Archive for the ‘Renewable tariffs’ Category

Renewable energy with smart grid technology – The new complex relationship turning everthing upside down

Saturday, April 3rd, 2010

The energy world is about to turn upside down. With the coming of smart grid, the electricity consumer customer becomes the electricity seller; the passive home appliance becomes the active energy manager; and the local 11KV DNO network becomes the power generation network itself.

Such an upheaval means that the energy world needs to start thinking about a new business model, says a recent report by IBM Global Business Services Energy and Utilities.

The fact that IBM is advising the energy industry is itself a point of interest, yet another signal of the new market opportunity emerging within the energy arena for information technology. This opportunity has drawn the attention of not only IBM, but also CISCO, Google and many others.

So how does IBM see the energy business model changing? First consider what it has been for the last century: a grow-and-build model. Utilities encouraged more and more consumption, and they built power plants and transmission to the far corners of the nation to serve the growing demand.

“The success of this strategy was remarkable. In the United States for example, from 1920 to the mid 1960s (excepting the period of the Great Depression), usage increased at seven percent annually – about five times the rate of usage of all forms of energy combined and three times the rate of economic expansion in general,” says the IBM report, “Switching perspectives: Creating new business models for a changing world of energy.”

But today we no longer need such expansion. The grow-and-build model is obsolete, yet continues to be used by utilities. As a result, utility stocks, which in the 1940s-1960s significantly outperformed the Dow Jones Industrial Average, now lag well behind.

Instead of expanding their territory, utilities are being called upon to change their product — to offer energy that is more efficient and clean and service that is more consumer-friendly.

Smart grid technology can help utilities meet today’s imperative. But it brings with it a new and complex relationship between customer and utility. This is because smart grid allows consumers to control energy usage via a home computer. With smart buildings into the mix and their appliances can control energy usage without the consumer doing anything. And with increased use of solar energy and other distributed technologies, the home also becomes power plant and storage facility for the electric utility.

“Companies willing to tackle industry model innovation and sit at the nexus of new complex relationships among business partners and customers will be well positioned to create and capture new demand for emerging products and services. Strong growth in revenues and profits – albeit accompanied by some risks – is achievable in multisided business models because of the embedded network economies of scale (i.e., margins increase with network size),” says the report.

IBM calls this new business model “a multisided platform.” What does it look like?

“Manufacturers, retailers and shoppers all benefit from having a single location where they can meet and transact business. A wider variety of stores and services brings more shoppers; more shoppers bring higher sales volumes for manufacturers and lower costs for retailers (and, in theory, also lower prices for shoppers). Thus, some element of network economy is bundled into the shopping center value proposition. The platform owner (the shopping center operator) extracts some of this value in the form of rent to store owners and, in some cases, service fees to shoppers,” says the report.

If indeed this is the future, it won’t be embraced quickly or easily by utilities, which are notorious for their caution. For those who do move forward, here is some of what IBM advises.

Be sure your current customer base is sizable enough to ensure that you get a meaningful head start.

But don’t hurry. History has shown that later movers may actually benefit from standing back from the first wave of early adopters.

Time the announcement of your new business model carefully to avoid shocking long-time constituencies or alerting rivals too soon.

But in the UK, the cat has already leaped out of the bag!

The UK Regulator – Ofgem’s duty to contribute to the achievement of sustainable development promoted this duty, placing it on an equal footing with its duties to meet reasonable demand and financing authorised activities. The principle objective, to protect the interests of consumers, refers to future as well as existing consumers. These changes underline Ofgem’s important and developing role in shaping the future of gas and electricity industries in a sustainable manner.The UK is facing a future that involves increased geopolitical risks to energy security, potentially higher energy prices and the need to do much more to reduce greenhouse gas emissions while making sure everyone can afford to adequately heat their homes.

While much of what is needed to deliver sustainability is not within the regulators direct control, a responsibility to facilitate change by engaging in the debate, trying to persuade relevant players to make changes where required and contributing information and expertise where it can.

Actions speak louder than words:

So whats already implemented in the UK?

  • Smart metering (CoP10) with import and export facilities – Coming to every home in the UK – See my blog on smart metering for more information
  • feed-in tariffs (FITs) for small-scale low-carbon electricity generation from 1 April 2010 – Customers own micro energy generation agreements connected to the local DNO grid – See FITs for more information
  • Climate Levy Tax incentives – Look at you next bill and spot this tax!
  • ROC’s – See my blog for more information
  • REGO – See my blog for more information
  • OGEMs – See my blog for more information
  • REC’s – See my blog for more information

The next step:

  • Informing the customer and proving ‘idiots’ guides to understand the available technologies and energy savings available.
  • Providing engineering design  and installation solutions.
  • The correct customer incentives to explore and implements these technologies.

