COMPARATIVE ANALYSIS BETWEEN NET AND GROSS METERING

BASED FEED-IN TARIFF

SAMARAH QASIM ALI ALASADI

Universiti Teknologi Malaysia

COMPARATIVE ANALYSIS BETWEEN NET AND GROSS METERING

BASED FEED-IN TARIFF

SAMARAH QASIM ALI ALASADI

A project report submitted in fulfilment of the

requirements for the award of the degree of

Master of Engineering (Electrical Power)

Faculty of Electrical Engineering

Universiti Teknologi Malaysia

DECEMBER 2016

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“Specially dedicated to

My Beloved Parents Kassim and Sahira and my Sisters Sara and Huda”

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ACKNOWLEDGEMENTS

Alhamdulillah, I would like to take opportunity to express my gratitude mostly

to Allah SWT for giving me ability and good health to complete my Master project

without difficulties.

I would like to express my gratitude and appreciation to my supervisor Dr. Md

Pauzi bin Abdullah for the guidance, understanding, comments and invaluable advices

throughout the two semesters upon the completion of this project.

Last but not least, not forgotten to my parents and siblings who are giving

moral support throughout my project and studies.

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ABSTRACT

Depleting gas and oil have encouraged scientist and governments to seek other

alternatives. Renewable Energy (RE) resources have been the best option as a solution

for the time being issue. In order to achieve rapid development of RE resources usage,

Feed in-Tariff has been introduced and applied. FIT considers as an energy supply

policy that offers a guarantee of payment to RE developers for the electricity the

customers produce. It incentive to encourage uptake of RE technology including

photovoltaic (PV) and wind turbines and other technologies. There are two different

types of metering systems, Gross and Net metering. Gross metering policy is to pay

customers for both RE installation and for the generated electricity weather it has been

consumed or injected directly to the grid. However, Net metering policy only considers

the difference of the injected and the consumed electricity. The customers are paid

only if their electricity consumption is less than their generation. This project compares

the results for Net and Gross metering system for various load cases. The works

presented here include i) review different FIT scheme metering system for various

countries, ii) to make different case studies for different loads scenarios for UTM load

and a typical Malaysian house, in JB, comparing it to a European (Portugal) house and

the analyses is performed by using Homer software. All cases will be considering grid

connecting PV system. The effect of financial factor like payback period, NPC (Vet

Present Cost) and COE (Cost of Electricity) are used in the comparison. Results

showed that Gross metering was preferable for Malaysian domestic or commercial

load because it has less COE, NPC and less payback period comparing to Net metering

system. Qqqqqq qqqqqqqq qq qq qqqq.

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ABSTRAK

Semakin berkurangan gas dan minyak telah menggalakkan saintis dan kerajaan

untuk mencari alternatif lain. Tenaga boleh diperbaharui (RE) telah pilihan terbaik

sebagai penyelesaian buat kali menjadi isu. Dalam usaha untuk mencapai

pembangunan pesat dalam penggunaan sumber RE, Feed in-Tariff telah diperkenalkan

dan digunakan. FIT menganggap sebagai dasar bekalan tenaga yang menawarkan

jaminan pembayaran kepada pemaju RE untuk peghasilan elektrik oleh pelanggan.

insentif untuk menggalakkan penggunaan teknologi RE termasuk photovoltaic (PV)

dan turbin angin dan teknologi lain. Terdapat dua jenis sistem pemeteran, iaitu

pemeteran kasar dan pemeteran bersih. Dasar pemeteran kasar adalah untuk membayar

pelanggan untuk kedua-dua pemasangan RE dan penjanaan elektrik sama ada tenaga

elektrik telah digunakan atau disuap secara terus ke grid. Walaubagaimanapun, dasar

pemeteran bersih hanya mempertimbangkan perbezaan tenaga elektrik yang disuap

dan digunakan. Para pelanggan hanya akan membayar jumlah pengunnan tenaga

elektrik jika penggunaan mereka kurang dari penjaan mereka. Projek ini

membandingkan keputusan untuk sistem pemeteran bersih dan kasar bagi pelbagai kes

beban. Kerja-kerja yang dibentangkan di sini termasuk i) kajian skim meter FIT yang

berbeza-beza untuk untuk pelbagai negara, ii) untuk membuat kajian kes yang berbeza

bagi beban yang berbeza senario untuk beban UTM dan sebuah rumah kediaman

Malaysia, di JB, membandingkannya kepada (Portugal) rumah Eropah dan analisis

yang dilakukan dengan menggunakan perisian Homer. Semua kes akan

mempertimbangkan penyambungan grid ke sistem PV. Kesan faktor kewangan seperti

tempoh bayaran balik, NPC (Vet Kos Sekarang) dan COE (Kos Elektrik) digunakan

dalam perbandingan. Hasil kajian menunjukkan bahawa pemeteran Kasar adalah lebih

sesuai untuk beban domestik atau komersial di Malaysia kerana ia mempunyai kurang

