The British government and Ofgem have recently announced several changes to the National Grid which will transform how we use, store and generate electricity. Regulations will be eased, thus allowing private individuals and businesses with small-scale renewable generators to sell energy more easily, and public investment is set for the battery sector alongside several other rule changes. The headline-grabbing claim of these modifications is that consumers will save up to £40 billion by 20501 whilst they should also address fears about a lack of generator capacity but their effectiveness in practice remains to be seen.
Small Scale Generation
In the short term, owners of renewable energy sources such as solar panels and wind turbines will now benefit from tariff-free import and export of energy to the Grid1. Previously, owners of generators with intermittent outputs had to pay tariffs when buying energy and when selling surplus electricity to the Grid. The government and regulator jointly realised that this system discouraged individuals from using energy flexibly as well as increasing the pressure on conventional electricity generation such as power stations and the change should pave the way to a system where everyone benefits from the electricity generated by small-scale generators alongside the larger institutions that have traditionally supplied the UK’s electricity.
A Battery Revolution
The government has been criticised for failing to invest in the UK’s technology sector and critics have suggested that this has resulted in British battery technology falling a long way behind leading countries such as South Korea, China and Japan. With increasing use of renewable energy, this has become increasingly important as the capacity to store electricity helps smooth peaks and troughs in demand, as well as making as much use as possible of periodic sources like solar and wind. The government has announced a competition for innovative battery technology as batteries remain the most efficient method of storing electricity, despite alternatives such as liquid air2 and hydro storage3. Advanced batteries will enable individuals and businesses to sell electricity to the Grid at peak times no matter when it is generated thus presenting an opportunity for profit whilst facilitating greater generation capacity at no extra cost to consumers.
Smart Devices, Smart Usage
One of the most exciting innovations in the electricity market comes not from generation but from smarter consumption. With traditional peaks and troughs in demand amplified by growing reliance on renewables, the so-called 'Internet of Things' might present an unusual answer to the problem of peak capacity. The new rules will reward people whose household appliances can be remotely turned on and off via an internet connection4. Examples of this might include deep freezers being turned off for a few minutes at peak times or washing machines being set to come on when the sun comes out in order to get a discount on the user’s energy bill. In fact, this system is already used by businesses such as Marriott Hotels which periodically switches off its air conditioning to save energy4. Small electricity savings could the be collated by traders and sold back to the Grid in the form of a ‘NegaWatt’ or ‘negative electricity’.
The newly re-written rules governing the National Grid undoubtedly present an opportunity for businesses when it comes to making significant savings on energy bills or even making a small return on renewable energy investments. On the other hand, the introduction of off-peak tariffs will almost certainly lead to the introduction of peak tariffs which could spell bad news for businesses working regular hours. With the larger picture of keeping the lights on yet to be fully resolved, consumers will be hoping that the bold claims behind these new regulations will be backed up by the evidence over the coming decades.
1. http://www.bbc.co.uk/news/business-40699986
2. http://www.bbc.co.uk/news/science-environment-19785689