better generation

We saw the Feed in Tariff (FiT) announcement and decided to look for the catch, but having studied the full response to the consultation document found there doesn't seem to be one - the tariffs proposed by Government have been well thought out, considering carefully the suggestions from all those who responded to the consultation document sent out in October 2009, whilst providing enough stimulus to encourage serious Renewable Energy (RE) growth without creating a bubble.

One question that I was pondering - now that all electricity suppliers of greater than 50 000 customers will be forced into purchasing RE from generators, how will utilities differentiate themselves? Good Energy, who were amongst the key lobbyist for the FiT, and Ecotricity provide in the UK the most support amongst utility companies to RE. Their general business models are based on charging slightly above the market rates for 'clean, sustainable' energy. Good Energy provides electricity from 100% renewable sources, whereas Ecotricity's renewable share is around 46%, although they claim to invest more than Good Energy in new Renewable Energy installations.

So now that companies like EDF Energy, notably pro-nuclear, will be obliged to purchase generated RE at the same tariff as competitors, and likely to be providing imported electricity at a cheaper price to customers, how will Good Energy and Ecotricity attract investors who will undoubtably come from other sectors looking only for financial gain, with little care for ethical trading?

In the table below, evaluating different electricity suppliers, I use the following assumptions:

-  Turbine generating 17 000kWh per annum with Feed-in Tariff @ 26.7p/kWh

-  Annual premises consumption of 25 000kWh

-  10 000kWh of electricity imported annually

-  2 000kWh exported to the grid annually @ 3p/kWh

-  15 000kWh thus used on site (avoided costs)

Tariff prices come from uswitch.com

A quick analysis of the above table shows that the most revenue would be made with British Gas as your electricity supplier, whilst even on this small scale Good Energy is by far the least cost-effective solution. Ecotricity is still not particularly competitive, but certainly outperforms Good Energy.

Good Energy has approximately 25 000 clients, whereas Ecotricity totals 31 500. The Feed in Law states that these utilities are not obliged to purchase generated renewable energy from capacities greater than 50kW, as their client base falls below 50 000. I would imagine that both companies would want to register themselves as licensed FiT suppliers, in order to stay with the competition. What they do beyond that we will find out shortly.