Setting up of Local Energy Markets or Local Supply arrangements so renewable energy generators can sell to local energy consumers.
Local trading of energy could enable suppliers to electricity locally at a higher price and consumers to buy locally at a lower price. Or consumers see a value in locally generated renewable energy and pay a premium. Swan Barton argue that a reduction in grid charges is reasonable, because matched power only travels between the source and the consumer and so the wider network benefits from reduced traffic. However, although precedent in the UK market there is little appetite from the regulator. Energy Local uses the local trading approach and passes on the balancing and settlement charge reudction to the generator and consumer. The generator and consumers must be on the same circuit and form a co-operative. All members of the co-operative will have the same Time of Use Tariff and licensed supplier and use smart meters.
Resources needed
The Energy Local project started as a community energy organisation but has received funding from the Department for Business, Energy and Industrial Strategy. However, the tariff runs on a commercial basis.
Evidence of success
So far one scheme has successfully developed a Energy Local approach
in Bethesda, North Wales (http://www.energylocal.co.uk/cydynni-sign-up/) but is working with a number of community energy organisations to replicate the approach.
Difficulties encountered
The Energy Local model doesn't create substantial cost-savings for the Licensed Supplier and unless they have a very high-tech billing system the costs of billing could outweigh the gains. Therefore it could be difficult to get them onboard.
Potential for learning or transfer
The ability to trade renewable energy within a locality could provide a higher price for the generation and this will improve the business case, particularly in a subsidy-free world.
Tags: Climate change, Energy, Market, Renewables
