Retuning transmission costs can make energy sharing communities a reality

We can think of the energy system like an orchestra, and the UK’s vision for net zero as a symphony. 

If one part of the orchestra drops out of tune it risks throwing off the other parts, stopping them playing their roles effectively, or even causing the whole piece to break down. But not every problem in an orchestra is caused by a struggling player who may need to be totally replaced. Often all that’s required is a small retune. And that’s why it’s important to regularly check on all parts to make sure they’re not falling out of step with the overall effort. 

Transmission, distribution, and balancing costs have long played an important role in maintaining the UK’s energy landscape by helping to manage and maintain the high-voltage grid that transports electricity nationally. But, as with other aspects of the energy system, they may no longer be fully in tune with the technologies and opportunities now available to us. By revisiting these costs, we can potentially uncover new opportunities for the UK and it’s net zero efforts. Among them are Energy Sharing Communities. 

Energy pricing doesn’t reflect the potential of Energy Sharing Communities 

Energy sharing is a model in which public buildings such as schools, hospitals, and churches help meet their energy needs by installing rooftop solar panels, and raise additional funds by selling surplus green electricity at an affordable price to local homes and businesses. 

According to nationally representative YouGov polling commissioned by E.ON, 93% of people support the idea of Energy Sharing Communities in the UK, and with good reason. As it becomes increasingly viable thanks to the falling costs of solar technology, energy sharing is a win-win for all involved: it has the potential to support public services, put more green electricity into the energy system, provide lower bills to customers, and reduce the need for investing in large-scale national infrastructure. 

This final benefit arises because when an energy sharing 'Prosumer’ (the school, hospital, church, or other building) sends surplus solar-generated power into the local community, that electricity flows directly to the nearest user without any need to be converted to the high voltage grid and transported long distances. Many of us will remember from school that electricity always takes the path of least resistance, but this isn’t always reflected in the way it is costed. 

Although the electricity generated and consumed as part of an energy sharing community would at no point be transported on the high-voltage national grid, it is still currently subject to the same transmission, distribution, and other costs that are charged on energy generated by large centralised plants, ultimately amounting to more than £550m by 2035. 

Removing obstacles to energy sharing 

Transmission costs and other levies are the only obstacle to making energy sharing communities a reality in the UK. By removing them for these projects (reflecting the reality of how locally generated low-voltage electricity really travels) we could create enough of an economic incentive for public buildings of all kinds, and even private businesses, to install solar on their roofs and start supplying affordable green electricity to their local communities. 

These costs and levies are important for maintaining the UK’s energy network, and we wouldn’t suggested removing them any more than dragging the second violinist from an orchestra. But by retuning this aspect of the energy system as has already been done in Spain to allow for a successful energy sharing pilot, we can help the UK support public services, bring lower bills to customers, avoid the need for prohibitively expensive new infrastructure, and get all parts playing together for a successful net zero transition. 

To find out more about our energy sharing pilot in Spain, and about Energy Sharing Communities more generally, go here.