Here’s something I’ve learned working with solar asset management clients with unique billing needs in the Middle East: It’s not just kilowatts and a plug. It’s also the quality and the parameters of that electricity.
Parameters that, conveniently enough, are often reflected in the billing system in place.
To really understand how solar—truly, any energy—billing varies in different regions like the Middle East, you have to understand the context. What drives the value that each region is getting out of your system, who is measuring that value, and how they measure it.
At PowerHub, as we explore these nuances, we’ve built solar billing solutions that our clients can use in multiple regions, across continents and with different energy parameters in mind. Here are three things we’ve learned about why billing solutions can appear so different.
1) Billing Varies Region to Region
Seems obvious, but important to reiterate. No matter what part of the world you’re in, each grid operator has their own parameters they use to make sure everything flows the way it’s intended.
And each region has its own standards that guide and manage the flow of electricity.
That’s why billing will vary based on the electricity systems governance group in the region. A good example is a group called the National Electric Power Company (NEPCO) in Jordan—they’re responsible for managing certain parts of the national grid.. They set rules for what information needs to be shared, as well as the procedure to be followed in under different grid conditions.
Groups like NEPCO have a huge impact on how renewable projects operate, so as a new solar/wind developer or operator, you need to understand what’s important to the appropriate regulatory body for the electricity you produce.
Consider demand response measurements like time-of-use rates (sometimes energy produced is worth a lot, and sometimes it’s worth nothing), partial curtailment, or frequency regulation. These are grid needs that can often affect energy production and energy billing. As well these needs are often defined and controlled by the regional governance group, and they’re vital for an operator to track and calculate on a regular basis.
2) Know How You Get Paid and Be Prepared to Show It
I’ve seen a lot more want for transparency in the way invoices are calculated in the Middle East.
Often, that’s because the infrastructure in place doesn’t offer easy visibility into production properties for one of the parties. So, the person buying power from you may not have an easy (or cost effective) mechanism for verifying your bill. Instead, the jurisdiction or governance body relies on the power producer to be much more transparent how the invoice was calculated.
We often see requests for calculation sheets (again, this varies by jurisdiction) because there are multiple calculations and line items that the regulator may want to audit prior to paying the invoice. In North America, as each party invoices their own side of the equation and this decreases the need for complex invoices as you are typically only auditing a single line item. If there are discrepancies after an annual audit, a simple true up process can be used. . In the Middle East, there’s often a single bill and single data set for that bill. As a result, truing up a net invoice that has different hourly rates can be really tough 6 months later.
Let’s talk about another example. Most North American and European renewable energy projects use a one-directional bill: one party invoices for whatever’s being sold (the other party might then send its own separate bill regarding its own chargers). But increasingly in the Middle East, there’s net billing. One party not only invoices for what’s being sold, but also calculates in that bill what it owes the second party, and takes that charge off of the amount owed. These must be properly documented on the invoices as their own line items and verifiable.
This visibility (or lack thereof) defines the values that need to be reported on.
3) Infrastructure Impacts Billing
In different countries, electricity infrastructure ownership is different. I’ve seen examples where the main step-up transformer into the grid is owned by the utility or regulatory body. This means each operator pays an access fee for that transformer—aside from having to wait for the transformer to be built by someone else, and then dealing with its parameters. I have also seen examples where the step-up transformer is partially owned by the grid operator and partially owned by the renewable energy facility. This is usually built by the facility to the grid operators’ specs, and ownership is separate by high and low side of the transformer. Don’t even get me going on delayed ownership transfers or partial ownership where it’s not tangibly this is your side and this is mine. How much more complexity can our industry invent?!
As we enter 2020, we’re reflecting on the many jurisdictions our customers operate in – bringing a global perspective to our team here in Toronto.
It’s important to note that the challenges and differences I’ve outlined above are due to how each market has evolved over time. They’re clear examples of the need for renewable energy project owners, asset managers, and software producers to understand the local market conditions and regulations. They are opportunities for us to grow and build robust tools that support the global renewable community.
As our renewable industry continues to grow, as our systems and needs grow more sophisticated, and regulations evolve to meet that need for sophistication, we have to grow with them. The billing solution is just one part of that evolving sophisticated energy ecosystem.