Selling electricity to the Grid

If they buy surplus power at all, most electricity companies will buy it at a much lower rate than they sell it for.

If they buy surplus power at all, most electricity companies will buy it at a much lower rate than they sell it for. But this acts as a strong disincentive for small-scale renewable energy producers. Installed systems tend to be smaller than they might otherwise have been because the price for surplus power is low.

Supporters of small-scale renewable energy advocate net metering or net billing, where the same price is paid for electricity, whether it is flowing to or from the grid. There is evidence to show that the financial savings on administration costs outweigh the loss of profits to the energy company.

The meter simply runs backwards when electricity is being exported. However, power companies have been reluctant to embrace net metering arrangements, and it is unlikely to be made available without legislation.

Dual metering allows the price paid for surplus power to be fixed at a different rate from the price paid for using the mains. From the point of view of a small turbine operator, dual metering is less attractive than net metering, as any surplus will be bought at a low price per unit.

Something is better than nothing, though, and dual metering may be the best option available.

In 2007, HM Treasury asked Ofgem to review the market arrangements for customers wanting to sell power from household electricity generation units to energy suppliers and to consider:

  • how easy it was for customers to find out how much suppliers will pay them for exported electricity
  • whether it is simple for customers to compare the offers suppliers make
  • whether the price paid reflects the value of microgeneration to suppliers and climate change objectives as a whole

The resulting report, 'Reviewing the microgeneration market', of March 2008, and a summary factsheet, can be accessed from http://tiny.cc/ZcUwf