What are Feed-In Tariffs?

Saturday, April 3rd, 2010

The Government is introducing a system of feed-in tariffs (FITs) for small-scale low-carbon electricity generation from 1 April 2010. FITs are a per-unit support payment made directly to generators by electricity suppliers.

The new renewable electricity Feed-in Tariff scheme (FITs) will be available from 1 April 2010. FITs aims to promote domestic and small-scale renewable generation technologies up to a maximum capacity of 5 megawatts (MW). Ofgem will be running the behind the scenes administration of the scheme on behalf of the Department of Energy and Climate Change (DECC).

There are two routes to apply for FITs depending on the type and scale of technology installed:
• Generators with Microgeneration Certification Scheme (MCS) accredited solar, wind and hydro generating equipment up to 50kW in capacity that are installed by an MCS accredited installer can apply direct to a ‘FIT supplier’ – usually their energy supply company – with their installation details and to enquire about FITs payments. We expect the majority of installations will fall into this category.
• Generators with larger installations between 50kW and 5MW (or anaerobic digestion at 5MW or less) will first need to apply for accreditation through Ofgem’s Renewable and CHP Register before they can apply to a supplier for the tariffs.

Its intend that FITs will replace the Renewables Obligation (RO) as far as possible as the financial support mechanism for microgeneration (with a declared net capacity 50 kW or less) in Great Britain.
FITs will complement the RO by providing the simplicity and certainty needed to support householders, communities and businesses involved in small-scale generation. Installations with a capacity of 5MW or less will be eligible for FITs. Whereas the level of reward under the RO is exposed to fluctuations in the value of Renewables Obligation Certificates (ROCs), FITs will guarantee a fixed level of reward for each unit of electricity you generate, for as long as you are eligible to receive support.The Feed-In Tariffs are based on the electricity generated by a renewable energy system and there will be an additional bonus for any energy which is ‘exported’ to the grid. This means you get paid more for the energy you don’t use than for that which you do which encourages energy efficiency.

At times when you are producing less electricity than you are using, the shortfall will be ‘imported’ from the grid and you will pay your electricity company for this in the usual way.

The Feed-in Tariff therefore gives you these three financial benefits:

  1. A ‘generation’ tariff based on the Total generation and the energy type, plus
  2. An ‘export’ tariff for any energy Exports when generating more than you need, and because you are now producing some of the energy you use
  3. Lower bills from your supplier for the energy you Import from them

What you need to do
You will require an additional electricity meter to measure the electricity that your system is generating, and also to measure how much is being fed back into the electricity grid.

Once you have installed your generating technology you must inform your chosen energy supplier that you are eligible to receive the FIT. The supplier will then register your installation onto the Central FIT Register, which is administered by Ofgem. Payments will be made by your energy supplier at intervals to be decided between you and your supplier. You may be required to provide meter readings to the suppliers if requested.

If you want to opt out of the guaranteed export tariff you must inform the supplier. You may want to do this if you chose to use a power purchase agreement.
Tariff levels, for technologies installed between 15th July 2009 and 31st March 2012

Technology___________Scale____________Tariff level (p/kWh)________Tariff lifetime (years)
Solar electricity (PV)____≤4 kW (retro fit)___ ____41.3____________________25
Solar electricity (PV)____≤4 kW (new build)______36.1____________________25
Wind_______________≤1.5 kW____________34.5_____________________20
Wind _______________>1.5 – 15 kW________ 26.7 _____________________20
Micro CHP ___________≤2kW _____________10.0 _____________________10
Hydroelectricity _______≤15 kW ____________19.9 _____________________20

Tariff levels vary depending on the scale of the installation.

The tariff levels shown in the table above apply to installations completed from 15th July 2009 to 31st March 2012 for the lifetime of the tariff. After this date, the rates decrease each year for new entrants into the scheme.

All generation and export tariffs will be linked to the Retail Price Index (RPI) which ensures that each year they follow the rate of inflation.
What payments will you be eligible for, and how can you claim them?

The tariffs available and the process for receiving them vary, depending on when the technology was installed, and whether the system and the installer were certificated under the MCS scheme:

The following advice applies to domestic installations. If you have installed a qualifying electricity-generating system non-domestic property with a grant from the Low Carbon Buildings Programme, see the Low Carbon Buildings Programme website for further guidance.

