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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.[1]

Do imminent changes to the Solar PV Feed-in Tariff and talk of a dynamic export tariff reflect a shift towards market dependent Feed-in Tariffs [1] ?

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

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.[2] 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.

Questions

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!

 

Sources:

[1] DECC

[2] British and Irish Chamber of Commerce

Photo: Jeff Djevdet credit http://speedpropertybuyers.co.uk/

See also: With oil prices low, why go green? and When will the level playing field be ready for renewables to compete on?

More information about Feed-in Tariffs on YouGen

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Comments

5 comments - read them below or add one

paul53

paul53Comment left on: 24 November 2015 at 5:13 pm

save a  few  watts to  power  you  led  lights during the  winter will  take  ages to  pay  the initial  expense but  to  be  able  to  save a kilowatt  to  power your  washing  machine with  the  1.3  kw  your  producing should  pay  off the  initial  expense earlier . will a  3.8  kw  system  ever  be  a able  to  give a average  household a  zero bill all  year?

 

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Jason Ramsdale

Jason Ramsdale from Comment left on: 19 November 2015 at 10:47 am

Hi pmburton,

“Not sure I understand the logic of a dynamic export tarrif / energy storage for domestic producers. I would have thought that for most domestic installations, the net amount of solar energy produced is not significantly in excess of the net amount of energy used by the household. Therefore, any stored energy would be used directly by the household (probably mostly at peak times/rates) rather than sold back to the grid.”

I definitely agree that in most circumstances it would be better to use the energy yourself than to export to the grid, only to have to buy it back later on.

“The local storage would definitely be a good thing (especially when my old meter gets replaced with one that doesn't run backwards!), but I can't see why I would want to sell the stored energy back to the grid…”

Without knowing the possible rates for a dynamic FiT it is very difficult to speak on when it would be best to store and when to sell.

“…unless my own usage patterns are out of step with the overall UK usage patterns (and hence cost). Eg. If I was using most of my energy during the night, then it would be worthwhile to sell stored energy to the grid from 5-7pm and buy in cheap energy overnight.”

In theory, it may be like you say that, if you are on the right tariff, at certain times of the day or year you could export energy for a higher price than you could import it at a later date. One reason for a high difference in price costs is usage patterns; energy is likely to cost more when more people are demanding it. On top of that are supply patterns, as solar and wind generators are added to the gird the more energy is likely to cost at times of the day or year that they are not generating, particularly if downtime was unexpected. It’s not something we can do yet, but is definitely worth watching out for.

Thank you for your insightful comment,

Jason

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Jason Ramsdale

Jason Ramsdale from Comment left on: 19 November 2015 at 10:43 am

Hi Andy,

“Storage is going to be important but so is WHAT we store and HOW we use it.”

Absolutely! There are many different options available on how to store energy.

“Much of the current discussion is narrowly about chemical battery storage with the intention of reverting the energy to AC electricity.”

I think the focus towards batteries has its merits, they have come down in price significantly in recent years and they show great promise in the rise of electric vehicles. They are relatively easy to install and are scaleable, produced correctly the same batteries installed in a home could potentially be housed in bulk to provide large scale community storage.

“Other storage media are possible, cheaper and arguably more useful in different situations. Heat (sensible and latent) can be stored and displaced.”

Definitely, it is worth considering other storage methods. An option available today for storing heat includes using an immersion heater and well insulated storage tanks to heat up and store hot water for when it is needed. The different options for energy storage is fascinating and is something we are looking to blog about in the near future.

“Even if the storage is in a battery, it is likely to be more efficient to use the power as DC rather than inverting it into AC that then is often transformed back down to ELV DC. Why not power LED lights and USB sockets [relatively] directly from the battery?”

While it is likely to be more efficient to have a DC circuit from your battery to electrical devices without the need from transformers, most homes would not have the wiring in place to do so. I’m not sure on whether current legislation would allow for a separate DC circuit to be installed but it could be something to look into if you are considering purchasing energy storage. Perhaps with something like the Tesla Powerwall you could charge and electric vehicle directly from your battery.

Thank you for your intuition,

Jason

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pmburton

pmburtonComment left on: 19 November 2015 at 7:49 am

Not sure I understand the logic of a dynamic export tarrif / energy storage for domestic producers. I would have thought that for most domestic installations, the net amount of solar energy produced is not significantly in excess of the net amount of energy used by the household. Therefore, any stored energy would be used directly by the household (probably mostly at peak times/rates) rather than sold back to the grid.

The local storage would definitely be a good thing (especially when my old meter gets replaced with one that doesn't run backwards!), but I can't see why I would want to sell the stored energy back to the grid, unless my own usage patterns are out of step with the overall UK usage patterns (and hence cost). Eg. If I was using most of my energy during the night, then it would be worthwhile to sell stored energy to the grid from 5-7pm and buy in cheap energy overnight.

 

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Andy in Hawick

Andy in HawickComment left on: 18 November 2015 at 4:44 pm

Storage is going to be important but so is WHAT we store and HOW we use it.

Much of the current discussion is narrowly about chemical battery storage with the intention of reverting the energy to AC electricity.

Other storage media are possible, cheaper and arguably more useful in different situations. Heat (sensible and latent) can be stored and displaced.

Even if the storage is in a battery, it is likely to be more efficient to use the power as DC rather than inverting it into AC that then is often transformed back down to ELV DC. Why not power LED lights and USB sockets [relatively] directly from the battery?

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