Home microgeneration tariffs: win-win

To date, the average take-up of microgeneration technologies across European households has been relatively insignificant; the main detractor being that microgeneration hardware is uneconomical and that the supply of power it generates is poorly matched to typical household demand. Therefore, the majority of microgenerating households still need to be connected to the local supply grid, or opt for energy storage and standby power systems, the size and inefficiency of which often makes standalone microgeneration inefficient.
Microgeneration is often touted as a costly and less reliable alternative to grid energy that can only provide a small fraction of the energy consumed by a typical domestic property. However, driven by the supply side, new market initiatives are boosting the appeal of microgeneration technologies.

However, in Germany - which has the largest solar market in Europe - the affordability of microgeneration was tackled by reducing payback time through two main initiatives: government-underwritten loans at a fixed interest rate, and regulation ensuring consumers were guaranteed a decent price for excess electricity exported back to the grid, far in excess of what consumers in the UK can currently expect.

In isolation, and without other incentives, microgeneration in the domestic market is unlikely to be economically viable in the short to medium term, and possibly even in the long term. There are too many significant hurdles in the current environment - including an inadequate energy export market, and a lack of guaranteed pricing propositions - for a viable market to emerge through natural market forces.

In addition, a lack of consumer awareness is preventing demand from being converted into actual purchases, and high front-loaded equipment and installation costs are acting as a deterrent to mass market demand. Various issues regarding metering, connection to the distribution network and balancing/settlement issues are also preventing widespread take-up of electricity generating technologies, as is the problematic design, management and regulation of energy networks.

Not only this, but the insufficient skills base for the future, combined with the lack of engagement with the construction industry, are undermining the feasibility of domestic microgeneration. There is also a pressing need for a more supportive legislative environment which embraces change affecting all aspects of the energy generation and usage model to create real economic incentives and true demand pull.

However, over the past few years, several new UK market initiatives have emerged that go some way towards counteracting the key limiting factor: inadequate direct legislative and regulatory environment support.
A good example of such initiatives is Good Energy's Home Generation offering, which is designed to support people with microgenerators - such as solar panels and micro wind turbines - by paying them for every unit of electricity that they generate, including those that they use themselves. The scheme also requires the microgenerator to be a supply customer of Good Energy, meaning that any power consumed by the customer from the grid will be supplied by Good Energy's 100% renewable electricity.

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