High energy users and renewables a new report from Climatechangematters limited

 Many high energy intensity businesses are experiencing considerable pressure on their cost base which, in the short to medium term, is likely to be affected by the various measures introduced to encourage Britain's transition to a low carbon economy. 

The CBI has argued that such industries need assistance in relation to this transition.

Climatechangematters limited has published a report High energy users and renewables which suggests an new approach- remote net metering -which together with other policy measures could help Britsih to control energy costs and participate in the transition to a low carbon economy.

In effect the policy measure is designed to put industry in the same place as the domestic user with a pv panel on the roof so that wherever renewable generation capacity is located a high energy user could invest in generation plant and net output against its own consumption rather than sell to the market . Under this arrangement it would only pay for transmission balancing and other costs.

The report suggests this could depending on the circumstances save £3 to £10 per mgw/h compared to separately selling power to the grid and buying it back. Moreover as a tool it enables industry to more readily budget for its costs over the long term . For policy makers it brings forward the prospects of achieving grid parity as costs are displaced closer to the retail price.

With a vibrant remote net metering market it is quite conceivable  that it would be common place for a major steel or chemical works to own and directly benefit from an offshore wind farm or biomass plant as a means of achieving both low carbon production and controlling its energy costs.

Jonathan Johns director Climatechangematters limited

Gaynor Hartnell, Chief Executive Renewable Energy Association 

‘We must bring industry and large scale energy users into the equation.  Renewables is not just the domain of specialist project developers –  or at the other end of the scale – householders with a panel on the roof.  Renewables must spread right across the economy.  This proposal would enable wider sharing of the benefits of renewables and bring in important new sources of capital.’ 

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Simple illustration of high energy user which owns renewable generation equipment on a remote site. The high energy user consumes 100 units of electricity and generates 75 units of renewable electricity.

Without net metering

 The high energy user pays for 100 units of electricity at retail price and sells 75 units of electricity at wholesale price.  It also earns 75 units of premium (e.g. 75 ROCs)

 With net metering

The high energy user pays for 25 (rather than 100) units of electricity at retail price.  It also earns 75 ROCs.

Plus …

The high energy user pays the supplier for the service of

·      balancing /aggregating its demand (if necessary)

·      wheeling the power across the network

·      engaging in sell and buy back agreement (in order that the renewable output is ROC-eligible)

·      providing top up

The high energy user would also get CRC tax offset or CCA rebate for carbon saved on substitution of previous power supply (less REGO sacrifice cost)

It would also obtain any embedded benefits if power was transmitted only through the local distribution network 

 "Many detractors of climate change argue that the price of the various measures  either in place or suggested raises the costs of traditional industry. These make it, so the argument goes, less competitive and vulnerable to exports from countries such as China and India where, although investment in renewables is strong, it is dwarfed by investment in new coal plants.

This debate is now occurring at a time when there is pressure on fiscal budgets and the cost of low carbon support measures, with their impact on consumer utility and tax bills. The renewables industry in the west is facing a critical stage as the ‘inconvenient truth’ becomes more of an ‘uncomfortable budget’.

'The renewables industry would do well to be sympathetic to the needs of these heavy users of energy and should seek to partner with them and participate in their shift to a low carbon production process. To this end, the historical focus of support measures on the generator/utility needs to be modified, to allow financial support  to flow more directly to the high energy user wishing to generate renewable energy. ' remote net metering offers away forward.