Active Consumer Support Mechanism Implementation Rules
Key Highlights: This decree establishes Azerbaijan's net-metering system, allowing individuals and legal entities to install renewable energy systems up to 150 kW, sell excess electricity to the national grid, and offset future consumption.
Overview
The Cabinet of Ministers of the Republic of Azerbaijan, in order to ensure the implementation of sub-paragraph 1.1.2 of Presidential Decree No. 1387 dated July 12, 2021 "On the Application of the Law of the Republic of Azerbaijan No. 339-VIQ" dated May 31, 2021 "On the Use of Renewable Energy Sources in Electricity Production", has approved the Rules for the Implementation of the Active Consumer Support Mechanism.
1. General Provisions
System Capacity Limits
The power of the power plant producing electricity from renewable energy sources by the active consumer shall be set at a limit of 150 kW (including 150 kW).
Definition of Active Consumer
An active consumer is defined as a legal or natural person who, while consuming electricity, also produces electricity from renewable energy sources with a capacity of up to 150 kW (including 150 kW).
2. Support Mechanism Stages
The active consumer support mechanism consists of the following stages:
- Design, construction, and installation of the active consumer's power plant
- Connection of the construction facility to the electricity supply network
- Transfer of surplus produced electricity to the grid for compensation
- Purchase of electricity from the grid at retail tariff when consumption exceeds production
- Contract execution between active consumer and energy supply company
- Payment for surplus electricity at wholesale tariff rates
3. Connection and Installation
Grid Connection
Connection of active consumers' construction facilities to the electricity network is regulated by the Rules on Electricity Networks approved by Resolution No. 315 of the Cabinet of Ministers of the Republic of Azerbaijan dated June 25, 2024.
Smart Metering
Compensation and settlement between the active consumer and the energy supply company shall be carried out in accordance with Article 10.3 of the Law, based on the readings of remotely controlled meters installed at their balance ownership boundary, allowing for the calculation of electricity transferred to and received from the electricity supply network.
Important: The active consumer must install and connect the meter to the electricity supply network at their own expense.
4. Compensation Mechanism
Monthly Balance Calculation
The balance of the active consumer for the reporting period is calculated using the following formula:
Bn = Bn-1 + (Ön - An)
Where:
- Bn – Balance for current reporting period
- Bn-1 – Balance from previous reporting period
- Ön – Energy transferred to grid in current period
- An – Energy received from grid in current period
- n – Calendar month
Annual Settlement
Compensation continues throughout the reporting year (January 1 to December 31), with the balance calculated month by month. At the end of the reporting year:
- If the balance is positive (you produced more than you consumed), the energy supply company pays you for the surplus at the wholesale tariff
- If the balance is negative (you consumed more than you produced), you pay the energy supply company at the retail tariff
5. Financial Benefits
Net-Metering Benefit: Excess solar energy produced during the day is "banked" in the grid and can be used at night or on cloudy days, effectively eliminating or significantly reducing electricity bills.
Key Financial Terms
- Wholesale tariff payment: Energy supply company pays active consumer for annual surplus at wholesale rates
- Retail tariff payment: Active consumer pays for monthly shortfall at retail rates
- Payment timeline: 1 month after notification is provided
- Taxation: Subject to the Tax Code of the Republic of Azerbaijan
6. Tariff Structure
Tariffs are established according to the "Domestic Tariffs for Electricity" approved by Resolution No. 14 of the Tariff (Price) Council of the Republic of Azerbaijan dated October 16, 2021.
Prime Minister Ali Asadov
Republic of Azerbaijan
Baku, September 28, 2023
Official source: e-qanun.az/framework/55295