Commercial Standby Charge

 A States’ commissioned independent review by NERA into Jersey Electricity’s proposed Standby Charge for Commercial customers installing embedded generation (EmGs) while requiring grid backup services found that the charge is reasonable, justifiable and without it, prices will rise for all other customers who cannot install solar PV, thermal or wind generators. The charge was also assessed as being at the lower end of the price range of what it should be.

Having given initial notification for the application of these charges in November 2016 and having twice postponed implementing the charge to 1 May 2018 while awaiting the review, Jersey Electricity will now introduce the charge as proposed of £3.25/kWp/month (incl GST) for Commercial embedded generators specifically with solar PV from 1 May 2019.

It should be noted that no Standby Charges are applicable for generation facilities that do not benefit from standby services, such as renewables facilities that export all their production on to the grid, or for facilities designed and built to provide backup to the grid.  Jersey Electricity has also deferred the grandfathering cut off time by a further 12 months and so existing systems in service as at 1 May 2019 will be grandfathered and exempt from the charge until change of ownership or facility upgrade. 

Jersey Electricity has also agreed to review and establish an appropriate Standby Charge for Combined Heat and Power (CHP) systems, building on the review's recommendation to assess and, if appropriate, incorporate the potential for grid value delivered by those technologies. Standby Charges will also be considered for other generation technologies as and when demand emerges for the connection of new generation technologies to the grid.

See below for more detailed information or visit our Q&A page.

Maintaining the networks

Put simply, the unit cost of electricity Islanders currently pay is made up of the wholesale price we pay for power, whether that be from our French supplier EDF or the States’ Energy from Waste plant, or the cost of generating at La Collette and Queen’s Road, plus a portion to cover maintaining and operating the networks over which it is transmitted and distributed.

Businesses generating their own power while still being connected to the grid are buying fewer units from JE and therefore contributing less to the maintenance and operation of the grid and nothing to the procurement of power they still want on standby - and made available instantaneously - if the sun doesn’t shine on their solar panels or the wind doesn’t blow on their turbines. 

In its independent review, NERA recognised that by reducing the amount of electricity they buy from the grid, EmGs reduce their financial contribution to the Island’s extensive and complex electricity grid and its related fixed costs.  If the grid were to be adequately funded, the loss of contribution to fixed costs from the growing number of EmGs would then need to be recovered from other customers in the form of higher prices.  NERA describe this as ‘inefficient grid bypass’, a problem JE faces in common with many other jurisdictions that have a similar tariff structure.

The Standby Charge does NOT apply to all renewable facilities

  • The Standby Charge will 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 will NOT apply to facilities installed as emergency backup in case of grid failure (as these facilities do not require a backup service),
  • The Standby Charge will NOT apply to any commercial facility installed and in service before 1 May 2019 (until change of ownership or replacement of generating units).

The charge is not new

Standby Charges are not new. JE has applied them in some form for many years to a number of existing Commercial customers who generate their own electricity but require standby capacity and support services from the grid when their equipment fails or needs maintaining.

Standby Charges are already levied in Guernsey and the Isle of Man at higher rates than we are proposing. In its independent review, NERA concluded that our proposed Standby Charge of £3.25 per kWp per month was, if anything, low, calculating a range of charges between £3.22/kWp/month and £5.48/kWp/month depending on the type of EmG and self-consumption assumptions used. NERA stated: ‘JE’s calculation is conservative overall.’

Why Jersey does not subsidise renewables

Jersey is different to the UK and many other countries. Subsidies, such as the Feed In Tariff in the UK, were introduced as incentive to move away from high carbon electricity generated at coal fired power stations. JE has already de-carbonised the Island’s electricity supply (it is already 10 times cleaner than the UK supply) making subsidy of renewables impossible to justify on those grounds. 

Similarly, renewables will not help security of supply which is also presently around 10 times better in Jersey than the UK. As intermittent generation, renewables will not allow JE to take our own emergency standby generation at La Collette off the system and therefore do not reduce the costs of providing that standby generation. 

There are alternatives

We also believe there are far more cost effective ways of encouraging renewables, which we are discussing with the States. There are also more effective ways of reducing Jersey’s carbon emissions further by switching from oil and gas-fired heating to renewable heating in the form of heat pumps. Now with a third of emissions emanating from transport, much could be done by encouraging the use of more sustainable forms of transport and the uptake of electric vehicles to which this Island is ideally suited.

Therefore, none of the arguments for subsidising renewables in other countries apply to Jersey; least of all for having those that do not have renewables subsidising those that do.

The head of Ofgem, the UK energy market regulator, said there was a risk that those who could afford to harvest their own energy and avoid network charges and 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’. 

Types of generators

Embedded Generator (EmG) is connected to a customer’s supply. It provides electricity for onsite use by a customer (either by being co-located or connected by private wire) and has the capability to export any surplus electricity as well. JE provides the remainder of the electricity demand of the site, which includes a standby service when the EmG is not operational. Standby charge applies because a standby service is being taken. 

  • Solar Panels, Wind Turbines, Waterwheels

Export Generator (ExG) solely exports electricity to JE. Sale of energy only and no standby services are provided. Standby Charge does not apply.

  • Large scale Solar farm, Wind farms, Tidal power

Standby Generator (SG) purely supports on-site energy demand when JE power is unavailable. No capability for parallel operation and cannot therefore export power to Jersey Electricity. Standby Charge does not apply.

  • Generating engines, UPS supplies

 

For more information on the commercial standby charge, please visit our Q&A page.