COE, NPC dan kurang tempoh bayaran balik berbanding dengan sistem pemeteran

bersih. Ffdffsdfsdfsd fdv dfsd dfdsf ddsf dvdv.

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TABLE OF CONTENTS

CHAPTER TITLE PAGE

DECLARATION ii

DEDICATION iii

ACKNOWLEDGEMENTS iii

ABSTRACT v

ABSTRAK vi

TABLE OF CONTENTS vii

LIST OF TABLES x

LIST OF FIGURES xii

LIST OF ABBREVIATIONS xiii

LIST OF APPENDICES xv

1 INTRODUCTION 1

1.1 Project Overview 1

1.2 Research Problem Statement 4

1.3 Research Objectives 4

1.4 Research Significance 5

1.5 Research Scope 5

1.6 Thesis Outline 5

2 LITERATURE REVIEW 6

2.1 Introduction 6

2.2 Gross Metering System 11

2.3 Net Metering System 12

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2.4 Comparison between various countries 15

2.5 Fundamental Formulations and Calculations 17

2.6 Summary 20

3 METHODOLOGY 21

3.1 Introduction 21

3.2 Historical data 21

3.3 Project methodology 23

3.4 Homer Software 25

3.5 FIT Rates and Electric Tariffs 25

3.6 Case Study 27

3.6.1 Case I 27

3.6.2 Case II 28

4 RESULTS AND DISCUSSIONS 30

4.1 Introduction 30

4.2 Analysis Results 30

4.3 Case I 31

4.3.1 Scenario I 32

4.3.2 Scenario II 34

4.3.3 Summary of Case I 36

4.4 Case II 39

4.4.1 Scenario I 39

4.4.2 Scenario II 40

4.4.3 Scenario III 41

4.4.4 Scenario IV 41

4.4.5 Scenario V 42

4.4.6 Summary of Case II 44

4.5 Discussion 47

4.6 Summary 48

5 CONCLUSIONS AND FURTHER WORK 50

5.1 Conclusions and Discussion 50

5.2 Recommendations for Future Work 51

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REFERENCES 52

Appendices A 54-57

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LIST OF TABLES

TABLE NO. TITLE PAGE

2.1.1 Types of tools for promoting for RE [3] 9

2.3.1 Net vs Gross metering system [5] 12

2.4.1 Different scenarios with view of LCEO and project lifetime [9] 15

2.4.2 Comparison of different papers for various countries

applying FIT system 16

3.5.1 Fit rate for Solar PV installation [25] 26

3.5.2 Commercial tariffs for grid prices [26] 26

3.6.2.1 UTM load profile of 24 hours of one day 29

4.3.1.1 The results for typical Malaysian house case for

Gross metering system 32

4.3.1.2 Payback period for the typical Malaysian house (gross) 33

4.3.1.3 Results for Net metering system 34

4.3.1.4 Payback period for the typical house (net) 34

4.3.2.1 Results for Gross metering system for a European house 35

4.3.2.2 Results for Net metering system for a European house 35

4.3.2.3 Payback period results for Gross metering system 36

4.3.2.4 Payback period results for Net metering system 36

4.4.1.1 Results for Gross & net metering system 39

4.4.1.2 Payback period results for both schemes 40

4.4.2.1 Results for Gross & net metering system 40

4.4.2.2 Payback period results 40

4.4.3.1 Results for Gross & net metering system 41

4.4.3.2 Payback period results 41

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4.4.4.1 Results for Gross metering system 42

