What is net metering?

In the simple case of net metering for an End Client that at the same time is a producer of electricity, the following conditions apply:

a)the total installed capacity of systems powered by renewable sources that have come on stream up to 31 December 2007 is no greater than 20kW;

b)the total installed capacity of systems powered by renewable sources that have come on stream up to 31 December 2014 is no greater than 200kW;

c)the total installed capacity of high-yield cogeneration systems is no greater than 200 kW

d)the total installed capacity of systems powered by renewable sources is no greater than 500 kW.

Net metering is a mechanism that compensates consumers for the energy they export to the electricity grid.

This compensation not only takes account of electricity added to the grid but also the energy drawn from it for consumption. In other words, it is a form of financial compensation that balances energy exported to the grid and energy drawn from it.

For example, if a client exports 2,000 kWh in a year and draws 800 kW from the grid, the client will pay the bills for the 800 kW used, but net metering will enable them to obtain a “partial refund” payment on the bills paid. It is a financial compensation balancing energy exported to the grid and energy drawn from it, not in terms of the amount of energy but its financial value, the costs and services normally charged on the bill.

The only information required for calculating the contribution is the number of kilowatt/hours exported and drawn. The former are those recognised by the GSE (Gestore Servizi Energetici, literally “Energy Services Manager”); the latter are those appearing on bills charged to clients and paid to their utility company. If, at the end of the year the value of energy exported to the grid is greater than the value of energy drawn from it, then an excess exists. This can be liquidated by the GSE.

Net metering, then, involves two types of input:

  1. Net metering contribution (Cs)

Any excess, if more energy is exported than drawn in the current year.

How is net metering calculated?

In order to calculate the contributions, the GSE uses the following formula:

Cs = min (Oe; Cei) + CUsf x Es


Cs = contributo in conto scambio (payment in exchange account)

Oe = Onere dell’energia prelevata dalla rete (energy charges).

Cei = Controvalore dell’energia immessa in rete (Sellback price).

CUsf = Corrispettivo Unitario di scambio forfetario (unit of flat rate exchange).

Es = Quantità di energia scambiata (amount of energy exchanged).

In greater detail:

Energy charges (Oe): these are expressed in euro, and are the price of energy paid in the bill (the only “energy price”). The reference price is the SNP- Single National Price, the hourly and area average of the variable prices recorded every day on the electricity exchange.

Formula: Oe = SNP x (kWh drawn)

Sellback price (Cei): also the price of energy expressed in euro but calculated in the reference area and on the basis of the times at which the power was exported to the grid.

Formula: Cei = (Prezzo zonale orario energia, based on the zonal energy price and the time of day) x (kWh exported)

Unit corresponding to the flat rate unit exchange (CUsf): is a parameter expressed in euro cents that quantifies some network costs and the general system costs paid through the electricity bill. This parameter “identifies” the advantage of net metering, refunding part of the “fixed” costs on the user’s bill. The payment is indicated in the tables published in the documentation available on the GSE website “Technical regulations – Net Metering Service

Formula: CUsf = (system costs) + (network costs)

Energy exchanged (Es): expressed in kWh, it is the minimum value of energy exported and drawn. Es = min (kWh exported; kWh drawn)

These definitions have been expressed in a simplified form and differ according to the various parameters (type of meter). Therefore, for a more detailed consultation, please refer to the document available on the GSE website “Technical Regulations – Net Metering Service”

How are any energy excesses calculated?

If the value of the energy exported to the grid is greater than the value of the energy drawn from the grid, this an excess. The excess is expressed in euro, and is the difference between the two values calculated at the end of year. 


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