Earning an Income From Renewable Technology

Earning An Income From Renewable Technology

Electricity

Electricity generators have two options available and whichever you choose will depend on your primary project goal. If your main objective is to generate income for your community, you may opt to export your generated electricity directly to the grid. If your main motivation is to generate electricity for use within your community, you may choose to export your electricity locally via a private wire. Or, you may opt to do both.

Exporting to the Grid

This is done via a Power Purchase Agreement (PPA) i.e. a contract whereby a buyer (usually a utility company) agrees to purchase a generator’s electricity at a fixed price for a fixed term. PPAs provide financial certainty for the generator in the form of a guaranteed revenue stream. The Smart Export Guarantee ensures that eligible small-scale, clean electricity generators will, under law, receive a route to market and payments from electricity suppliers for each unit of electricity they export to the grid.

Local Supply

If you decide to export your renewable energy for local use you can install a private wire network which provides a direct physical connection between your generation asset and a localised grid, bypassing the distribution network. This can be done via a private wire PPA which is distinguished from a standard PPA because the buyer is not a licensed supplier of electricity. This set-up has the advantage, for both the generator and consumer, of providing shared savings in avoiding grid charges associated with electricity imported from the grid. Click here to learn more about the concept of local supply for local use. Learn more about the concept of local supply for local use.

Domestic Renewable Heat Incentive ofgem

Heat

There is no option to export heat to a ‘national heat grid’, therefore all of the heat generated from heat projects has to be delivered and used by buildings locally. A project may receive income from Renewable Heat Incentive (RHI) payments, as well as from selling heat directly to end users. It should be noted that the RHI scheme is due to end on the 31st March 2022 and will be replaced by the Low Carbon Heat Support Scheme – a grant based scheme which will run from April 2022 and will offer support to households and businesses to invest in heat pumps and biomass boilers. The details of the scheme will be decided in the coming months.

Consideration must also be given to how the heat is delivered to consumers. Heat networks distribute heat from a centralised source via a network of insulated pipework carrying hot water to multiple connected buildings. The heat can be used for both space heating and domestic hot water. Each property drawing heat from the network is metered for heat consumption and will pay for this heat accordingly.

Read about the West Whitlaw Burn Housing Co-op district heating system here and find out more about Brighton & Hove Energy Services Co-operative’s innovative, low-carbon heat network here.

Read about West Whitlaw Burn Housing Co-op district heating system

More Information on Heat Networks

How do I sell my energy?

To sell energy directly to consumers, an Energy Service company (ESCo) will need to be set up. An ESCo will deal with billing and collection of payments for heat supply and to maintain and manage the system assets.

There are several legal structures to consider - ESCos can be wholly owned by public sector organisations, private sector organisations or as a joint venture between two or more organisations, and can be established as profit or not for profit. Non-profit ESCos which are community owned (either wholly or partly) have many benefits such as:

Improving energy efficiency by minimising transmission and distribution losses
Encouraging consumers to use renewable energy by raising awareness, understanding and acceptance of renewable energy
Generate income locally by selling renewable heat and, in the case of biomass projects, can stimulate local woodfuel supply chains
Create jobs for the local economy
Alleviating fuel poverty by reducing energy costs for consumers

Aberdeen Heat and Power is an example of a local authority-owned ESCo. AHP is limited by guarantee and operates on a not-for-profit model with any surpluses being reinvested in further development. The project was initially developed to deliver heat and power to four multi-storey residential blocks.

Find out about Aberdeen Heat and Power

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