understanding P272 and the opportunity for Solar PV installers – Featured in the latest Inside Clean Energy Magazine

Egnida’s latest blog on the looming changes to Ofgem’s P272 settlement code and what the opportunity is for solar installers has been featured in the latest edition of Inside Clean Energy. You can download a copy by Clicking Here – Inside Clean Energy Magazine.

Egnida provides complete energy solutions for customers so we understand all aspects of energy management from energy procurement and metering through to demand side management, battery storage and Solar PV installations. We know that most competent commercial Solar PV installers understand the technical installation and FITs and many that analyse the financial benefits of a solar installation for their customers will have some understanding of half-hourly usage data. However, many installers still struggle with customer tariffs and usage data, particularly non half-hourly data. Clearly, with the reduction in FITs and increases in electricity market prices, accurately analysing how much Solar PV output is likely to be absorbed on site is a much more critical aspect to the associated business case. Most large sites will be “half-hourly” and therefore the customer can supply their half-hourly electricity load data. Half-hourly metered sites can be identified from the customer’s MPAN (Meter Point Administration Number) which is shown on their electricity bill. Profile Type “00” indicates half-hourly metering as in the example below:

meter

Larger non half-hourly “maximum demand” metered customers ie those of Profile Types (Classes) 05 (<20% Peak Load Factor), 06 (between 20% and 30% Peak Load Factor), 07 (between 30% and 40% Peak Load Factor) and 08 (>40% Peak Load Factor) are currently effectively billed based on standard load shapes allocated to their Profile Classes. This makes it much more difficult for those outside the energy industry to interpret and accurately analyse how much Solar PV output is likely to be absorbed on these sites based on billing usage data alone. However, P272 is going to change this in the near future.

P272 is a change in electricity industry legislation requiring circa 160,000 UK business sites with Profile Classes 05, 06, 07 and 08 and Automatic Meter Reading (AMR) meters to move to half-hourly electricity settlement. As such, customers that have these meters installed that are capable of recording half-hourly consumption data are also required to appoint an industry approved half-hourly Data Collector and Meter Operator so that from 1st April 2017 they can be billed under the new arrangements. As an experienced energy management company Egnida manages this process on behalf of customers together with the associated changes in electricity supply contract arrangements. Depending on the difference in customer’s actual load profiles compared to the standard shapes used previously their bills can potentially increase or decrease. Either way, billing and charging structures for these types of meters will inherently become more complex.

The good news for Solar PV installers is that for those customers that will see an increase in day time electricity costs the case for solar will improve. In addition, the availability of half-hourly data will make it easier to more accurately predict how much of the Solar PV output will be absorbed on site further removing risk from the business case. As an added bonus, for suitable sites, hybrid solutions comprising Solar PV, battery storage, Demand Side Response and tailored electricity supply contract arrangements can offer further efficiencies and cost savings for customers particularly for those with larger portfolios of relatively low usage sites.

 

If you need help complying with P272 or the ongoing management of your supply contracts, please call us on 02920 098 100 or click here.

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Brexit and the law of unintended consequences

brexit

On the 23rd June 2016 Britain voted to leave the European Union by a 52%/48% majority. Both before and after this vote there has been much analysis and forecasting of the impact of this decision on the UK’s economic outlook, much of this done by the Bank of England. The Bank has recently been forced to admit that growth will beat its previous gloomy forecasts but what the Bank and other Government economists have failed to recognise or appreciate is that it is impossible for businesses that are reliant on significant imports in sectors where EU imposed Minimum Import Pricing (“MIPs”) exists to “bounce back” post Brexit.

The renewable energy sector, more specifically the Solar PV industry, is one such sector where Brexit is having a damaging impact and there is very little the industry can do because of the “double whammy” of MIPs and a devalued pound caused by uncertainty created by the Brexit decision itself.

MIPs were introduced in 2013 to protect the European Solar PV manufacturing industry from cheap Chinese imports. Currently the MIP is set at €0.56/watt, which is significantly higher than the global “free market” price. This blatant protectionism does nothing for the UK because we have no UK Solar PV manufacturing base to protect and therefore we are forced to import at artificially high prices. The fact that the UK voted to LEAVE the EU does not help in the foreseeable future because until Article 50 is triggered and for about two years after that, we are still (technically) in the EU and accordingly MIPs apply unless the EU decide to withdraw them in the meantime.

The second “whammy” for net importers such as the UK Solar PV industry, is the strength, or more accurately the lack of strength, of sterling compared to the Euro and US Dollar. When Britain voted LEAVE, Sterling suffered its biggest one-day fall on record against the US Dollar and didn’t fare much better against the Euro. Although there was a marginal recovery in the aftermath of the Brexit vote, nevertheless Solar PV panels, whether Chinese imported (and subject to MIP), from Europe or from the rest of the world (and traded in USD) are c.10% higher now than their pre-Brexit levels.

The renewable energy market is a global market and in the important sub-set of this market, Solar PV, UK players are being forced to go out to battle for global investment with not one, but two arms behind their backs. Fortunately, there are a few businesses, such as Egnida, that have a pretty powerful “head-butt” and so far we have used our ingenuity and innovation to compete and keep this industry moving forward no thanks to the EU, Brexit or the UK Government.

 

Randall Edwards

Chairman

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