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When will the level playing field be ready for renewables to compete on?

Posted by Jason Ramsdale on 19 November 2015 at 11:34 am

The national grid is ill-equipped to deal with the intermittent supply of electricity from renewables. It was designed with energy production from fossil fuels in mind, leaving innovators and policy makers stuck with an ageing infrastructure which is costly to adapt.

Of energy supply, Amber Rudd says the government wants to “provide a level playing field, where success is driven by your ability to compete in a market”.[1] But, when anyone asks the question “When will renewables be ready to compete on a level playing field?”, they should be asking “When will the level playing field be ready for renewables to compete on?”

Rudd says “In the same way generators should pay the cost of pollution, we also want intermittent generators to be responsible for the pressures they add to the system when the wind does not blow or the sun does not shine. Only when different technologies face their full costs can we achieve a more competitive market.”[2]

But why should renewable energy shoulder the burden of a poorly designed ‘system’ biased in favour of fossil fuels? The national grid’s ageing infrastructure was paid for with public money over the last century. What Rudd failed to mention is that “the system” cannot cope with intermittent power as it is outdated and was designed around fossil fuels, and has little inbuilt storage capacity. This means that the system is ill-equipped to deal with variations in supply and demand. If energy could be stored as it is generated and released when it is needed, the grid would be able to maintain a stable and more efficient energy supply.

Who should pay to update the National Grid?

The energy industry is fragmented; the companies that generate the electricity are different from the companies that transport the electricity and in turn they are different from the companies that sell the energy. This leaves innovators in energy storage with the problem of trying to find a market for their products.

Who could profit from energy storage?

  • Home Owners and Businesses - energy storage would also allow home owners and business to stockpile energy when it is off-peak to use during peak demand and provide a back-up power supply.
  • Generators of green energy - whether it is domestic solar panels or a large offshore wind farm could raise the value of their electricity to the grid if they were able to smooth the supply of their energy.
  • Utility companies - the motivation being that they would be able to buy cheap, intermittent energy when it becomes available, store it and supply it to customers as required.
  • The National Grid - whose concern it is to provide a stable energy supply, investments into energy storage would help the grid cope with the transition to green energy.
  • Energy Storage Companies - Other business models for energy storage includes the energy storage companies themselves providing energy storage sites where they could either “let” energy storage by the kW/h or buy energy from the grid when the grid is oversupplied and sell it back for a higher price when it is in demand.

An outline of how a decentralised energy storage system in the UK could be funded and set up was made available by Lightsource.[3]

A government that truly wants to provide a level competitive playing field should consider the need for investment in energy storage.

Sources:

[1] Telegraph

[2] Gov.UK

[3] British and Irish Chamber of Commerce

Image: Dana

See also: Is a more market sensitive Feed-in Tariff possible? and With oil prices low, why go green?

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