Background:
In October 2008 the UK Secretary of State for Energy and Climate Change, Ed Miliband, announced that Britain would implement a feed-in tariff by 2010, in addition to its current renewable energy quota scheme Renewable Obligation Certificates”. In July 2009, he presented UK’s new Feed-in Tariff Programme, expected to begin in early April, 2010. Miliband has given a new name, “clean energy cash back”, to this policy which falls fully within the framework of Feed-in Tariffs and is based on a few, extensively discussed, key elements:

a) Less than 10% of Britain’s electricity consumption, by 2020, will be provided by renewable energy sources. The 2% target requires the “green generation” of only 8 billion kWh (that is 8 TWh) per year. France, thanks to its system of Feed-in Tariffs, in 2008 generated already nearly 6 TWh, and only from wind energy; in the same year Germany generated more than 4 TWh from solar PV (photovoltaic), and reached 40 TWh from wind energy.

b) The project involves only renewables sources which can produce less than 5 MW energy; so, UK’s new FiT’s project cap is 5 MW. Depending on law, only renewable energy sources and generators within this cap can benefit from tariffs: the government still prefers resorting to the Renewable Obligation Certificates mechanism for developing larger projects.
To prevent companies from moving large scale (for example big wind) projects from the ROCs to the Feed-in Tariff programme, a number of anti-gaming provisions has been inserted in the policy design; this should avoid the breaking up of bigger projects into several small ones, to fit within the 5 MW energy size cap.

c) The contract term is 20 years, 25 years for solar photovoltaic projects: this means that, starting from 2010, British providers of Wind Energy, Hydropower, Energy from Biomass and Anaerobic Digestion falling within the Renewable Sources eligible in accordance with the provisions of the proposed FiT scheme will be rewarded with a tariff rate guaranteed for the next 20 years – 25 years for Solar PV generators. In this way UK’s renewable energy industry has a somehow long-term certainty, and can advantage of the FiT over other policy options.

d) Costs for the programme will be borne by all British ratepayers proportionally: all electricity consumers will bear a slight increase in their annual rate, thus allowing electricity utilities to buy renewable energy generated from green sources at above-market rates set by the government.

e) Generators can be green fields (they do not have to be metered customers).

f) The new UK’s Feed-in Tariff Programme review is scheduled for 2013.

Sell your own energy

Friday, June 5th, 2009

Did you know you could be making money from the electricity generated by your renewable technology installation?

If you have installed, or are thinking about installing, a renewable technology which produces electricity, such as a Solar Electricity (PV) system, you may be able to get paid for the electricity it produces. The most common way to do this is to sign up to a buy back scheme with an energy supplier. There are two main tariffs available to do this:

  • Export tariffs: You are only paid for the electricity that is exported back to the electricity network (you are not paid for any electricity you use).
  • Generation tariffs: You are paid for all of the electricity that your system has generated even if you use it in your own home.

There are also some Set Price Tariffs available where a fixed amount is paid by the energy supplier based on the type or capacity of the installation.

Choosing the right tariff

The answers to the following questions should help you choose the right buy buy back tariff for your situation:

Do you expect to use most of the electricity you generate at home?

If the answer is yes, it is likely that a Generation Tariff is likely to be a better option for you as you will get paid for all the electricity you generate rather than just the electricity that is exported.

If you will be using a small amount of the electricity your system generates then an Export Tariff may be a better option for you.

Will you need to install a new meter?

  • Total Generation Meter: Most tariffs will require you to have an Ofgem approved Total Generation Meter which should be installed with your system. Total Generation Meters give a running total of the electricity generated by the system in kilowatt-hours (kWh).
  • Export Meter: Most export tariffs require you to have an export meter installed. Some companies will pay for the meter and its installation whereas others may charge you. It is important that you establish the costs before agreeing a contract.

Will it affect your import supply?

Most buy back tariffs are dependent on the customer getting their import supply from the same energy supplier, and some suppliers limit the choice of available import tariffs that can be used.

You should check tariffs are on offer from the supplier purchasing your electricity generation and how much your annual bill will be. You will want to take these costs into consideration alongside the export/generation tariff payment.

What else should you consider?

Renewable Obligation Certificates (ROCs) are certificates given to registered generators of renewable electricity produced and sold within the UK. You will be entitled to one certificate for each megawatt hour (or 1,000 kilowatt hours kWh) of electricity you produce.

Some tariffs include a price for ROCs whereby the energy supplier acts as the ROC agent, claiming ROCs from Ofgem on behalf of the customer. However, there are other tariffs where the customer retains the ROC entitlement and must claim these themselves. For ROCs to be able to be claimed you must have a Total Generation Meter installed. Information on which tariffs include a payment for ROCs can be viewed by looking at the tariff details on our buy back tariff search tool.

