Insights from the latest Energy:2030


In this issue we look at the community energy sector. We focus on possible impacts of the end of Feed-in Tariff (FiT) subsidies in the UK and call for retention of a guaranteed route to market for small-scale renewable generation, at least until levelised costs fall further and necessary market changes are implemented. We also make the case for a continuing export payment to ensure a last-resort market.

New Markets

This assessment of the impending end of FiT subsidies comes following the publication of Community Energy England’s State of the Sector Report 2018, which outlined how the UK community energy landscape has changed year on year. The report documented a declining number of successful projects in 2017 and a 31% drop in new community-owned capacity compared to 2016. The report recommended clearer and more supportive national, regional and local government strategies to catalyse future community energy project developments.

Another part of the future market under question is the use of blockchain. A paper by Eurelectric, Blockchain in Electricity: A Critical Review of Progress to Date, surmised that, despite the technology’s potential, its utility in the electricity sector is limited by high costs, slow transaction speeds, and other limitations and risks.

Future Networks

Considering future network developments, we look at two task forces under the Charging Futures Forum (CFF) reviewing forward-looking network charges. One focuses on forward-looking charges and the other on access arrangements. The recommendations they outline will be consulted on by Ofgem.

Continuing the theme of community energy, we look at a joint report by Regen and the Energy Networks Association, which provides information and guidance for potential innovators, investors and customers of innovative community energy projects. Ongoing collaboration between distribution network operators and community groups must occur if the opportunities of a shifting energy system are to be maximised.

Low-carbon, heat and transport

On a topic which spans future networks and future low-carbon initiatives, we cover an Oxford Institute for Energy Studies report on the potential of green gas technology in decarbonising heat. Again, the lack of a clear vision from central government means it may be difficult to fully realise the potential of green gas technology in decarbonising heat.

Looking to low-carbon electricity, we consider research by Bernstein that argued that the cost of onshore wind, offshore wind and solar power is likely to be well below the cost of fossil fuel generation by 2030. The report paints a picture of further significant and sustained cost reductions.

Considering the inter-play between low-carbon gas and electricity, we also look at a joint study by the energy storage firm ITM Power and Northern Gas Networks which has identified four potential locations for the deployment of large-scale power-to-gas storage. Power-to-gas technology, which converts renewable power to low-carbon gas, could offer a solution to the decarbonisation of heat in the UK power system.

Demand-side and supply

Considering the supply side, we look at the emergence of time-of-use (ToU) tariffs for domestic customers in GB as well as in the US markets. ToU tariffs are likely to become a more attractive proposition for consumers globally as more opportunities to pair solar and storage systems emerge. In GB, where solar is not as prominent, suppliers will need to continue to be more experimental in their innovations to appeal to consumers.

Other international

Looking globally we weigh up President Trump’s bid to bail out coal and nuclear plants and discuss US regional transmission operator PJM’s capacity auction results. The auction, notably dissimilar from capacity auctions in GB, attracted diverse competitive resources with a “healthy” reserve to ensure that electricity requirements in the region can be met.

Other international markets news includes the imminent Australian Energy Market Commission 2018 market report on network regulation and Japan’s position at the forefront of virtual power plants and smart storage.

Finally, returning to the theme of local supply, we take a look at Vandebron – a green energy company in the Netherlands allowing consumers to buy renewable energy directly from local producers via an online peer-to-peer marketplace. This model is not yet possible in GB, but the expected loosening of the Supplier Hub principle may be a sign that Ofgem is becoming more open to this model in the future.

Related thinking

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