exporting electricity to the grid, a properly registered connection point, and commercial metering. The business enters into a power purchase agreement with an electricity supplier under the self-generation mechanism, which forms an appendix to the electricity supply agreement.
Before commissioning, the permitted export capacity, metering configuration, and inverter parameters are checked. If a BESS is installed, the energy flows to and from the storage system must also be properly metered.
Net Billing Economics: How Much Can a Business Earn?
Revenue depends on the actual amount of electricity exported and the agreed purchase price:
Revenue = amount of electricity exported × purchase price offered by the supplier.
For example, if 8,000 kWh is exported per month at an assumed price of UAH 3.50/kWh, the value of the exported electricity would be UAH 28,000 before taxes and other charges.
At the same time, it is often more profitable to increase self-consumption first. Every kWh used directly at the facility reduces the amount of electricity purchased from the grid. A BESS allows daytime solar energy to be shifted to evening hours.
Benefits of Net Billing for Businesses
Net Billing allows businesses to monetize surplus solar generation, reduce electricity purchases, and make more efficient use of installed solar capacity. A BESS can additionally provide backup power and smooth peak loads.
Potential Limitations and Risks
The result depends on the agreed electricity purchase price, generation and consumption profiles, and the permitted export capacity. Proper commercial metering and compliance with the system operator’s technical requirements are essential.
Therefore, a solar power plant designed for Net Billing should preferably be calculated based on the facility’s hourly load profile. Excessive system capacity without assessing potential future exports may increase the payback period.
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