POLICY PAPER
CONSUMING SELF-PRODUCED ENERGY:
FROM CONSUMERS TO PROSUMERS
Claude Turmes
Member of the European Parliament
Brussels, 14 July 2015
Consumption of self-produced electricity is a driver of the energy transition and at the heart of a more
decentralised energy system empowering citizens to fully master both their energy production and their
energy consumption, where consumers become prosumers. Over the last years, many Europeans have
already taken the plunge and reached the conclusion that generating their own electricity was at the
same time cheaper than buying it from the grid and good for the planet. A combination of photovoltaic
panels, batteries, smart meters and smart grid to allow demand-response are the fundamentals of the
energy system of the future.
This concept needs nevertheless to be better defined in order to grasp all its facets and reap its multiple
benefits as a structuring element of the energy transition. Self-generation is more than simply allowing
citizens to install solar panels on their rooftop: it is the recognition that each and every inhabitant
should have equal access to natural resources and ambient energy and be allowed to store, share,
consume and sell the energy they individually or collectively generate in their own or common
location, just like each and every of us can store, share, consume and sell fruits and vegetables grown
in our own or common garden. This implies that energy is not perceived only as a commodity tradable
by market operators on stock markets but as a resource each citizen shall be able to value as the product
of the sustainable exploitation of the infinite potential of sun, wind, seas, rivers and forests. At the same
time self-generation allows prosumers, who shall remain connected to the grid, to become key actors of
the energy solidarity in Europe by contributing fairly to grid charges. The policy design should then
extend to cover the challenges of inclusivity and affordability.1
Introduction
The advent of bottom-up energy production modes is today opposed by large utilities, who intend to
protect their oligopolistic situation in electricity generation and their monopolistic situation in
transmission and distribution for given geographic areas. For instance, market actors such as EDF in
France, Iberdrola in Spain, RWE in Germany, ENEL in Italy, GDF-Suez (Engie) in Belgium perceive
self-generation as an attack against their profits and more generally fear that renewables will on the
long-run push off-market their nuclear and fossil fuel assets. This was explicitly acknowledged by Peter
Terium, CEO of RWE at a press conference in October 2013: “Economic stagnation, energy efficiency
improvements and renewable energy are making conventional capacities increasingly unprofitable”.2
This attitude is even more paradoxical since utilities are lobbying actively against their own customers by
attacking solar PV feed-in tariffs.3 For example, the Spanish coal and gas champion Iberdrola was at the
1
same time one of the largest victims of retroactive regulatory changes adopted in Spain in the area of
wind.
The ownership unbundling, albeit imposing a structural separation of generation, transmission and
distribution tasks, was a first victory against the status quo. The "third package" is assuring the neutrality
of distribution system operators (DSOs) under strict oversight from national regulators, coordinated in
ACER. However in member states where DSOs remain largely dominated by oligopolistic actors (ERDF is
100% owned by EDF in France, Endesa owned by ENEL in Spain, State-owned CEZ bought all local DSOs in
Czech Republic in the early 2000s), enforcement of the third package need to be carefully scrutinised.
Other member states display a more fragmented distribution landscape, such as Germany, where more
than 800 DSOs are active. The generalisation of self-generation, whereby prosumers have the possibility
to use the distribution grid to exchange their excesses or shortages without any form of discrimination, is
another battle field to dismantle old-fashioned centralised utilities and substitute them by a
decentralised energy system with citizens at its core, based on renewable energy showing a near-zero
marginal generation costs.
In order to anchor self-generation in the European energy system, we need to propose an adaptation of
the distribution system which is most directly affected by this structural change. As regulated entities
delivering a service of general interest, DSOs should actively promote the right to become a prosumer.
As neutral market facilitators, DSOs would also benefit a lot from self-generation if the policy framework
is well designed: this would be a fair deal for prosumers and grid operators.
The potential of self-generation was acknowledged in principle by the European Commission in their
energy union communication, offering "a new deal for consumers: (...) smart technologies will help
consumers and energy service companies working for them to reap the opportunities available on the
energy market by taking control of their energy consumption (and possible self-production)". The
Commission also announced an initiative to redesign the electricity market in order to allow for the
benefit of "a multitude of new producers". These timid intentions from the Commission are expected to
be translated into policy actions in the coming months, with a first step in July 2015: the adoption of an
Commission communication on the retail market and on self-generation, offering "a new deal for
consumers".
We believe that self-generation, while prosumers remain connected to the grid, has the potential to
deeply modify the energy landscape in Europe. With the objective of completing the internal energy
market, self-generation should thus be framed at European level instead of left to member states to
develop their own regulatory framework. A European framework should first of all enshrine the right to
self-generation coupled with grid access in relevant legislative texts (part 1). It should also be articulated
around the principle that both grid operators and customers benefit from it and hence should also
contribute in fair proportions through regulated grid charges (part 2). Finally, self-generation should be
closely linked to energy savings and offer a smart metering approach (part 3).
1. Key principle: enshrining the right to self-generation into European law
Firstly, the right to produce energy and directly consume it, while remaining connected to the grid,
should be enshrined in relevant legislations at EU and member states level. It should be part of the
review of the Energy Consumers' Charter soon to be undertaken by the European Commission. This step
is a prerequisite to the definition of the framework on self-generation. In addition, it should also be
2
included in the revision of the RES directive expected in 2017 to set the framework towards 2030 so that
member states have the obligation to set up a framework regulating self-generation.
Secondly, self-generation should not remain only a theoretical right outlined on paper but an actual
freedom for each household or community. For this reason, barriers should be removed as they
sometimes constitute hidden obstacles on the way to self-consume. We recommend that administrative
constraints are limited to the lowest possible level: for example, self-generation should only be notified
to relevant administrative authorities rather than subject to lengthy and uncertain authorisation
procedures. In addition, regulatory barriers should also disappear, such as the obligation to inject
electricity into the grid before re-buying it (French system) or the limitation of the size of an installation
falling under the scope of self-generation, even if differentiation on these criteria should be possible
through cost-reflective network pricing (see chapter 2). It means the right to self-generation in
residential buildings should be absolute and unconditional, also applying to the consumption of energy
from community energy initiatives such as cooperatives which are flourishing throughout Europe.4 The
market should encourage and reward engagement, also offering advice, guarantees and protection to
prosumers.
Unfortunately, this right is still not recognised in
some member states where electricity distribution
When the French government fights against
remains into the hands and under the control of a
RES on a 120 inhabitant territory
large dominating entity, forcing consumers to inject
The Island of Sein (Île de Sein) is a small island
their electricity to the local grid and to buy it from
off Britany coast, populated with 120
the grid too. This is the case in France notably,
inhabitants and not connected to the
where political speeches in favour of self-generation
continental network. Inhabitants gathered in a
are not translated into a concrete model. Although
local company aimed at substituting fuel oil
the French Minister for Energy, Ségolène Royal,
with renewables in a cost-effective system also
declared that self-generation should be "a big
involving energy savings. However French
priority work for 2015",5 the establishment seems
public authorities combat this to defend by all
exclusively concerned about maintaining the
means the monopolistic situation of EDF and its
domination of EDF. The example of the Island of
subsidiary ERDF as the exclusive operator of the
Sein is very illustrative in this respect. The Spanish
public service of electricity, rejecting the
situation is equally bad. While self-generation is
request of the Ile de Sein Energie company to
recognised as such, the ceiling of 100 kW constitutes
become a local alternative DSO.
a de facto barrier to its full and legitimate exercise,
in addition to the “backup toll” imposed to
prosumers who, after using their own generating
facilities, shall pay full third-party access fees to sell back the excess to the grid, other barriers were
established such as the necessity that PV installation owner must be the same as the surface owner.6
Insufficient self-generation framework has been identified as a specific challenge by the EU-sponsored
project PVGrid, with a final report urging "countries not having a self-generation framework in place to
consider legislation for allowing it".7
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2. Which model for self-generation? Finding the right balance between rights and
obligations for prosumers and grid operators
Firstly, we need to recall that the choice to enter
into self-generation can only be done by
consumers if they access the necessary
information. Unfortunately, "consumers’ plans
to invest in self-generation are hampered by a
lack of reliable and structured information on
technological options and potentials while the
quality of offers and services often differs
widely" 8 making this choice even more
complicated. It is therefore important to achieve
more transparency in the billing information
(including real time information transmitted in a
clear and understandable manner) so that they
can adequately measure the potential savings
implied by self-generation but also more
information on technologies and products
available, displayed in a comparable manner:
"advice with consumer needs at the heart should
be treated as a priority area for action".9
Secondly, solutions should be offered to help
prosumers managing the upfront costs, so that
self-generation is not limited to the wealthiest
part of society.

