Radical tariff to boost solar PV development and eradicate energy poverty

A solar project in Cornwall, UK could be a template for solar industry business models faced with zero subsidies.
Published: Thu 21 Jul 2016

Grid capacity in South West England is currently exceeded and this is what’s standing in the way of renewable energy development in the area. Any connection for distributed generation can expect a three to six year delay according to Tamar Bourne, of the South West Renewable Energy Agency (Regen SW), an independent, non-profit organization.

Community drives 100% renewables

In response, Wadebridge residents and surrounding villages in Cornwall, have launched the Wadebridge Renewable Energy Network (WREN) which aims to promote renewable energy in the area. Member numbers exceed 1,000 and many are rolling out micro-installations, mainly solar PV. According to current figures, the area is among the country's top destinations for solar PV installations. [WREN-A community energy town in the making.]

WREN wants to build a large-scale solar PV farm in the region- a 5MW ground-mounted project but due to the grid’s thermal and voltage constraints in the area, they were advised to shelve the project. The effort has taken the community about four years and £15,000 to £20,000 in consultancy and other planning fees to get the project off the ground, still with no success.

Offset connection commercially viable?

The community is now trying to shift the power demand pattern and incentivize daytime power consumption so that the generated power from the solar farm is consumed when generated and avoiding the need for export via the grid.

The traditional way of connecting a PV farm to the grid is via timed connection, said Matthew Watson, an engineer at local DNO Western Power Distribution. In this case, PV power generation is often curtailed due to power constraints. Eventually, if the curtailment is very frequent, the business case for the project is not viable.

The alternative to this is the so-called "offset connection," whereby PV power generation in the distribution grid is only curtailed when it’s not offset. In other words, "if you can absorb extra generation locally then there will be no net effect on constraints at higher voltage levels," Watson said.

This idea was given the name "sunshine tariff" because it incentivises  customers to use more electricity during daylight hours.

Sunshine Tariff can relieve energy poverty

North Cornwall residents can now sign up for lower electricity costs through this  radical new ‘Sunshine Tariff’ which is actually a first for the UK.

The Sunshine Tariff trial offers a low rate (£0.05 per unit) during the day from 10am to 4pm between April and September 2016, and a higher rate (£0.18) at other times. Between April and the end of March 2016, there was a flat rate of 13.4p. Customers receive greater costs benefits from the lower rate the more they can shift their electricity usage into the daytime period. Estimated savings of up to 40% are possible, according to Professor Stephen Frankel, chair of WREN.

Paul Jewell of Western Power Distribution said: “The Sunshine Tariff is an opportunity for the local community to use their greatest asset, the people within it, to change the way they use energy and help the transition towards a more efficient electricity network and a low carbon future”

Scott Mann, MP, said: “It’s great that Wadebridge is once again leading the way in energy generation and tariffs. The census data in 2011 showed that almost 30% of Wadebridge residents are over 65, with some of them living in fuel poverty. Having a tariff that is lower during the daytime will help many people who work from home, or who are retired. Although the sunshine tariff won’t be suitable for everyone there will be many people who will benefit from this local energy initiative.”

The trial is being carried out in partnership with the DNO, Regen SW and local utility Tempus Energy. The results from the project's trial are vital for its implementation.

Bourne said that they want to see if an offset connection agreement can be commercially viable for the generator; how an offset connection agreement needs to be structured to provide confidence to the DNO; what mix of low tariff, behavioural signals and technology options would be most effective in shifting demand; and what scale, longevity and reliability of demand side response would be achieved by the most effective method.

In order for such a project to be implemented successfully, a company or group of companies with vested interests in the area will be needed, said Bourne. Moreover, independent of the findings, the proposed sunshine tariff could also make sense without the offset connection. Such a tariff could relieve the grid from existing constraints.

Funding for the project comes from the Network Innovation Allowance, administered by Western Power Distribution, which has seen the amount of renewable electricity generated in the Southwest of England increase hugely in the last few years. 

This is not the first time that Cornwall has forged ahead as a community without government assistance. We wrote recently how the community is planning a £30 million onshore windfarm in Cornwall without government subsidy. The development will be partly financed by the local community. The Big Field farm (near Bude), consisting of 11 turbines each measuring 125m in height to the tip of the blade, will power 22,000 homes. [UK community develops windfarm without government help.] Cornwall itself is also developing what it calls “the UK’s first mainland smart energy ecosystem”. [Smart Cornwall – Towards A Local Smart Energy Ecosystem]

UK’s solar needs innovation to survive

Beyond the specifics of the Wadebridge project in Cornwall, the trial is significant and could be a strong indicator for what is possible for the UK’s solar PV sector.

The solar industry has been disappointed by the UK government’s decision to abandon solar three to four years before solar technology reaches grid parity and can compete with other power sources on a level playing field. [link article here]

In response, the UK’s solar businesses are preparing for the rationalization and consolidation of the sector, while the UK PV market’s ground-mounted segment is expected to take a hard hit.  

It would appear that for the UK’s PV sector to develop further, the UK needs new business models and innovative ideas.

With this new radical tariff, through matching demand and generation locally, the network can be utilised more efficiently and potentially allow the connection of more generation. While the customer benefits from cost savings from the Sunshine Tariff, the energy supplier also benefits from a capacity perspective.

While this particular project is restricted to Wadebridge, the benefits and what is learned can most certainly be applied throughout the UK.

Rob Shaw, of London-based LDA Consultancy suggests that a viable future solar energy business model needs to bypass the energy generation and grid capacity model it is currently based on and that to survive without subsidies, solar needs to think creatively, encompassing solutions such as energy demand management, energy storage, microgrids, community energy, direct energy sales and collaboration with the commercial and residential property sector.