4.4.4.2 Results for Net metering system 42

4.4.4.3 Payback period results for Net metering system 42

4.4.4.4 Payback period results for Gross metering system 42

4.4.5.1 Results for Gross metering system 43

4.4.5.2 Results for Net metering system 43

4.4.5.3 Payback period results for Gross metering system 43

4.4.5.4 Payback period results for Net metering system 43

4.4.5.5 Yearly average harmful gases emission 44

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LIST OF FIGURES

FIGURE NO. TITLE PAGE

2.1.1 Solar irradiance of all Malaysian cities [2] 7

2.1.2 Average daily radiation (MJ/m2/day) [2] 7

2.1.3 Average daily radiation (MJ/m2/day) [2] 8

3.2.1 World solar irradiance [19] 22

3.3.1 The methodology of the project 24

3.6.6.1 Typical Malaysian house load profile [21] 27

3.6.6.2 Domestic European load profile [22] 28

3.6.2.1 Specifying the location of UTM in JB 29

4.3.1 Typical design using Homer for a typical house in Malaysia/JB 31

4.3.1.2 Results for electricity costs 33

4.3.1.3 Results for electricity production 33

4.3.2.1 Monthly average electricity generation 35

4.3.3.1 The COE comparison of the domestic case (Net) 37

4.3.3.2 The COE comparison of the domestic case (Gross) 37

4.3.3.3 The Payback Period comparison of domestic case (Gross) 38

4.3.3.4 The Payback Period comparison of domestic case (Net) 38

4.4.5.1 Monthly average electricity generation 44

4.4.6.1 The COE comparison of UTM case (Net) 45

4.4.6.2 The COE comparison of UTM case (Gross) 45

4.4.6.3 The NPC comparison of UTM case (Net) 46

4.4.6.4 The NPC comparison of UTM case (Gross) 47

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LIST OF ABBREVIATIONS

NPC – Net Present Value

PV – Present Value

COE – Cost Of Energy

RE – Renewable Energy

FIT – Feed-In Tariff

NREPAP – National Renewable Energy Policy and Action Plan

UTM – Universisi Teknologi Malaysia

GWh – Giga Watt hour

MJ – Mega Joule

m2 – Meter square

PV – Photovoltaic

MBIPV – Malaysia Building Integrated Photovoltaic

kW – Kilo Watt

GHG – Green House Gases

TNB – Tenaga Nasional Berhad

RM – Ringgit Malaysia

Pc-Si – poly-crystalline silicon

Mc-Si – mono-crystalline silicon

CIS – Copper-indium-dieseline

A-Si – Amorphous silicon

UKM – Universiti Kebangsaan Malaysia

RECs – Renewable Energy Certificates

PPA – Purchased Power Agreements

DG – Distributed Generation

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USA – United State of America

EBIT – Earnings before Interest and Taxes

NY – New York

AZ – Arizona

WV – West Virginia

LCOE – Levelised Cost of Energy

K$ – 1000$

NREL – National Renewable Energy Laboratory

HOMER – Hybrid Optimization of Multiple Energy Resources

JB – Johor Bahru

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LIST OF APPENDICES

APPENDIX TITLE PAGE

A Create a New HOMER File 54

CHAPTER 1

INTRODUCTION

1.1 Project Overview

The primary solution for the world wide serious issue ’’depleting gas and oil’’ is to

provide a continuous energy supply to cover all needed demand. For any developed county,

energy demand increases rapidly due to huge consumption of the different loads like

commercial and domestic. To overcome this problem, many scientist and researchers found

out that using renewable energy (RE) to provide electricity can be achieved and the technology

has proved that by making wind turbines, PV panels and other RE technologies. Best

alternative resources are RE like solar, wind, tidal, wave, geothermal and biomass. The location

and the potential of these RE are important before installing the system and decide which RE

technology to use.

Different techniques have been used as well not only to encourage investors but also to

encourage people for using RE technology partially to generate electricity for their own usage.

These protocols vary from one country to another by different rules contracts and various

tariffs. Feed-In Tariff (FIT) scheme considered as a good technique to use RE technology and

encourages people to use and install it. There are two schemes for FIT to apply, Gross and Net

metering system.

The recent studies signify the importance of the applying FIT system to supply green

electricity using one scheme depending on the country and the utility contracts. However, each

state or country uses either gross or net metering system.

2

Guaranteed price is set for the RE electricity generation is being performed using FIT

scheme. It will be for long period of time, depend on the country and the utility contract for it,

in order to encourage investment for the use of RE system. China, Germany, Denmark,

Portugal, Spain and many other European countries or the other American continents have

applied FIT scheme with success in prevailing huge amount of solar, biomass and wind energy.

The main advantage of FIT is long-term assurance of financial support which leads to reduce

the investment risks noticeably.