Multiple benefits for prosumers
"Solar Leasing": democratising the usage of PV
panels in the UK
The U.S. company SunEdison introduced their
energy saver plan into the UK market in 2015, which
includes the important point of "solar leasing" (or
"rent-a-roof"). Because the installation of solar
panels on roof tops might turn expensive for
low-income households, SunEdison tries to simplify
the process by removing the biggest barrier - the
upfront purchase costs - through a leasing model.
The company claims that the lease runs for about
20 years and the consumer does not have any down
payments and during the first year, the new solar
panels will deliver a 15% saving on existing
electricity. Moreover, the energy saver plan
includes that SunEdison will be responsible for
installation and maintenance of the photovoltaic
system. The regulatory framework should favour
such systems, including the specific circumstances
arising for tenants. Consumers lease solar panels
reportedly to reduce their dependence on rising
electricity prices and to contribute to environment
protection.
The advantages of self-generation for citizens are numerous and easily graspable. Firstly, self-generation
is a protection against the volatility of prices for a relatively long time as the life duration of renewable
installations (mostly photovoltaic in this case) is relatively long, spanning from 20 to 30 years.
Self-generation can successfully be combined with batteries to induce peak shifting and member states
should establish incentives for the purchase of batteries. In such cases, micro-storage at individual or
collective level is reinforcing protection against price effects for consumers, while delivering also grid
balancing benefits. Self-generation is also generating revenue for the prosumers: when their production
exceeds their consumption, the electricity generated is injected to the grid and sold for the benefit of the
producer (a favorable regulatory framework should be in place, see below).
In a context of constant cost-reductions for PV installations (the costs of a rooftop PV system have been
divided by factor 7 since 1990),10 self-generation will require less and less capital, be affordable to more
and more households. These cost-reductions also have virtuous impacts on the retail market because it
would increase competition and open perspective to new energy companies in a context where
competition in retails is not always delivering. Where costs remain dissuasive, other business models
emerge such as the "solar leasing" programme in the United Kingdom.
4
Source: Fraunhofer Institute for Solar Energy Systems ISE, Photovoltaics Report, 24 October 2014

