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How distribution costs impact solar investments in the UK


This post explores distribution network tariffs in the UK and the price signal they provide to businesses investing in rooftop solar. In the UK the distribution network operators or DNOs provide two types of tariff, one that charges energy consumers for energy they import from the grid to their site, and another that rewards them for energy that is exported from the site back to the network.

Modelling Approach
  • The customer in this case is a cold store operator with annual consumption of 1,545 MWh pa and peak demand of 403kW
  • We’ve cloned that site into 14 different cities where each city is within a different DNO region
  • For each location the site pays the LV Site Specific Band 4 tariff with time-of-use periods and rates corresponding to the respective DNO
  • For each location the site earns any export against the respective LV Generation Site Specific tariff
  • We’ve added a 400kWAC / 520kWDC solar system in both a south facing and west facing orientation to see which makes the most cash
  • We’ve calculated the impact on cashflow both in terms of reduced import costs against the Band 4 tariff as well as new revenue from export against the Generation tariff
  • No other tariffs or cashflows have been modelled. This is all about the DNUoS costs.
  • In general, there’s a big spread between DNOs in terms of which offer the best price-signal for a rooftop solar project. Best cities are Aberdeen (SHEPD), Liverpool (SP Manweb) and Brighton (UKPN South East).
  • Surprisingly perhaps, west facing solar systems commercially outperform south facing systems in 8 out of the 14 networks. That’s despite west facing system yielding about 30% less in turns of raw MWh. The key being that the west facing systems yield more later in the afternoon during the red band periods.
  • UKPN London is the standout for export value since the red band includes a period from 11am to 2pm. Every other DNO’s red band focusses on later afternoon only, typically from 4pm, by which time solar yield is starting to fall away.
A few graphics to tell the story:

Annual Distribution Tariff Impact shows the realised cashflow benefit for each location, each DNO and each solar orientation.

Annual Solar Performance shows the gross solar yield together with any solar export. Remember the solar is being added to an existing cold storage facility.

A couple of maps to show that same info spatially.

Energy Flows and Time-of-Use Tariff Bands shows an example day July 10th for the site in Aberdeen connected to SHEPD for our baseline (no solar) as well as for the south and west facing systems.

A grab of the simulation setup in the Gridcog software.

Pete Tickler
Chief Product Officer & Co-Founder
May 10, 2023
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