By Chris Welby, Good Energy’s Commercial Director

In these days of rising energy prices, how would you like to get a phone call from your energy company offering to pay you to use more electricity?  Well that is just what happened in Germany on the 24th July.  Plenty of sun and a stiff 15 mph wind meant that the country was producing more renewable power than there was demand for.

A few years ago, this would have been considered a fluke but in Germany it’s the 31st time it has happened this year.  Without doubt, this is a precursor of a transformation of the economics of energy generation in the years to come.

Of course, the German market differs from the UK.  Over there, as in France and Spain, renewables take precedence over fossil fuels.  In the UK, however, they have to compete in a market designed for fossil fuelled generation.  Nevertheless, the same dynamics apply here given that most renewables have low running costs compared to initial capital costs.

Historically, most fossil fuelled (and nuclear) power stations are built on the premise that they will run as base load-- more or less continuous operation over their life time.  As the amount of renewable energy increases, then these plants will find themselves being forced offline more often as clean, carbon- free renewable energy provides sufficient power to meet the nation’s need.  This will mean developers of traditional power stations will need to recoup their investment over shorter periods of operation.

If we stick with the current system,  logic dictates that fossil fuelled power stations will move from base load to back up.  They’ll either require exceptionally high prices when they are called on, or a retainer to sit there idle until we need them.  Or, quite possibly they just don’t get built and the lights go out.

The reality is we need a renewable solution.  The traditional approach has meant that we have never invested in storage or managing the demand side of the equation.  That’s why most of us pay the same unit rate for electricity irrespective of the time of day or season.

If  the system could be a little more responsive to energy availability, then energy bills could be much cheaper.  Many of Good Energy’s micro-generation customers have already discovered that by being more flexible in their energy usage, for example doing laundry on sunny days, they can maximise the use of the energy they generate.

Energy companies are becoming very good at forecasting the amount of renewable energy that will be available some days in advance.  This could easily be converted into day ahead prices (or payments) to customers (domestic and business) allowing them to organise their non-time dependant usage in the cheaper time periods.  The next step is to use automation so that devices can make these decisions for themselves.

As the UK de-carbonises its energy system, then we need to change our approach.  The Government’s current Energy Market reform include paying fossil fuelled power stations to sit idle until they are required, something consumers will have to pay for. This is unsustainable in the long term and we need to get to grips with enduring solutions.

Good Energy is involved in several industry initiatives on this front, which we hope will lead the way.  We need renewables in order to eliminate carbon from our energy usage, but we must not allow renewable energy’s intermittency be blamed for a lack of foresight in mitigating this successfully in a way that delivers cost reductions to consumers. Germany has shown us how this could be done.