The grid - a vector of energy solidarity
In parallel, self-generation is also offering a number of advantages for the distribution system operators
(DSOs). First of all, it allows them to rely on more predictable consumption patterns: thanks to local
storage units, the peak load can be shaved, relieving the grid from a high stress. As outlined by the PV
Grid report, "the benefits of self-generation are at their best when the peak power demand is reduced".11
Source: Solar Power Europe, 2015
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In addition, prosumers also offer grid services for the benefit of the DSOs, such as demand-side
management systems allowing the grid to limit congestion. For this reason, it is indispensable that each
and every prosumer acting individually or collectively remains physically connected to the grid. If
governments, regulators and DSOs penalise self-generation, there could be a tendency for European
consumers to go totally off-grid. We don't believe that energy autarky is a suitable development in
Europe. The grid is a vector of energy solidarity.
As outlined in the introduction, advantages linked to self-generations could be perceived as challenges or
even as threats by some DSOs, sometimes under the influence of their parent company holding fossil
fuel assets. Indeed the role of DSOs has critically evolved lately, shifting from the limited mission of
channeling electricity from point A to point B to the thrilling task of identifying in real time which of A or
B are the generation and the consumption locations and balancing the grid accordingly! In line with
Michel Derdevet, Secretary General of ERDF, we trust that the distribution grids should be renamed
"distribution and collection grids". These new tasks require significant investments to make the grid
"smarter" and able to cope with such a setting. New technologies are already being tested at real-scale
and show that PV can actively support the grid.12 DSOs investments are expected to be massive in the
coming years: for example € 4 billion should be invested by the French DSO only by 2020,13 and € 480
billion EU-wide by 2030.14 It means that these investments need to be financed and that the prosumers
partly contribute to such investments, notably through a cost-reflective network pricing,15 bearing in
mind that other sources of financing should be also thought of. In other words, part of investment costs
borne by DSOs as well as their R&D expenditure directly related to smart grids should be adequately
recovered in grid charges. The regulatory framework should provide a solution to the "remuneration
gap" caused by the development of self-generation. As a principle, we trust that DSOs investments must
be properly incentivised and remuneration schemes for DSOs should be cost-effective. We need to
reduce the cost of capital for DSOs. In addition, DSOs investment should be discussed with national
regulatory authorities (NRAs), themselves coordinated through ACER: "a thorough discussion on
recognition of smarter investments by NRAs without leading to technology micromanagement by the
regulator is needed".16

