NEWS

Could large scale microgeneration be the direction the energy distribution is heading in? There are many who think so, but not without a major change of emphasis on the part of the industry. 

The way the UK produces and distributes energy has been built up over more than a century and worked using the same basic model for many decades. However, things are changing; microgeneration is democratising power production and delivery. If the UK can move towards a system of microgeneration at a faster rate, there are opportunities for significant benefits, to companies, consumers and the planet. However, with great change comes great challenges. The industry must completely shift its mindset if it is to adapt to this new way of operating.

So, what is microgeneration? Why is it growing in popularity? What are the advantages and disadvantages? How is it different from what we have now? What changes must happen in the industry in order to reap the rewards?

What is microgeneration?

Microgeneration is when you generate some or all of the energy you need to run your home or business, using renewable sources on your premises. The most popular methods of producing your own power are:

• Solar panels – installing panels on your roof that convert sunlight into electricity.
• Hydro turbines – if you have a source of flowing water on your land, you can install turbines that produce electricity as the water flows through.
• Wind turbines – if you live in a particularly windswept area, you can construct wind turbines to generate electricity.

It is also possible that your source of microgeneration produces a surplus of energy. If this is the case, you can sell this excess power to the National Grid for a profit. This is called the Feed-In Tariff.

The existence of the Feed-In Tariff is one of the primary reasons why microgeneration is taking off in the UK. While there is an outlay at the start of your microgeneration, purchasing and installing solar panels, for example. Once it’s up and running, you will see your energy costs decrease significantly. Generating your own energy is much cheaper than buying it from an energy supplier. On average, it takes nine and a half years for solar panels to pay for themselves. After that, you may even end up making money.

Microgeneration from renewable sources is also much better for the environment than standard, fossil fuel-derived energy.

Energy distribution – before and after microgeneration

For decades, coal, gas and nuclear power plants have generated the vast majority of energy in the UK. The electricity generated at power plants is then delivered across the National Grid into homes and businesses, across hundreds of miles of power lines, above and below ground. This is a centralised power network, where the power flows out from the centre.

Microgeneration is decentralising the power network. Energy is created on the outside and flows back into the National Grid.

This is a huge shift of emphasis and is leading to a true democratisation of the energy industry. The barriers to entry drop dramatically, meaning that essentially, anyone can start their own energy company. Entrepreneurs can build their own solar or wind farms, taking advantage of new battery storage technology to conserve, sell and deliver their power.

This rise in competition gives the consumer more choice over what kind of energy they purchase and how they buy it. Competition between this larger number of energy creators should lead to lower prices for the consumer.

Consumers could also choose where they want their energy to come from. If they want their energy to only come from solar, for example, they can do that. If they are happy with fossil fuels, they can stick with the conventional power generation systems.

Challenges to a decentralised power network

Unfortunately, the UK is nowhere near ready for a truly decentralised power network. It can cope with the relatively small amount of microgeneration taking place at the moment. However, for microgeneration to become the norm, large scale change needs to happen. It requires a complete change of thinking from all the leading players in the industry.

The electricity network was always designed around large power stations pumping out as much energy as they could. The more they produced, the lower the prices would be. It’s basic economic theory: economies of scale.

Moving from large scale to small scale generation and delivery is a complete 180-degree shift. It would involve changing the way energy is regulated and sold. It also would mean breaking the stranglehold of the Big Six energy companies (soon to be Big Five) which would meet with massive resistance.

The National Grid would have to be totally redesigned to be able to cope with surges in demand, ensuring every consumer in the country has energy exactly when they need it. There would also be challenges around storage.

Decentralisation is not impossible

While there are challenges, they are not insurmountable. Other countries have shown that a decentralised grid is achievable.

The US and some Northern European countries are well ahead of the UK when it comes to implementing decentralisation. Whether it’s efficient trading or rewarding customers for more efficient use of power, they are showing that it is possible to deviate from the old ways of doing things.

It’s not just countries either. In the UK, businesses are taking the lead on microgeneration, creating their own power and grids to supply their premises. UPS has built a smart grid to power its fleet of electric vehicles, while Sainsburys and M&S have invested in alternative energy sources for their operations. M&S has put millions of pounds into purchasing and installing solar panels to power its stores.

Decentralising the grid to reap the full potential of microgeneration is a large and testing task. But it is possible. It requires a change of thinking. Let’s hope they can achieve it.