Local power could mean cheaper bills
Led by Dr Furong Li, a team from Electronic & Electrical Engineering is working on a study which shows up to £200m per year could be saved from energy bills.
The present method of charging relies on a flat rate, irrespective of the distance energy is distributed. Commissioned by gas and electricity regulator OFGEM, Dr Li's research in calculating costs would mean that local users of energy supplies generated nearby would pay less than those living further away.
“This would help establish greater incentives for energy produced locally through renewable sources," says Dr Li. "It would help attract investment in local supply networks and encourage them to operate cost-effectively.”
Of the four parts in a consumer's electricity bill, 21 per cent is taken up by distribution. Generating, transmission and a supplier's charge make up the rest. Dr Li's long-run incremental cost (LRIC) pricing system will, for the first time, reward those who generate and distribute power locally. It will help minimise the cost of cables, estimated at £5 million per kilometre, and installing pylons. This in turn will help the UK meet its targets for reducing CO2 emissions. "Our new pricing system will reduce the need for costly infrastructure and lower prices paid by consumers," adds Dr Li.
The team's work has attracted interest from Brazil's Electricity Regulatory Agency ANEEL, which is keen to explore this model for its distribution networks. "Our long-term vision is to provide ready-to-adopt solutions for a range of supply industries," says Dr Li."It will help with delivering a low carbon economy and give better value for money."
To determine a fairer costing model for energy distribution.