Palestinian Energy Project (PEP) Net Metering Policy Assessment and Recommendations

PEP is supported by the U.S. Agency for International Development (USAID) and implemented by AECOM. The project focuses on building the institutional capacity of Palestinian energy institutions, strengthening commercial operations of distribution companies (DISCOs), and implementing select renewable energy (RE) pilot activities. Net metering policies are market-based incentives that address the barrier of project economics for most renewable energy technologies. These policies create an incentive for private investment in distributed renewable energy technologies by providing value to the electricity generation that exceeds a utility customer's electricity demand. When implemented properly, net metering lowers project-related risk, improves project financials, ensures proper sizing of renewable energy systems, and increases overall market penetration. Best practices for net metering policies include being as inclusive as possible, ensuring fair retail credit for power produced, and being nondiscriminatory. Inconsistency in standards, eligibility, application processes, and credit application creates confusion among consumers and undermines the ability of renewable energy businesses to operate efficiently across utility service territories. The Palestinian Energy Project recommends implementing best practices for net metering policies to promote renewable energy development in the West Bank. Recommendations for improving net metering policies in the West Bank include removing monthly penalties on excess generation, increasing the net metering capacity limit to 2MW, listing eligible renewable energy technologies, allowing for aggregated metering, improving transparency and data access, and allowing for third-party ownership of renewable energy systems. These recommendations are based on best practices from the U.S. and other countries, where net metering policies have been successfully implemented to promote renewable energy development. The U.S. has a long history of implementing net metering policies, with many states serving as proving grounds for connecting renewable energy to the grid. According to the Renewables 2018 Global Status Report, 63 countries now have existing national or subnational net metering policies in place. In Jordan, approximately 100MW of net-metered renewable energy systems are currently installed due to favorable net metering policies. Egypt recently increased the individual renewable energy system capacity limit for net metering from 500 kW to 20 MW.