Towards a more dynamic pricing system?
A relevant pricing system allowing DSOs to invest does not necessarily mean fixed system charges for all
decentralised generators. We rather advocate for a better, transparent, cost-reflective and more
dynamic pricing system fully rewarding flexible consumption without however fully shifting the burden
of grid balancing to prosumers, who should appropriately benefit from their upfront investment. These
new pricing systems should be accompanied by all necessary advice and safeguard for prosumers:
assistance to decisions about whether a given tariff is suitable; appropriate limit on their financial
liability; availability of sufficient and clear information on offers. Such dynamic price contracts should be
incentivised as they benefit both to prosumers and to DSOs. They should take the shape of hybrid
solutions, based on the variable energy consumption (the volumes) and to the capacity. Prosumers
consuming less when the network is saturated should contribute to a smaller extent to network charges,
reflecting their actual individual impact on the grid.
These pricing systems should incentivise self-generation and propose a solution to avoid that prosumers
tend to buy from the grid during the midday peak, when the presence of massive PV on the grid would
lead to very low wholesale prices. Dynamic pricing would at the same time incentivise storage and
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demand-side management while allowing DSOs to overcome their dilemma of an industry with large fix
costs (building and maintaining the physical infrastructure) but only little income from fix prices (as
tariffs are currently exclusively based on volumes.

Solving the taxation issues
Indistinct self-generation charges and levies destroy the whole return on investment logic for prosumers
and should be avoided when designing a new self-generation model.
When insulating or refurbishing a house, one does not pay charges for it. The same logic should apply
when one enters into producing electricity. The idea of introducing a special fiscal regime for
self-consumers is not fair: consumers already pay VAT for the installation and also VAT and grid charges
on the electricity bought from the grid to top-up self-generation. In addition, they also contribute to the
general interest and the public policy objective of fighting climate change and increasing the share of
renewables in the mix and decreasing energy consumption (2020 objectives). As such, these active
prosumers should be rewarded and not penalised through disproportionate levies.
3. Self-generation and smart metering for demand-side management
If well-designed, consumption of the self-produced electricity will increase demand-side management
opportunities, ultimately leading to energy savings and a reduced consumption. This is only possible if a
key principle is acknowledged: all the power produced has to go through some kind of a metering
system. The meter is then a box not exclusively aimed at charging customers but a tool for better grid
management and data collection. For this reasons, we call for the full implementation by member states
of the Commission recommendation outlining the ten smart metering functionalities,17 while only 50%
of them follow these requirements.18
Member states and local governments should plan the roll-out of smart meters throughout Europe, in
partnership with DSOs, retail market operators and civil society, such as consumer organisations. The
current record of two-thirds of member states planning to install smart meters is a first step, assessed by
the Commission as "appreciable progress" but a lot remains to be done in order to reach the target of
72% of European consumers having a smart meter at home by 2020.19
In parallel, standardisation and interoperability is a must to allow that smart equipment and appliances
installed within the home can interact with the smart meter and communicate with the grid regardless
of their brand.
Finally, smart meters raise the ultimate question of data protection. In this context, we should recall the
basic principle that prosumers are the exclusive owners of their own data. No self-generation model shall
deviate from this rule, which seems to be also accepted by European DSOs.20 We propose that most
data remains in the meter (the device itself) to provide live feedback to the prosumer. At the upper level,
data should be stored in a public service - regulated - server and only be made available in an
anonymised, aggregated and formatted/standardised way to all potential service providers in equal
terms, covering the scope of information which is strictly necessary to match the settlement periods.
DSOs insist that data is communicated, upon prosumer's consent, to all market players on a fair basis.21
Local DSOs acting as data managers in a decentralised way will have to play the role of neutral market
facilitators and not favour their parent company, leading to competitive advantages. In order to solve
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this issue, Michel Derdevet is proposing the creation of regulated data hubs such as a European platform
on data protection, leading to the emergence of a European Big Data sector able to compete with
American leaders.22
Contact
Jérémie ZEITOUN
Assistant to Claude Turmes, MEP
Member of the Green Group in the European Parliament
European Parliament
Rue Wiertz, 60, ASP 04 F 255/253, B-1047 Brussels
Phone: +32 2 28 47 246 - Fax: +32 2 28 49 246
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Annex - National models: what's happening throughout Europe?
Some member states already established a progressive framework while others are lagging behind in
terms of acknowledging the right to self-generation and framing its modalities. For this reason, we need
clear guidelines from the European Union. If not, there is a risk that the regulatory framework on
self-generation becomes a patchwork, just like the one on capacity mechanisms: uncoordinated national
initiatives hindering the accomplishment of the internal market and confusing stakeholders.

