In a World of Distributed Renewables, Who Is Going to Pay for the Power Grid and How?

Gas and electricity are some of the biggest business expenses and can be difficult to manage if you don’t have the right tariff and supplier. Many businesses rely on either electricity or gas energy to operate efficiently. Because of this the supply of the energy can for a significant part of the business. This is especially true during price hikes.

Most businesses need a constant flow of gas and electricity for them to operate. This includes all businesses that rely on machines to produce products or carry out certain processes. This means that even if the prices are hiked the business owners will have to keep the energy supplies in order not to disrupt the operations of their business.

For your business to cut costs and increase its profitability, you need to monitor its gas and electricity usage. Gas is popular with businesses that do a lot of heating such as restaurants because it is often considered to be cheaper than electricity in terms of heat produced per dollar.

The prices for gas has taken a downward trend in the past few years as production and supply have increased. From recent price comparison, it is clear that gas produces more heat per dollar than electricity. This makes gas ideal for heating purposes in businesses as compared to electricity.

However, if you are starting your business then you may find electricity to be a cheaper option when compared to business gas. This is more important when looking at various aspects of business energy prices such as the appliances used in the business and the cost of gas lines vs. electricity lines among others. Usually, quality electric appliances are a little bit inexpensive when compared to those that use gas.

This makes installing business electricity a lot more affordable.

Most business managers are too concerned with increasing the efficiency of operations in their businesses to be concerned with the ever-changing utility costs. For you to increase the profitability of your business you need to manage the cost of your energy.

You should be aware of energy price changes at any time so that you can be in a better position to come up with creative strategies for sourcing and using your business gas and electricity. This way you can get a more affordable supplier and employee strategies that will minimize energy wastages in your business.

Quite a number of business owners tend to stick to one energy source say gas or electricity while others may stick with a single supplier for many years without thinking of the price changes.

To save on your energy expenses you need to start comparing different energy prices for different suppliers so that you can come up with a friendly rate. You will soon realize that making a switch for different business energy suppliers can provide sufficient savings to your business.

Thanks to many websites dedicated to business energy prices, it is now easy to compare different supplier and energy source prices which makes it easy for you to make the right choices when it comes to a supplier whether for business gas or electricity.

Business energy prices are quite important to a business. You need to find the best option when looking for gas or electricity in order to cut costs and increase the profitability of your business.

Utility companies tend to oppose the widespread adoption of distributed renewable generation. They argue that since there is less energy flowing through their power grids, fixed costs must be spread over a reduced volume of kilowatt-hours, driving up the unit price of energy. However, the reality is that power grids are burdened by variability in either supply or demand, not renewable energy per se – it’s just that solar and wind power happen to be variable-output energy sources.

The key to financing the power grid of the future lies in addressing the core of the problem: managing variability in both supply and demand. The power grid can adopt a new billing structure that rewards customers who reduce variability, and charges those who produce it.

Managing Variability in Supply

Charging a higher fixed fee to all customers who deploy commercial solar power arrays or wind turbines will only slow down the adoption of these technologies. A more effective approach is to incentive energy storage so that the power grid is not forced to manage sudden peaks in output from distributed renewable power systems.

Utility companies can introduce a net metering scheme where owners of distributed renewable generation system are paid a lower feed-in tariff when these energy sources are operating at peak output. For example, energy from solar PV systems can be credited at a reduced rate in the hours around noon, and at the full retail price away from these hours. This creates an incentive to store energy during peak generation hours, to be consumed later or supplied to the grid when the full retail price applies.

Owners of variable renewable generation systems who don’t manage their supply effectively are forced to sell their energy at reduced rates, and the profit from this energy can be used by the utility company to help cover the cost of managing these supply peaks.

Managing Variability in Demand

Demand fees can be expected to play a very important role in the power grid of the future, as the amount of energy in circulation is reduced. Customers who use many types of high-power equipment simultaneously place the highest burden on the power grid, so it makes sense to transfer grid ownership costs to them with increased demand fees. On the other hand, customers who control their peaks in demand are billed lower power bills as demand fees are reduced.

Demand fees are effective for controlling the peak demand of individual customers, since they are calculated and measured individually. On the other hand, time-of-day electricity rates accomplish the same effect at the scale of the entire power grid: customers have an incentive to minimise their consumption when rates are high, while taking advantage of low-cost off-peak electricity.


The power grid of the future can cover its costs by managing variability: energy generators who produce supply peaks are paid less, and energy consumers who cause demand peaks are billed higher. In both cases, the profit margin is increased for the power grid.

The opposite also applies: generators who trim their supply peaks earn more per kWh produced, and consumers who trim their demand peaks pay reduced energy and capacity charges. These generators and consumers are actually lowering the operating cost of the power grid, so it makes sense to share a portion of the savings with them.

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