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BEIS bids to create smart markets for small-scale renewables in subsidy absence

Image: SunGift.

Image: SunGift.

The UK government has put forward a future vision for small-scale renewables which places the generators at the heart of local flexibility and balancing markets.

Yesterday the Department for Business, Energy and Industrial Strategy published two crucial documents pertaining to the role of small-scale low carbon generators, such as solar and wind, in the future energy system and how central government could stimulate their deployment.

While confirming the closure of the feed-in tariff and export tariff from 31 March 2019 – moves which the government’s own impact assessment concludes are likely to trigger a significant downturn in deployment – the future vision document offers a loose idea on how renewables deployment could be stimulated.

Central to this is the concept of a ‘route to market’. BEIS’ call for evidence (CfE) is light on detail, but the government alludes to a role for domestic generation to play in localised energy markets to provide both more efficient power generation and flexibility services for network operators.

A pool of systems could be aggregated and used to bid into the Capacity Market and ancillary services markets, for example, while the concept of a smarter export tariff has been mooted which would reward home owners for behaviours that “promote efficient grid management”, such as demand shifting.

The CfE itself pitches a number of questions to industry relating to the design of that ‘route to market’. It seeks to determine industry ideas on what steps will be needed to stimulate continued deployment of small scale renewables, evidence of subsidy-free deployment business models and whether or not government intervention is necessary.

Government intervention in the energy market has proven to be a particularly contentious point since Dieter Helm’s cost of energy review, published late last year, blamed numerous interventions for having driven the cost of energy upwards and created a muddled policy environment.

But the government’s CfE has widely been pilloried by the renewables lobby for lacking detail. Chris Hewett, chief executive at the Solar Trade Association, described the CfE as “frighteningly vague”.

It has also been criticised for both its timing – it is more than seven months overdue and comes just nine months before the feed-in tariff closes, leaving an inevitable gap in renewables policy – and ambition in expecting renewables to access such markets as it stands.

Leonie Greene, head of advocacy and new markets at the Solar Trade Association, described the CfE as expecting solar to “run before it can walk”, and pointed to an array of factors related to the adoption of smart meters and systems that will need to be in place before such markets can be created.

The call for evidence remains open until 13 September 2018.

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