Germany - the early bird
Beginning in 2011, Germany stimulated self-generation with a premium tariff for PV electricity: with a
self-generation rate of over 30%, the remuneration for the prosumer was even higher. These incentives
led to an increased direct consumption ratio. In the following years, the production costs of PV
decreased while the retail price of electricity increased, so self-generation became more profitable than
feeding the electricity into the grid23. Additionally, since the review of the German Renewable Energy Act
(EEG) in August 2012, the sale of surplus energy is limited to 90% of the production output. In case that
the electricity production is bigger than 10kWp, self-generation from energy systems that came on
stream in August 2014 or later, is partly stressed with the EEG-surcharge24.

France - lagging behind
Still in 2011, France was one of few European states that provided no incentive for self-consumed
electricity and only renewable energy fed-in to the grid was incentivised 25 . The first report on
self-generation of electricity was ordered in late 2013 and has been submitted on 12 February 2015 to
the Energy Minister Ségolène Royal. Its conclusion is that self-generation is not only desirable but also
inescapable, because of the excellent economic circumstances: the production costs of PV panels are
constantly falling while the selling prices of electricity keep rising26. But because the report itself does not
sufficiently explain important points like the residential sector and a possible remuneration model, it
might still be a long way for France to introduce self-generation27.

Italy - on a good way to tap the potential
The case of Italy is an example of a highly supportive regime. By the end of 2012, the fifth energy bill of
Italy - named Vth Conto Energia - introduced a self-generation premium scheme, which is very close to
the German concept28. Two schemes permitted high financial incentives: first, the PV generated power
was remunerated by feed-in tariffs, but only until June 2013. Second, the alternate option is the
"scambio sul posto" (net-billing) that still exists and remunerates the amount of produced, fed-in and
immediately consumed electricity29. But even if this scheme is already well designed, it is considered to
be very complex and still needs to be improved: e.g. the cap at 200 kW is still quite low and could
therefore be further increased.

Spain - an immense potential destroyed by poor government decisions
Since November 2011, self-generation in Spain has been formally permitted but capped at 100 kW. In
general, there are no direct incentives given by the state - only the fed-in to the grid is remunerated.
Because of hard administrative barriers and legislative uncertainties, the situation of self-generation is
still difficult. The introduction of a partial net-metering scheme is still under discussion.30 In addition,
regulatory barriers remain, such as the obligation that PV installation owner must be the same that
surface owner. The new Spanish regulation 24/2013 Act only permits very restrictive self-supply scheme
and imposed a Grid Backup Toll ("sun tax") for in-house produced electricity.
9

Portugal -a model for the Iberian peninsula
Portugal treats the topic self-generation differently as his Spanish neighbour: A new law from January
2015 exempts small solar systems that are producing electricity under 1,500W only by registering them
(neither metering nor contracts are required). This new legal situation makes solar electricity for
self-generation available to every household and simplifies furthermore the regulation of all
grid-connected solar production system. There are two types of system that are now brought into one
law: first, the "Production Units for Self-generation (UPAC)" that covers all renewable and
non-renewable energy sources producing electricity for consumption at the point of installation; and
second, the "Small Production Unit (UPP)" that covers all renewable energy sources feeding in 100% of
the electricity into the national grid for profit.31

United Kingdom - on track
With a legally approved self-generation right and an explicit self-generation premium in form of an
export tariff (for up to 50% of the production by default that is less than 30kWp), the most attractive
conditions can certainly be found in the UK 32 . The whole scheme can be seen as supportive.
Furthermore, the exemplary practice of Solar Leasing (“rent-a-roof”) that has been established in the UK
bears the high upfront costs of a PV panel installation and thus enables consumers – not only house
owners but also tenants - to generate and to consume their own energy. According to a study from the
British association “Citizens Advice”, consumers describe their positive experiences with the installation
process and living with the solar panels33. Nevertheless, problems still seem to be existent for the supply
of social housings.