Net metering is a policy that allows customers to use RE system to generate electricity

and sell the extra generation to the grid. It works by using one meter that spin and records the

flow of the energy in both directions. When it spins forward, means the customer is drawing

electricity from the utility grid and when it spins backward then the customer is sending power

to the grid. By the end of the month the customer will be charged for the difference of the

electricity if it consumes more than what it generates. But if it injects power more than needed

then depending on the arrangements in that place it get paid back somehow.

On 2nd April 2010, the FIT was introduced under the National Renewable Energy

Policy and Action Plan (NREPAP) which has been approved by Malaysian cabinet. This

NREPAP is established to enhancing the utilisation of local RE resources to contribute towards

national electricity supply security and sustainable socio-economic development. The FIT

scheme is an enterprise to allow consumer to generate electricity from RE resources and sold

it to the power provider at fixed rates in specific duration. For example, renewable energy for

biogas and biomass, the lifetime agreements is 16 years while for small hydro and solar PV the

agreements is for 21 years. In Malaysia, gross metering is applied. The objectives of FIT

scheme are as follows [1]:

i. To ensure reasonable RE generation is used,

ii. To ease the growth of the RE industry,

iii. To conserve the environment for future generation and

iv. To increase RE contribution in the national power generation.

3

Gross or Net metering systems are two techniques used for calculating the difference

in electricity used, generate from RE installed system and the benefits for the investors. Net

metering considers to pay the customers regarding the difference of the electricity energy

injected to the grid and consumed from utility, whereas Gross metering pay them once for their

installation of RE system and for the injected electricity to the grid.

This project aims to evaluate Fit (gross and net) scheme, pricing (COE and NPC),

payback period and the optimum scheme to use in Malaysia will be considered for different

load scenarios.

1.2 Problem Statement

FIT has been known as an actual solution to make a monthly income. Customers can

generate electricity from RE sources that they installed. Either Net or Gross metering system

is being used, the utility will pay the customer regarding the type of mechanism they are using.

Due to the difference between these two mechanisms, this study will compare between them

by assessing various scenarios of different load profiles. Malaysian and European domestic

load will be studied. Also different scenarios of UTM load profile will be done. All scenarios

based on grid connected PV system. The COE, NPC and payback period will be studied for all

cases using Homer software.

4

1.3 Objectives

In order to achieve the aim, this study has the following objectives:

1. To review different FIT scheme metering system for various countries

2. To apply Gross and Net metering scheme on different types of customers using HOMER

software

3. To analyze and compare for both metering scheme in terms of NPC, COE and payback

period

1.4 Significance of Study

The main superiority of the proposed project is to study the difference of gross and net

metering system and make a comparison of them to decide which pricing mechanism better to

apply in Malaysia.

1.5 Scope of Study

This project provides a comparison between Net and Gross metering system while

considering similar cases applied in several countries. It depends on many factors such as load

profile, tariff structure, solar irradiance, discount rate and other factors. It is important to do

comparative analysis to investigate the preferred metering that would benefit both customers

and utility. In this study, it will be limited to grid connected PV system for domestic and

5

commercial loads. A case of a residential load profile for a typical Malaysian and European

(Portugal) house will be investigated. Installing 4kW of grid connected PV system will be

introduced. COE, NPC and payback period will be considered. Another case is UTM

commercial load, many scenarios will be done considering different PV capacity varies from

27kW to 30MW. Different tariff rates will be considered regarding the each various PV

capacity.

1.6 Project Report Outline

This report is produced in order to fulfil the requirement of master project. The report

is organized in the following ways:

Chapter 1 describes the project introduction, problem statement and objective of the

studies.

Chapter 2 reviewed and summarized the previous studies and works that has been

discussed of other countries regarding feed-in tariff (FiT) scheme, comparison of different

metering systems, Home software and other important parameters.

Chapter 3 covers the project methodology which involves studies in historical data of

using FiTs, solar irradiation, FiT rates and data collection of selected residential house for

Malaysia and Europe, some calculations regarding some parameters to find out and Homer

software for estimate approaches.

Chapter 4 is the project result and discussion. In this chapter, the data projection for the

suggested different loads (Malaysian house, European house and UTM load) scenarios to

evaluate it using Homer software and find out the COE, NPC and payback period. Deciding

which scheme is better by comparing the results that has been performed.

Chapter 5 Concludes the overall project and suggesting for future work.

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