Net metering for solar electricity may be an effective tool to spur rooftop solar growth in the UK
When queried about renewable energy in the UK, former energy minister Lord Barker contends the future of solar electricity here depends on government fiscal incentives, such as net metering and power purchase agreements.
According to Solar Power Portal, Barker and former energy secretary Ed Davey spoke at the ‘Renewable Futures’ event conducted by the Renewable Energy Association (REA). The two men debated recent clean energy policy decisions and the current government spending review.
While Davey said that the renewables industry would have to adapt to the “hard new reality” under a Conservative government, Barker said that there was a need to see energy policy “in the context of the entire economy.”
Barker was optimistic regarding the future of the solar industry, saying submissions to DECC’s FiT consultation had proven there was a desire to see government subsidies shifted away from large-scale solar operations to rooftop installations.
He forecasted that in the absence of subsidies, large-scale solar developers would now seek to build out solar parks on the back of signing direct wire power purchase agreements (PPAs) with utilities and other companies.
As defined by the US EPA, a solar power purchase agreement is a financial deal in which a third-party developer owns, operates, and maintains the photovoltaic system, and a host customer agrees to site the system on its roof or elsewhere on its property and purchases the system’s electric output from the solar services provider for a predetermined period. Such an agreement allows the host customer to receive “stable, and sometimes lower cost electricity,” while the solar services provider or another party acquires monetary benefits, such as tax credits or revenue.
“With this business model, the host customer buys the services produced by the PV system rather than the PV system itself. This framework is referred to as the “solar services” model, and the developers who offer SPPAs are known as solar services providers. SPPA arrangements enable the host customer to avoid many of the traditional barriers to adoption for organizations looking to install solar systems: high up-front capital costs; system performance risk; and complex design and permitting processes. In addition, SPPA arrangements can be cash flow positive for the host customer from the day the system is commissioned.”
Barker added he would urge current secretary of state Amber Rudd to look into establishing an effective net metering policy.
Net metering is an incentive mechanism that credits solar households that distribute electricity to the grid. It has proven to be popular in the US, especially in states like California where rooftop solar shows a strong user community.
A number of US utilities, including those in California, want to amend current net metering policies, wanting to reduce payments to customers who generate electricity from solar power and charge them fees in addition. Solar proponents, on the other hand, argue such an amended net metering policy might potentially destroy the California solar power industry.
How net metering and solar power purchase agreements play out for solar electricity in the UK remains to be seen.
Images via Shutterstock and EPA
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