UK Government Sets Outs Mediocre Support For Small-Scale Renewable Energy Generators

The UK Government on Tuesday finally proposed what amounts to relatively mediocre guidelines intended to support the development of small-scale renewable energy technologies by ensuring remuneration for any and all electricity generated that is supplied to the grid by small-scale generators.

The proposed Smart Export Guarantee was unveiled by the UK’s Department for Business, Energy and Industrial Strategy (BEIS) and opened for consultation until early March, and comes less than a month after all hell broke loose when the BEIS announced in December that existing schemes to incentivize small-scale generators to supply electricity to the grid were closing, and that no replacement was intended. Such schemes — a Feed-in Tariff (FiT) scheme and a generator export tariff — remunerated small-scale generators for the electricity they generated but then supplied to the grid. Both are set to close on 31 March, and in December the BEIS made it clear there were no plans to replace them, leaving new small-scale generators in the lurch.

Those most obviously affected by such a shift are rooftop solar owners, but the UK boasts approximately 560,000 households and businesses generating small-scale electricity under the FiT scheme using a range of technologies including anaerobic digestion (generating energy from waste products), wind power, biomass, and hydro-electricity. However, these technologies are in the overwhelming minority, with 99% of small-scale generators under the FiT using rooftop solar.

This 99% accounts for 80% of the capacity being generated by these small-scale generators, with wind accounting for 12%, hydro for 3%, and anaerobic digestion for 5%.

The BEIS announced on Tuesday, however, a proposed Smart Export Guarantee for small-scale renewable electricity generators which would guarantee payment for excess electricity supplied to the grid. The proposed Guarantee would specifically replace the FiT scheme and would require electricity suppliers to pay new small-scale energy producers for excess electricity generated from homes and businesses which is supplied to the grid.

“This new scheme could help us to build a bridge to the smart energy system of the future, with consumers firmly at its heart – not only buying electricity but being guaranteed payments for excess electricity they can supply to the grid,” said Claire Perry, the UK’s Minister for Energy and Clean Growth. “It could also reduce strain on energy networks with a more decentralised and smarter local network delivering resilience much more cost effectively, unlocking innovative products for electric vehicles and home energy storage; a win-win for consumers and the environment and a key part of our modern Industrial Strategy.”

While this is good news, the welcome by the renewable energy industry has been tepid, representing concerns over the specific value of remuneration small-scale generators can expect.

“We give these proposals a cautious welcome,” said Chris Hewett, CEO of the UK’s Solar Trade Association.

“We are very pleased the Government is unequivocal; small generators will be compensated for the power they contribute to the system, but the issue remains providing remuneration at a fair market rate. We are particularly pleased to see a clear requirement to meet MCS standards for participation in the scheme, which means safeguards for consumers will be retained.

“Positively, the Government again identifies the System Sell Price as accurately reflecting the market value of power spilled to the grid,” Hewett continued. “However, the consultation acknowledges many of the market barriers we have raised with Government and the associated costs. Our worry is that these may impede the ability of suppliers to offer fair and meaningful rates, even though they may wish to. Customers are freely able to switch suppliers in a competitive market so where these costs fall remains vital to developing meaningful offers.” – Hewett

“These new government proposals rightly recognise the role that small-scale generation can play in developing a smarter, more decentralised energy system that benefits consumers,” added RenewableUK’s Head of Policy Barnaby Wharton.

“Small-scale wind energy and other renewable generation reduces overall demand on the grid and supports thousands of jobs in industries across the UK. It is vital that the value of this locally generated, low-carbon power is reflected in the final Smart Export Guarantee proposals.”

“Owners of small scale solar will be paid for the power they export, which is an improvement on the proposal that they give their power away for free,” said Dustin Benton, Policy Director at the UK’s Green Alliance, who spoke to me via email. “But the guarantee is very limited: there’s no minimum price, and it won’t come into force before the current export tariff is cancelled, which means there could be a gap of up to a year in which new small scale generators aren’t paid.

“Rather than this stopgap, we’d like to see a new regime for small scale power which enables small generation to get paid for exports when it supports the decarbonisation of the grid.” – Wharton