Denmark - solving the taxation issue
While in a lot of European countries, self-generation has been promoted, Denmark had developed a
small scale yearly net-metering scheme, but which has been stopped by the government in November
2012 because of a loss of tax revenues; since then just an hourly net-metering is left.34 But recently, in
2014, Denmark implemented a new "Order on net settlement of self-generation of electricity", that
incentivises producers to supply electricity to the grid by exempting them from paying tariffs, duties and
value added taxes.35
1
This paper exclusively addresses self-generation in residential buildings. However SMEs and the industry could
also benefit from self-generation following a different model.
2
Greenpeace, Tied Down: Why Europe's energy giants want to keep us hooked on imported fossil fuel, October
2014.
3
Greenpeace, Why Europe's big energy companies fear change, February 2014.
4
See the map published by the EU-funded REScoop project: http://rescoop.eu/fr/node/750
5
Matthieu Combe, "Royal annonce le chantier de l'autoconsommation", Natural-Sciences, 12 February 2015
(courtesy translation into English)
6
UNEF, Self-generation perceived as a threat: the PV disruptive toll, 22 September 2014.
7
PV Grid, Final report, August 2014.
8
BEUC, Building a consumer-centric energy union, 8 July 2015.
9
Citizens advice, Staying FiT Learning from consumer experience of solar PV systems to inform the development of
low-carbon policies, June 2015.
10
10
Fraunhofer Institute for Solar Energy Systems ISE, Photovoltaics Report, 24 October 2014.
PV Grid, Final report, August 2014.
12
Meta-PV project, Final Report: Cost-effective integration of photovoltaics in existing distribution grids, March
2015.
13
Michel Derdevet, Secretary General of ERDF, Energie, l'Europe en réseaux, La Documentation Française, 2015.
14
IEA WEO
15
GEODE, Comments on the role of DSOs in a smart grids environment, 24 January 2014.
16
EDSO, The future role of the DSO, February 2015.
17
European Commission, Recommendation 2012/148 on preparations for the roll-out of smart metering systems, 9
March 2012.
18
European Commission, Benchmarking smart metering deployment in the EU-27 with a focus on electricity,
COM(2014) 356 of 17 June 2014.
19
European Commission, Benchmarking smart metering deployment in the EU-27 with a focus on electricity,
COM(2014) 356 of 17 June 2014.
20
GEODE, Comments on the role of DSOs in a smart grids environment, 24 January 2014.
21
EDSO, The future role of the DSO, February 2015.
22
Michel Derdevet, Secretary General of ERDF, Energie, l'Europe en réseaux, La Documentation Française, 2015
23
EPIA, Self-Consumption of PV Electricity, July 2013.
24
Fraunhofer ISE, Recent Facts about Photovoltaics in Germany, 19 May 2015.
25
SunEdison, Enabling the European Consumer to Generate Power for Self-Consumption, November 2011.
26
Loïc Chaveau (Sciences et Avenir), L’autoconsommation électrique: on y vient doucement. Même la France!, 17
February 2015.
27
Joël Spaes (Europolitics), France takes small steps towards self-consumption, 18 February 2015.
28
EPIA, Self Consumption Of PV Electricity, July 2013.
29
Marie Latour (EPIA), Net-Metering and Self-Consumption Schemes in Europe, 20 September 2013
30
EPIA, Self Consumption Of PV Electricity, July 2013.
31
Freeenergyshop, Electricity for self-consumption, January 2015.
32
Marie Latour (EPIA), Net-Metering and Self-Consumption Schemes in Europe, 20 September 2013.
33
Citizens Advise, Staying FiT, 2015
34
Latour 2011, p.13
35
J.F. Sanz et al., Analysis of the European policies and incentives for microgrids, April 2014.
11
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