Is a more market sensitive Feed-in Tariff possible?
Posted by Jason Ramsdale on 18 November 2015 at 6:41 pm
As the green energy technology market continues to grow and develop, the policies and regulation surrounding them need to evolve. The introduction of smart meters in every home could make real-time pricing for both the selling and buying of energy become an intriguing and very real possibility. It is both exciting and reassuring to notice that DECC are aware and already considering this possibility.
Payments that vary with the price of energy in real time could make solar energy more competitive in the long-term. As solar energy is typically inflexible in the times that it can generate electricity (i.e. more output in day/summer and less at night/winter) real-time market dependent export FiTs would provide an incentive to invest in energy storage.
Energy storage would enable the array owners to save energy to sell back to the grid when the market price is high (i.e. during peak times) rather than flooding the grid with energy only as it is generated. Potentially electricity could be auctioned to the grid with each owner setting their minimum price per unit. The ability to store and auction energy for a variable price could place more power in the hands of array owners as they can determine when they want to sell their energy.
Lightsource, in conjunction with Good Energy and the Foresight Group, released a report on the costs and benefits of implementing a decentralised energy storage system in the UK. The report proposes reallocation of existing funding for the solar community which would adhere to the Levy Control Framework. The report recommends alternative changes to the FiT schedule with higher tariffs for 2016 but ending a year sooner than DECC has outlined. The report also proposes time-limited grants for households to purchase domestic energy storage. The grants outlined would be £300 per kW of storage with a maximum of £1500 per household. This could help with load smoothing for the National Grid particularly if combined with time-of-use tariffs.
Opting out of the current FiT plan and banding together with other generators of green energy to form a “virtual power plant” could allow you to pool together and store large amounts of green energy and help to negotiate better deals with energy suppliers. This “virtual power plant” could be achieved through a community or commercial middleman, who buys energy from the array owners and stores it in bulk to sell to the grid at the optimal time. Smart metering would also help analyse supply and demand on a household scale and enable energy providers to set variable tariffs. These market dependent FiTs could be then subsidised in such a way that it offers higher initial rates to help pay off for the array’s installation before falling off to the real-time market level. This would allow the government to encourage the shift towards green energy without committing to prices for the next two decades.
Is energy storage the next big thing?
Is the report from Lightsource in touch with the renewables industry today?
Should the government take heed of Lightsource’s recommendations?
Would you be interested in being part of a virtual power plant?
We’d love to hear your comments below!
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