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Photovoltaic self-consumption in developing countries: Assessing the impact of block tariffs and net metering in Ecuador

Abstract:

Photovoltaic self-consumption (PVSC) has spread unevenly worldwide. In Ecuador, adoption remains lower than expected, and the influence of residential tariff design on PVSC profitability has received limited attention. This study examines how the increasing block pricing (IBP) tariff and net metering (NM) interact to determine the financial performance of residential PVSC in Ecuador. Full-year, high-resolution monitoring data from eight operational households were analysed. PV generation was scaled from 10% to 100% of annual demand and assessed under four scenarios: IBP with NM, IBP without NM, a fixed-price volumetric tariff with NM, and the same fixed tariff without NM. The results indicate that the IBP structure is the primary driver of profitability: under IBP with NM, the time to return on investment (TROI) is typically short for most households and can become exceptionally low for high-consumption ones. Removing NM reduces returns; however, under IBP, PVSC generally remains viable. In contrast, under a uniform volumetric tariff, NM becomes critical, as profitability deteriorates markedly in its absence. Overall, the findings help explain the uneven uptake of PVSC in Ecuador and highlight the central role of tariff design when deploying residential PVSC under regulated pricing frameworks.