By putting their faith in small scale renewables, like solar, ‘prosumers’ can produce electricity and sell it to the National Grid
Conservative MP Antoinette Sandbach writes ahead of her Westminster Hall debate on the ‘Effect on the solar industry of the replacement of the feed-in tariff’.
Energy, like many areas of Government policy, is rife with arcane terminology and baffling acronyms. This complex dialect requires people to know their SEG from their FIT, but it has thrown up one new word which means more, rather than less, than the sum of its parts.
A ‘prosumer’ is a person who both produces and consumes energy. These people have turned the energy market on its head. Whereas once the process was one-way, big energy producers generated electricity, they then sold it to individual homes and businesses which consumed it; now prosumers have upended that old-fashioned idea.
By putting their faith in small scale renewables, like solar, prosumers can produce electricity and sell it to the National Grid, as well as consuming both the electricity they produce themselves, and more that they buy from the Grid.
These prosumers were able to sell into a market dominated by big energy companies because of the Feed in Tariff (FIT) scheme. This was a scheme which paid out to those who had installed renewable technology. If you put a solar panel on your roof or your village builds a small-scale hydro project, such as the Archimedes Screw in my constituency, then the FIT would ensure a fair rate of return for the excess energy you produced and put into the Grid. For an industry where big companies are used to selling to small consumers at whatever price they care to set, this is a revolutionary change.
However, the Government has now ended the FIT scheme, and promised a ‘Smart Export Guarantee’. This is a welcome commitment and demonstrates the Government’s ongoing support for renewables. However, there are several issues with the new scheme.
The first is that is does not guarantee a minimum ‘floor price’ for the power put into the Grid. While the Government has accepted that prosumers should not receive zero payment for the power they produce, there is still a gap between this and the minimum price necessary to breathe new confidence into the market. This would bring renewables into line with other parts of the energy industry, such as offshore wind and fossil fuels which enjoy considerably greater protection.
The economics of the solar industry are already very tight, and confidence has been hit by the closure of the FIT regime. A fair minimum export price will ensure prosumers are not ripped off while the industry and surrounding regulation sorts itself out. It will also encourage suppliers to get their systems in place in readiness for market-wide half-hourly settlement, which will help to accelerate the smart energy transition. To not enact a guarantee would be another blow to an industry already shaken by the loss of the FIT.
This problem is compounded by the fact that the consultation for the Smart Export Guarantee ends today, at 11:45am, and the export tariff (one key pillar of the FIT) expires on the 31st of March. This leaves just 18 working days to implement the SEG. The Energy Minister Claire Perry is clear that “solar power should not be provided to the grid for free” however, there is a risk that without serious effort, one policy will end before the other comes into force.
That is why this afternoon I am holding a debate in Westminster Hall today. I hope that the Energy Minister will have some answers, and much needed reassurance for the renewables sector, and I hope that over the days and weeks to come we see greater clarity on what will replace the FIT regime.
Antoinette Sandbach is the Conservative MP for Eddisbury