Renewable energy installations continue to be popular, not only among households, but also among businesses. Many of them choose to build renewable sources to partially meet the electricity needs of so-called commercial facilities, such as shopping malls, large-area warehouses, office buildings or technology parks. Current regulations allow the implementation of at least several models for the use of electricity generated by RES installations by tenants or lessees in commercial facilities. Here are the most important issues to keep in mind when building a renewable energy source for a commercial facility.
1. customer status
A tenant of floor space in a commercial facility generally does not have the status of a final customer under the Energy Law, as it is not connected to the electricity grid, but only to the facility’s internal grid (Article 3, paragraph 13a). This means that the supply and billing of electricity is based on sub-meter readings. In this case, you can consider either rebuilding the internal network and allowing the tenant to obtain a separate connection, or apply the so-called contractual model of providing access to the installation. Both solutions have their advantages and disadvantages, but are necessary for the tenant to legally use electricity from the RES installation.
2. Re-invoicing of costs – principles
According to the well-established position of the President of the ERO (cf. Announcement No. 11/2018 of February 1, 2018), the re-invoicing of costs for electricity consumed should always be applied in the ratio of 1:1:, i.e., those costs – and only those – incurred by the end-user (manager or owner of the facility) should be transferred to the tenant (actual customer) for the settlement of supplies, as indicated by the sub-meters. As the ERO President explained in the above-cited announcement: In the above-described case, the recipient (i.e., the owner or manager of a building with residential and commercial premises, inhabited or used by other non-consumers), firstly, accounts for these costs in the fees charged to these entities, and secondly, the amount of these fees must be determined so as to ensure that only the billed costs are covered. Such a customer does not have the right to “make money” from billing the costs of electricity consumption. Otherwise, the conduct of billing could bear the characteristics inherent in the business of energy trading, and the concluded sales contract would demonstrate the need to implement mechanisms that allow the customer the right to change the seller.
Therefore, it is clear that the re-invoicing of costs cannot be a source of additional earnings for the owner or manager of the facility, as this would entail a very high regulatory risk in the form of a finding that the activity carried out meets the criteria for trading in electricity, for which it is necessary to obtain a license.
3. Use of energy from RES installations – requirements.
Although there are many variants of the use of electricity generated from RES installations, all models have certain features in common. First of all:
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- the installation must be built and put into operation in accordance with the law, technical knowledge and safety rules,
- the installation must be connected to either the power grid or the internal grid. Even in the case of a so-called island installation, if the energy generated is to be made available to tenants, the flow of energy must be measurable by means of sub-metering,
- it must be estimated whether the amount of electricity generated by the RES installation is able to meet all or only part of the tenants’ demand. In the latter case, it will be necessary to use either a re-invoice or to conclude a sales contract and a distribution contract, as long as the tenant has the status of a final customer.
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4. Wide opportunities for the generator
The energy law is really flexible in terms of the possibilities for arranging the contractual relationship between the generator (owner of the installation) and the customer (tenant in a commercial facility). Among the most important models are:
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- closed distribution system – designed for large facilities where the grid owner consumes the bulk of the electricity. The model allows you to earn revenue from both the sale and distribution of electricity, but involves a number of legal obligations. You can read more about the closed distribution system in this post
- direct line – worth considering when a commercial facility has the potential for a high-power installation, and at the same time one of the tenants or an entity operating near the installation has a significant demand for electricity. We wrote about the details of the direct line in our article PPA – power sales contracts between the generator and the customer, can take place with the intermediation of trading companies. However, it is required that the tenants in the commercial facility have the status of consumers;
- contractual use of the installation – the solution does not require the tenants to have the status of a consumer and allows the tenants to take the energy generated by the RES installation, but it is necessary to properly arrange the contractual relationship between the owner of the installation and the tenants to minimize regulatory risks;
- liberal model – the owner of the installation sells electricity from the RES installation to the trading company, and the tenant, who has the status of a consumer, may or may not enter into a contract with the owner for the purchase of electricity. In this model, each entity independently manages its electricity demand/generation.
Regardless of the legal aspects, it is worth remembering that each model also has its financial and organizational implications. Before investing, it is necessary to verify all factors and assumptions in order to choose the optimal solution.
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