Behind the Meter Renewables
There are numerous technical terms within renewable energy. The purpose of this article is to explain the benefits that behind the meter renewable energy generation gives to commercial energy consumers. We also address the key issues and challenges the project developers may face when trying to deploy such projects.
What does behind the meter mean?
Just like the energy meter we are all familiar with in our homes, large commercial energy consumers have a similar arrangement. A boundary meter is located between their own electricity network and the UK grid network which monitors how much energy is consumed.
Behind the meter renewables is simply renewable energy generation that is connected directly into the consumer’s electrical network. This could be generation which is situated on the customer’s premises, or generation which is located away from the site but connected directly by a cable. Both are considered behind the meter generation. In front of the meter generation refers to generation connecting independently and directly to the grid.
What are the commercial benefits?
When connecting behind the meter, the power produced from the energy project, e.g. Solar PV or Wind, flows directly to the customer and offsets the site’s consumption. If the site is consuming 2MW and the energy project is producing 2MW the boundary meter would record zero MWs of electricity. The grid is effectively oblivious to the facilities need for power at that moment in time.
Any time the renewable generator is producing power, the consumer’s boundary meter reading is reduced and can even be zero if the amount of power generated matches or exceeds the site consumption. The reduction in consumption through the meter will directly lead to a reduction in the customer’s utility bill.
This quickly leads toward 2 key questions:
- How much of the facilities annual energy consumption could the renewable energy project provide?
- How much will this energy cost?
How do we work this out?
Solar lends itself well to behind the meter arrangements as it is relatively low cost and can be sized according to requirement.
What does it all mean?
There are two key components, facility consumption level and grid export.
Facility consumption level
The level of facility consumption during the sunshine hours particularly during summer months is key for the solar asset to sell significant volumes to the consumer.
The generation on a daily basis can be volatile due to local weather which affects how much and when energy is delivered to the customer. The customer energy consumption profile also plays a large part in how much energy can be delivered, some consumer profiles lend themselves much better to private wire solar than others.
Grid Export
Anything not consumed by the facility needs to find a route to grid. In the graphs this is the difference between the yellow and the green lines
Securing Export capacity is key not only so surplus power has a route to grid, but also if the off taker stops consuming power, the project is still able to generate. Project risk is something that is baked into the energy price and investor returns. A higher risk project needs to pay back faster than a lower risk project.
Other factors to be taken into consideration are outlined below.
Project Oversizing
If a grid export connection can be obtained e.g. 2MW the solar installed capacity will not be sized identically e.g. 2MWp as the solar system is rated to produce 2MW under ideal conditions (hence the MWp (Mega-Watt-peak). The project will be oversized so a larger volume can be generated with only minimal curtailment losses, however this is only true until a certain point where additional Capex does not add additional project value. This is mainly a result of losses becoming too significant to warrant the extra capex. The extent of the oversizing is an optimisation problem and is determined by our modelling or the; consumer consumption profile, grid export connection and project financial risk.
Pricing
After assessing the energy and financial models, a price is offered to the customer which allows for the project to be deliverable from the energy developer and generator’s perspective
As this behind the meter energy does not pass through the grid (DNO network), the consumer is not liable to pay non-energy costs on this power resulting in significant financial cost savings on the proportion of energy. This can be anywhere from 0-100% of the facilities consumption annually. The remaining facility consumption would come from gird or other energy projects.
Customer balance costs will change but the value create by agreeing a private supply allows for their the be significant savings even including the higher balancing costs.
Conclusion
Behind the meter renewables allow large energy consumers to access low carbon energy generation, whilst also benefiting from cost savings on their energy bill, energy supply chain transparency, and price certainty to help risk management.
There are several key inputs/issues to resolve before a project can be develop. We have worked hard at Novus to understand how to successfully deliver these projects and have a keen appetite to deploy additional private wire projects in the UK in the coming years.