Draft regulation allows increasing the capacity of renewable energy systems when adding electricity storage systems

The Council of Ministers approved the justifications for the draft amended regulation for the regulation of connecting renewable energy source facilities to the electrical system and the exemption of renewable energy source systems and energy conservation for the year 2026.

The government stated that the project aims to enable citizens and economic sectors to benefit more and more efficiently from renewable energy, by allowing greater flexibility in self-generation, encouraging electricity storage and energy conservation, which enhances the feasibility of investment in clean energy and increases the electrical system's capacity to absorb more of it, while maintaining grid stability and reliability.

The proposed amendments include removing sectoral restrictions on some connection mechanisms, allowing for an increase in generation capacity in cases related to storage systems, reorganizing the provisions for the residential sector, allowing, under specific conditions, the expansion of systems existing before June 2024, in addition to requiring an energy efficiency certificate for facilities whose consumption reaches 500 megawatt-hours or more over 12 months.

- Storage allows for capacity increase

Among the most prominent proposed changes is allowing an increase in the generation capacity of renewable energy systems when connected to storage systems, with a maximum limit linked to 100% of the consumption of the last 12 bills, according to the conditions specified for each mechanism.

In the off-site net metering mechanism, the project allows, if the renewable energy source systems intended to be connected to the licensee's system are linked to storage systems, an increase in generation capacity up to a maximum of 100% of the total consumption of the consumer or consumers for the last 12 bills from the date of application, plus the electrical loss quantities specified in the table below, provided that the increase is compatible with the capacity of the storage systems and in accordance with the guidelines approved by the Energy and Minerals Regulatory Commission.

In the on-site net metering mechanism, the project also allows for an increase in the generation capacity of systems linked to storage up to a maximum of 100% of the consumer's consumption for the last 12 bills from the date of the connection application, provided that the increase is compatible with the capacity of the storage system and in accordance with the guidelines approved by the Commission.

The 100% ratio does not automatically mean allowing the doubling of the size of any existing system by 100%, but rather sets a ceiling for the increase in generation capacity based on the volume of consumption and within the conditions regulating each mechanism.

- Expanding the beneficiary sectors

In parallel, the project aims to remove a number of sectoral restrictions contained in the current regulation; in the off-site net metering mechanism, the project cancels the text that limits its benefit to the medium industrial, small industrial, agricultural, and hotel sectors.

It also cancels, in the on-site net metering mechanism, the restriction to the medium industrial, small industrial, agricultural, hotel, and residential sectors.

The project also cancels the text that excludes consumers under the standard tariff, extractive industries, and banks from the zero-export mechanism.

Deleting these restrictions leads to expanding the scope of sectors that can benefit from the relevant mechanisms, while each case remains subject to the rest of the technical and regulatory provisions and conditions specified in the regulation.

The project also adds a provision stating that the user chooses one suitable connection mechanism from the connection mechanisms specified in the regulation.

- Tariff for generated energy and storage

The project replaces the table for the tariff of electrical energy generated from renewable energy source systems, with different values determined according to the sector and the presence and capacity of a storage system.

According to the proposed table, the tariff for energy generated from residential systems without storage is 50 fils per kilowatt-hour, while it is 70 fils per kilowatt-hour for systems linked to storage with a capacity equivalent to 50% or more of the amount of electrical energy expected to be produced from the renewable energy source system.

If the storage capacity is less than 50%, the tariff is calculated according to a formula that links its value to the percentage of storage capacity, starting from 50 fils per kilowatt-hour.

In the rest of the tariff sectors, the project set the tariff at 40 fils per kilowatt-hour for systems without storage, and 50 fils per kilowatt-hour for systems linked to storage with a capacity equivalent to 50% or more of the amount of energy expected to be produced, while the tariff is calculated according to a gradual formula when the storage capacity is less than 50%.

These values do not represent the electricity consumption tariff paid by the subscriber, but rather the tariff for electrical energy generated from renewable energy source systems included in the table.

- Expansion of pre-June 2024 systems

The project opens a path for renewable energy facilities and systems connected to the electrical grid that obtained approval from the licensee before June 1, 2024, as it allows them to apply for an increase in generation capacity by adding new capacity.

It is required that the electrical energy produced from the additional generation capacity be handled according to the "export all and draw all" mechanism, and that the total amount of electrical energy expected to be generated annually from the existing system and the added generation capacity does not exceed 100% of the subscriber's total consumption for the last 12 electricity bills issued by the licensee, in accordance with the guidelines approved by the Commission.

