Electricity Tariffs And Alternative Energy

• Published date: 23 March 2021
• Subject Matter: Intellectual Property, International Law, Energy and Natural Resources, Energy Law, Oil, Gas & Electricity, Patent, Trademark, International Trade & Investment, Renewables
• Law Firm: Marks & Clerk
• Author: Tomas Karger

Innovation in renewable energy technology has been slow to develop over the last several decades, but the push to transition to a mixture of traditional and alternative energy sources has accelerated research and development in this sector.

Cutting edge technologies are in development across a range of renewable energy sectors. For instance, wind farms which can predict wind speeds inside the farm to control individual farm turbines are being tested to maximize efficiency of wind farms. In the solar power field, a prototype satellite with reflectors which concentrate solar energy onto solar panels on the satellite and then convert the energy to electromagnetic radiation to be beamed to earth for transformation into electricity is scheduled to be sent into space as soon as 2022. Alternative fuel sources are also in various stages of R&D.

Advancements in electrolysis allow for the clean production of 'green' hydrogen where water is split into hydrogen and oxygen using renewable energy. These are just some examples of the cutting edge research at the forefront of the renewable energy sector.

But how will we, the consumer, be billed for electricity produced by these new forms of power generation? Electricity pricing or tariffs vary widely by country and even by locality within a country. Tariffs may be influenced by many factors including the cost of power generation, distribution infrastructure and government taxes or subsidies. Innovation in this area may impact the energy mix of the future just as significantly as the technology currently being developed.

Innovation relating to energy pricing is not a revolutionary concept. As far back as 1972, Theodore Paraskevakos filed a patent application for a 'sensor monitoring device'. This technology would eventually be come to known as a smart meter. Smart meters allow for tracking, in near real time, of electricity consumption which may be reported to a central supplier and is visible to the end user. This provides the user with a greater degree of control, allowing them to increase or decrease their energy usage accordingly. Electricity suppliers are also able to incorporate smart meters into advanced metering infrastructure (AMI) as part of smart grid initiatives. Suppliers may use this information to offer dynamic or surge pricing to incentivise increased energy usage during off-peak demand hours.

The emergence of alternative energy sources has affected the pricing models of the past. As an initial point the...