On 27 October 2017, the Energy and Water Utilities Regulatory Authority (EWURA) enacted the Electricity (Net Metering) Rules. This is the first time Tanzania has enacted laws to guide the legal framework in net metering and they look set to herald a revolution in small power projects in the Tanzania energy industry, with a massive increase in solar power generation. Along with the introduction of the Net Metering Rules, the Electricity (Development of Small Power Projects) Rules 2017 have been enacted to regulate small power projects in Tanzania. This article describes the impact of these new rules.
What is Net Metering?
Net metering is defined under the Net Metering Rules to mean: “measuring the difference between an imported and exported energy in kilowatt hours (kWh) over the applicable billing period”. Net metering allows business and individual customers generating their own electricity (off grid) through renewable energy to deliver and store the unused or excess energy in the local electric grid. Net metering facility, on the other hand, is defined as a facility that generates electricity from renewable resources with a nominal capacity to generate less than 1000kW and which is intended primarily to offset part or all of the net metering customer’s requirements for electricity.
How does Net Metering workk?
When excess power is generated using renewable resources, the meter will run in reverse by crediting the excess power into the electric utility grid. The credited power is stored in the grid and in exchange, it can be pulled back from the grid when the renewable resources system is under-generating. When this happens, excess power is drawn from the distribution network operator (DNO) just as if the net metering customer were not connected to a renewable resources power generation system.
Therefore, net metering ensures availability of power, for example, at night when, if using solar power generation, the system is under-producing, or at any time when there is a shortage of solar power. Similarly, this may apply to wind power generation, where any deficit, for whatever reason, entitles the producer and consumer to draw the excess power from the DNO to which it is connected.
Net Metering in Tanzania
EWURA is a statutory regulatory authority with the mandate to supervise the operation of net metering in Tanzania. The Net Metering Rules provide, among other things, connectivity procedures for a net metering facility, metering requirements, the billing process for the net metering, interconnection of net metering facilities, and a common interconnection agreement for net metering generating facilities. The technology used is a bi-directional meter capable of registering and displaying the direction and volume of electricity flowing in the two directions.
Eligibility for net energy metering is on a first-come, firstserved basis within each DNO service area until such time as the total rated generating capacity owned and operated by net-metering customers within the respective utility service area totals or would exceed 5 percent of the highest peak load during the previous calendar year. Under the Net Metering Rules, the DNO has the discretion to offer net metering beyond the prescribed levels if it deems it necessary to do so.
Interconnection of a Net Metering facility to the National Grid
Interconnection of a net metering facility is done by way of an agreement between the net metering customer and the DNO, which in Tanzania is the power company wholly owned by the Government of Tanzania, the Tanzania Electricity Supply Company Limited (TANESCO). The standard interconnection agreement is provided in the schedule to the Net Metering Rules.
Billing for Net Metering
Billing for net metering is undertaken monthly by the DNO, based on the charges applicable under the tariff schedule approved by EWURA. The net metering customer is entitled to receive kWh credits for the energy that is exported to the DNO. The billing customer will also be billed for service and demand charges during the billing period, along with the net energy bill.
The billing for net metering provides that in the event the kWh supplied by the DNO exceeds the kWh generated by the net metering facility and fed back to the DNO, the net metering customer will be billed for the net kWh supplied by the DNO.
In the event the kWh generated by the net metering facility exceeds the kWh generated by the DNO, then the Net Metering Rules allow the DNO to credit the net metering customer with any accumulated net excess generation in the next applicable billing period.
Any credit that remains in the customer account will automatically expire after three years, or in the event that the customer terminates the service with the DNO. The Net Metering Rules prohibit any monetary payment to be made by the DNO to the net metering customer.
Advantages of having Net Metering
Generally net metering enables saving excess or underconsumed generated power thus giving the customer control over their own electricity bill. Net metering makes it possible for those producing renewable resources to generate power or energy commercially to be able to make money from the power produced by such generation without having to install a power storage facility. Net metering reduces the demand on the grid, especially during peak consumption by the customers from the DNO by using those generators employing their excess power. The system encourages active participation in alternative renewable energy generation, which protects the environment as well as preserving natural energy resources.
Features unique to Tanzania
The net metering legal framework has some characteristics that are different from other jurisdictions. It introduces a one-to-one system of transferring electricity without imposing storage charges. Technically, the DNO acts as a giant storage facility (battery), for example, for the solar generated power. This is different from other jurisdictions such as the United Kingdom which have service and storage charges.
The future of renewable energy power generation in Tanzania relies on both private and public cooperation. In our view, the fact that there are no costs involved in storing or pumping the excess energy to the DNO, is a good incentive for private generators of renewable energy and will go a long way to encouraging investors in the Tanzanian market. We are aware of the increasing popularity of net metering systems around the globe, with countries like the United States, the United Kingdom, Denmark, Brazil, Morocco, Kenya and many more, getting involved. Tanzania has taken this approach in order to encourage private investment in renewable resources, especially in rural areas where power availability is still a major problem.