Some suppliers include the payment for ROCs within the tariff, this means the ROCs are claimed by the energy company on the customers’ behalf. If the tariff does not include payment for ROCs then the customer can claim for them separately.

‘Smart’ appliances empower users to save money

Thursday, June 4th, 2009

<em>Chris Hermann,<br /> Senior Vice President,<br /> Energy Delivery, LG&E</em>
Chris Hermann,
Senior Vice President,
Energy Delivery, LG&

Six months into Louisville Gas & Electric Company’s (LG&E) pilot program that uses smart meters, smart or demand response appliances, and a tiered-pricing program, results reveal participants are choosing money saving options.

The program tests the use of “smart” appliances to help offset energy costs when higher prices are implemented during peak usage times, generally from 3-8 p.m.

Pilot participants were a select group of GE employees living in the LG&E Louisville market. They were provided with a suite of GE smart appliances – or demand response appliances – to replace their standard appliances. In most cases, this included a refrigerator, range, microwave, dish washer and laundry pair. In addition, LG&E installed a programmable HVAC thermostat in the participants’ homes, as well as a smart utility meter.

The smart appliances receive a signal from the utility company’s smart meter which alerts the appliances, and the participants, when peak electrical usage and rates are in effect. In the pilot program, the signal word “eco” comes up on the display screen. The appliances are programmed to avoid energy usage during that time or to operate on a lower wattage; however, participants can choose to override the program.

“This pilot program gives us the opportunity to incorporate our customers’ feedback on how to manage the very critical issue of peak energy demand and supply,” said Chris Hermann, senior vice president, Energy Delivery at LG&E. “We believe we are learning a lot from this pilot about how to accomplish our objectives. This will result in managing our energy better and reducing the need to construct more power generation facilities – which is better for us, our customers and the environment.”

Some of the examples of savings are that the refrigerator delays the defrost cycle from occurring during peak hours and goes into energy saving mode, microwave ovens power down slightly by reducing wattage used when operated during peak hours, and the ”smart” dishwasher and laundry can delay starting the cycle to off peak times.

Notably interaction with the dishwasher and laundry appliances has been noted as the most challenging by the participants.

SmartestEnergy launches U.K.’s first flexible renewable supply service

Thursday, June 4th, 2009

 

Independent U.K. purchaser and supplier of energy, SmartestEnergy Limited, has launched a specialist renewable power retail service that can supply renewable and good quality combined heat and power electricity to business or local authority customers at prices competitive with traditional forms of power.

SmartestEnergy claims that for the first time, U.K. business customers can specify the exact fuel mix of the electricity they use – up to 100 percent renewable supply if desired. In addition, customers will be able to identify and specify exactly which technology and which producer they would like to buy from. For example, a business or local authority could choose to buy from renewable energy projects in their area to show their direct support for locally produced energy.

Jo Butlin, vice president for retail at SmartestEnergy said: “It’s quite clear that business wants to improve its green credentials but until now has never had the option to buy ‘green electricity’ in the same way that domestic users can. We are offering a flexible solution, from source to supply, where customers can specify exactly how much renewable power they want and which sources they want it from.”

SmartestEnergy buys its power direct from independent producers using a wide range of renewable technologies including wind, biomass, anaerobic digestion and landfill gas. Each unit of power comes with numbered Climate Change Levy Exemption Certificates (LECs) attached to specific power plants, along with a Renewable Energy Guarantee of Origin (REGO). These certificates prove the source of the electricity supplied and can be used by the business purchaser to highlight their green credentials to stakeholders.

SmartestEnergy has agreements with producers, covering more than 400 sites in the UK. Generators range from sub‐1 MW to 420 MW, enabling SmartestEnergy to deliver power from 1.2 GW of installed capacity, equivalent to nearly 10 percent of the U.K.’s renewable output.

Green tariffs – An introduction

Tuesday, May 19th, 2009

Buying renewable electricity from an energy supplier

The average UK household now produces more than five tons of carbon dioxide a year just from gas and electricity. Since 2002 however, electricity companies have had to buy a proportion of their electricity from green power sources. As a result most now offer a green tariff, designed to provide as much electricity as possible from renewable or sustainable sources.

Such sources include Wind power and Solar power and Biomass energy, which avoid the harmful emissions associated with burning fossil fuels, or the risks associated with nuclear power. The electricity supply continues to come from the National Grid, using the same cables and meters, so changing to a green tariff is hasslefree.

There are two types of green tariff currently available:

Renewable tariffs

On these tariffs, every unit of electricity bought by the supply company on behalf of the customer is generated by a renewable energy source.

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Eco-fund tariffs

These tariffs involve the customer paying an additional premium which is invested in funds used to finance new renewable energy projects, often based in developing communities.