If these systems are linked to a storage system capable of storing the entire amount of electrical energy expected to be produced from the additional generation capacity, the project stipulates that the tariff for electrical energy exported to the grid be 50% higher than the tariff for energy generated from renewable energy source systems not linked to a storage system.

This percentage differs from the 50% storage capacity ratio mentioned in the table below; the former relates to the tariff applied in the special case of additional capacities for systems that obtained approval before June 2024, while the latter is used in determining the tariff according to the capacity of the storage system.

- Organizing residential sector provisions

The project reorganizes the provisions for the residential sector through an independent article that allows residential users to establish and own renewable energy source systems according to the mechanisms authorized by the regulation, such that the amount of energy expected to be produced annually does not exceed 100% of the total consumption calculated according to the guidelines approved by the Commission.

It also stipulates that the capacity of renewable energy source systems for the residential user must not exceed 16 amperes per phase.

The 100% ceiling or the 16-ampere limit per phase does not represent a completely new privilege for the residential sector, as the current regulation includes provisions that organize residential systems within specific mechanisms, while the project reorganizes these provisions in an independent article.

The project introduces a condition for high-consumption facilities, as it stipulates that it is not permissible to operate renewable energy source systems connected to the electrical grid for facilities whose total electricity consumption reaches 500 megawatt-hours or more during the twelve months preceding the connection application, except after obtaining an energy efficiency certificate.

The project links obtaining the certificate to instructions issued by the Ministry of Energy and Mineral Resources for this purpose, thereby adding a requirement related to energy efficiency before operating renewable energy systems for this category of facilities.

- Changing the capacity calculation method

The project also changes the method for determining the size of generation capacity when submitting a renewable energy system connection application.

It stipulates that the capacity size be determined according to the production coefficients for solar and wind energy sources adopted by the Energy and Minerals Regulatory Commission. As for other renewable energy sources, the consumer is provided by the licensee with the amounts of energy expected to be produced according to the technical specifications and guidelines approved by the Commission.

The amendment thus transfers the determination of production coefficients used in calculating system sizes to the Commission instead of keeping specific values for them in the body of the regulation.

The project also replaces the table related to grid service fees, setting different values according to the user's tariff.

According to the proposed table, the grid service fee is 17.5 dinars per kilowatt for banks, 14 dinars for extractive industries, 10 dinars for both the standard tariff and ports, and 9 dinars for each of radio and television, the armed forces, and commercial entities for systems with a capacity exceeding 16 amperes per phase.

The fee is 8.5 dinars for both telecommunications and private hospitals, 5.5 dinars for large industrial, car charging, and commercial systems with a capacity of less than 16 amperes per phase, 5 dinars for both street lighting and mixed agricultural, 3.5 dinars for water pumping, 2 dinars for hotels, and one dinar for the residential sector.

Conversely, the draft set the network service fee at zero for medium industrial, small industrial, and agricultural sectors.

The network service fee represents a charge separate from the generated electrical energy tariff mentioned in Table No. 3; therefore, the values in the table do not imply a change in the electricity consumption tariff applied to these sectors.

With the sum of these amendments, the draft aims to reorganize a number of rules for connecting renewable energy systems to the grid by expanding the scope of benefits from certain connection mechanisms, introducing storage more broadly into capacity regulation, and allowing the expansion of existing systems under specific conditions, in exchange for adding requirements for large electricity consumers.

The government stated that the draft regulation came after discussions with government and regulatory bodies, electricity companies, representatives of economic sectors, specialists, and investors in renewable energy, and based on a regulatory impact assessment, noting that the results of implementing the amended regulation will be subject to monitoring and evaluation through indicators that include the expansion of renewable energy projects, installed electrical capacities, added storage capacities, and their reflections on the electrical system, provided that a comprehensive review is conducted three years after its entry into force to develop procedures, measure the achievement of its objectives, and evaluate its impact on electricity tariffs and the stability of the national electrical system.

The draft comes at a time when the government stated that renewable energy has reached a contribution of about 27% of the Kingdom's electricity generation needs, while the energy sector strategy for the years 2025–2035 aims to raise this percentage to 40% by 2035.

The text remains a draft regulation open for public consultation and is not an effective regulation, and the amendments contained therein do not become binding before completing the procedures for its approval and publishing the amended regulation in the Official Gazette.