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Behind-the-meter generation is cost-competitive for end-use consumers when its average cost of energy (calculated from past projects or LCOE) is at least equal to the retail electricity price over a project’s lifetime. In developing economies, this generation unit’s cost-competitiveness is determined by the retail price plus the amount saved in backup generation costs.

In the United States, most behind-the-meter PV systems are contracted through a third party who owns the system and sells the electricity to end-use consumers at a negotiated price. This model has become popular because it eliminates the up-front cost of PV systems to end-use consumers. This model is cost-competitive if the price offered to end-use consumers is below the electricity retail price over the contract period.