One of the defining features of our electricity system over the last decade has been rapid decentralisation. Best illustrated by this wonderfully geeky timeline by Carbon Brief, the UK has gone from having all of its power supplied by a few huge power stations, to a situation where we are cracking on for a million generators across the UK. The overwhelming majority of these are smaller renewable sites, situated close to where their power is used. This is a change for good - the best electron used is the one which travels the shortest distance from the greenest source.
Even so, we are not even close to realising our full potential. While electricity generation is moving with the times, the way power is supplied is lagging. It is designed and kept for large corporations operating on a national scale, and so anyone wanting a license needs to turn up on Ofgem’s doorstep with a briefcase full of cash, and a penchant for red tape.
This means that there is no way for smaller generators to supply power directly to their local communities – the demands on their time and money would be prohibitive, despite how efficient the arrangement might be. On top of this, recent regulatory changes have removed significant revenue streams from many existing generators and whittled away any at incentives to build more.
Small scale renewables do not just reduce emissions. They make the way we use power more efficient and provide a whole host of social benefits.
We have a system which is clearly not designed for local players, who are not being compensated for the significant benefits they provide.
Looking to change this are Power for People, a campaign group who have developed the Local Electricity Bill, introduced to parliament last month by Peter Aldous MP. Already backed by over 180 MPs from both sides of the house, the bill seeks to place an obligation on the regulator, Ofgem, to issue local supply licenses to generators, at costs proportionate to the size of said generator’s business. They cite the German model, where there are over one thousand local suppliers. I can feel the collective flinch coming from Ofgem HQ – thousands of tiny electricity suppliers scattered across the land might sound like the worst nightmare of any regulator. But local power could actually be a dream come true for many.
There are plenty of innovators working in this space already, already looking at how to unlock the potential of local electricity and deliver on the spirit of the bill. At Good Energy, we work with over 1,700 renewable generators, delivering to them the best possible service and price for the power and benefits they provide. On average, one of our customers is less than 4 miles from one of our partner generators, and our Selectricity tool allows businesses to choose which generators they wish to partner with to meet their electricity demand.
Our work with local communities shows that we can dramatically reduce many of the costs associated with supplying electricity.
Our work with local communities has shown that by optimising local generation and supply, often with new storage technologies, such as batteries, we could dramatically reduce many of the costs associated with electricity supply, and policy costs. Not only would that mean lower bills, but also a greater incentive to build even more zero-carbon generation. We want to explore this further, and would encourage MPs, the government and the regulator to use the Local Electricity Bill as an opportunity to do so.
Small scale renewables do not just reduce emissions. They make the way we use power more efficient and provide a whole host of social benefits: mitigating fuel poverty, driving local economic growth through their revenues, and creating plenty of jobs. Finding new ways for local generators to have a clear, profitable route to market places an explicit incentive to build more renewables, and realise these benefits. If we truly want to decarbonise the sector quickly and fairly, it is a no-brainer.
This article first appeared in BusinessGreen.