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How to get the renewable electricity market right

Summary:
There’s always the hope that someone, somewhere, will finally stumble across the correct method of dealing with and even measuring this renewable electricity stuff. It appearing that we’ve a danger that it will be our own UK electricity market which does so. The end result will be that we’ll see the true value of this generation - perhaps something that not all will be happy about:Households with solar panels are to get a guaranteed payment for excess electricity they export to the grid – but there will be a hiatus when people are expected to give it away for free.Energy minister Claire Perry said on Tuesday she would legislate for a new market that will make energy firms compete to offer solar homes the best price for any unused energy they export.The marketplace would replace a scheme

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There’s always the hope that someone, somewhere, will finally stumble across the correct method of dealing with and even measuring this renewable electricity stuff. It appearing that we’ve a danger that it will be our own UK electricity market which does so. The end result will be that we’ll see the true value of this generation - perhaps something that not all will be happy about:

Households with solar panels are to get a guaranteed payment for excess electricity they export to the grid – but there will be a hiatus when people are expected to give it away for free.

Energy minister Claire Perry said on Tuesday she would legislate for a new market that will make energy firms compete to offer solar homes the best price for any unused energy they export.

The marketplace would replace a scheme that pays households about 5p for each unit of solar electricity they export, which is paid for by all energy billpayers but will close for new applicants on 31 March.

Solar households expected to give away power to energy firms

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Energy suppliers with more than 250,000 customers will be mandated to offer a “smart export guarantee” tariff, with solar households expected to shop around for the best rate.

We’re not quite there yet of course as what we would really want is a time variable tariff to deal with intermittentcy. But, baby steps and all that.

What, actually, is the electricity produced by such solar panels worth? No, not ought it to be worth, not would some like it to be worth, but what is it that people will actually pay for it? Only when we know that number can we find out whether the installations are worth their cost - obviously enough, for an investment in anything is only worth the return from it.

Our own suspicion is that the market price will turn out to be very much lower than the current assumptions but we’re entirely willing to be surprised on that.

Tim Worstall
Tim Worstall is a British-born writer and Senior Fellow of the Adam Smith Institute. Worstall is a regular contributor to Forbes and the Register. He has also written for the Guardian, the New York Times, PandoDaily, the Daily Telegraph blogs, the Times, and The Wall Street Journal. In 2010 his blog was listed as one of the top 100 UK political blogs by Total Politics.

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