U.K. customers need more transparent information on microgeneration


London, U.K. — (METERING.COM) — March 18, 2008 – Most suppliers in the U.K. are offering a range of fair value tariffs to purchase electricity exported from household microgeneration systems, but the market for exported electricity and household generation in general would be improved by better provision of information to help customers find the best deal that suits their circumstances and easier access to financial incentives.

These are among the findings of a review of the market for exported electricity from microgeneration by the energy regulator Ofgem, which found that despite that availability of offers it is complicated for customers to work out the best deal as the suppliers’ offers are not directly comparable. In addition customers need to look at a range of other factors, such as the amount of electricity they expect to use, the fit of this to the generation profile of the microgeneration unit, and the costs of metering.

The market for exported electricity in the U.K. is still in its infancy and in the past year some 1,500 customers signed on with suppliers to sell surplus home-made electricity, marking a significant increase from a year ago. Typically three types of supplier offers are available, covering metered export reward, unmetered reward, and payments based on the total amount generated regardless of how much is exported.

In some cases the suppliers’ offers are loss leaders and are probably justified on marketing and customer acquisition terms, although it is possible that the tariffs may become unsustainable if the volume of take up by customers increases significantly. However, in most cases the offers appears to reflect the value to the supplier.

Ofgem finds that the financial payback period for microgeneration systems may be up to 20 years or more, and financial incentives are limited because most domestic installations are small-scale. Additional stimulus can be expected from April 2009, with the reform of the Renewal Obligation but this is unlikely to be sufficient to bring forward microgeneration in the context of the 2020 renewable energy targets.

The government’s commitment to thinking afresh about its preferred mechanism to support microgeneration as part of developing a new renewables strategy is therefore timely, says Ofgem.