Low-carbon energy has a critical role in tackling climate change
We support the Government of Jersey’s vision for our Island to push for carbon neutrality by 2030, and we believe that we should all play our part in reducing our impact on the climate. As Jersey’s primary low-carbon energy provider, we believe we have an essential role to play in helping the Island find solutions to achieving this goal, working collaboratively with partners who also recognise the critical role energy has in tackling the climate emergency.
New technologies and the falling costs of renewables and batteries are transforming energy markets and the way electricity is generated, stored and distributed across the world. We are at the forefront of that change, deploying these technologies and offering our integrated network as a testbed.
We want the whole community to benefit from local renewables
Jersey has so much more to do but is already ahead of many countries. We have built a low-carbon energy platform that provides Islanders with clean, reliable electricity whenever they need it. The grid has been designed to be compatible with and supportive of locally generated renewables, and we are introducing solar power to the grid in increasing volumes and in a way that will socialise the benefits across the whole community.
Where individuals and businesses want to invest in their own solar, we are happy to connect them and have done so for many years, offering to buy back any surplus electricity into the grid at a market-related price.
We believe in fair, affordable prices for everyone
Our customers have told us that price remains critical to them, and we believe in fair, affordable electricity prices for all. That means everyone pays their fair share of the cost to deliver electricity to Jersey’s homes and businesses under a ‘user pays for an efficient service’ model.
The unit price of electricity is made up of several parts. As well as the wholesale price we pay to import power or generate on-Island, we have to account for many other costs. These include the cost to build, maintain and run our transmission and distribution networks.
The more people use the network and contribute to its operation and maintenance, the lower the unit costs are for all.
We support on-Island renewable power
The cost of some renewable energy, such as solar PV, has fallen in recent years, and increasingly customers are interested in generating their own electricity. We want to support customers to do this, and we have allowed embedded generators (EmGs), as they are known, connect to the grid for many years. Some customers may wish to come off the grid and be entirely self-sufficient in future. And that’s fine too.
Unfortunately, like many other power providers, we see a potential problem arising when businesses wish to generate their own electricity when they can but still want grid and power backup services when they cannot. For instance, when the wind does not blow, or the sun does not shine.
Fewer units mean a lower contribution to network fixed costs
Businesses generating their own power while still being connected to the grid are buying fewer units and contributing less to the maintenance and operation of the network. They are also not contributing to the procurement of power that needs to be ready on standby and available instantaneously to prevent power outages.
It is vital that customers who are unable to afford and install renewables, do not subsidise those who can and so we feel it is important that the costs of providing standby services are fairly allocated, especially when local renewables are unlikely to drive down carbon levels from already very low grid carbon levels.
Preventing the burden of costs falling to the least affluent
The Head of Ofgem, the UK energy market regulator, said there was a risk in distributed renewables that those who could afford to harvest their own energy and avoid network charges and [UK] policy costs that are passed on via bills, would leave a ‘shrinking pool of less wealthy customers to shoulder such costs’.
He questioned whether it would be acceptable if 'many of the wealthier in society were having very, very low energy costs because they weren't paying network costs, they weren't paying policy costs, and those costs were then being smeared over a smaller section of less well-off people, including potentially on the vulnerable’. He suggested those who wanted to maintain a grid connection for emergencies paid something ‘akin to an insurance premium’.
It calculated a range of charges depending on the type of embedded generation (solar PV, wind, Combined Heat and Power), and self-consumption used. NERA stated: ‘JE’s calculation is conservative overall.’
NERA recognised that by reducing the amount of electricity bought from the grid, on-Island renewable generators reduce their financial contribution to the Island's network and related fixed costs.
To adequately fund the grid, the lost contribution from the growing number of generators would need to be recovered by other customers in the form of higher prices.
NERA described this as ‘inefficient grid bypass’, a problem faced in many jurisdictions with a similar tariff structure.
The Standby Charge - an equitable solution for all
The solution is Standby Charges. They are not new. JE has applied them in some form for many years to some Commercial customers who generate their own electricity (from any generation source) but require standby capacity and support services from the grid when their equipment fails or needs maintaining.
The picture is similar in other jurisdictions. Guernsey and the Isle of Man levy Standby Charges, and these are at higher rates than the £3.25 per kWp per month (incl. GST) that we introduced for commercial generators in May 2019.
A Government of Jersey-commissioned review by economic consultants NERA in 2018, concluded the charge was reasonably low.
The Standby Charge does not apply to all renewable facilities
- The Standby Charge does NOT apply to commercial renewable facilities that export all their electricity to the grid (as these facilities do not require a backup service),
- The Standby Charge does NOT apply to generation facilities installed as an emergency backup in case of grid failure (as these facilities do not require a backup service),
- The Standby Charge does NOT apply to any commercial facility installed before 1 May 2019 (until a change of ownership or replacement of generating units).
We aim to provide affordable, reliable and sustainable power for all Islanders to enjoy long into the future. This means everyone contributing their fair share to the network that provides it.