Network charging and residential tariffs: A case of household photovoltaics in the United Kingdom

Currently, about one million households in the United Kingdom (UK) have installed solar photovoltaic (PV) panels with about two-thirds of them are using the panels for self-generating power. According to the UK Department of Energy & Climate Change, solar PV deployment in the UK (measured in megawatt) has grown considerably (from 95 MW in 2010 when the feed-in tariff was introduced to 11,429 MW in 2016). The popularity of the solar PV among the UK households made the government to introduce major changes to the scheme. Our paper focuses on the two major questions: Could it be that the system already favours richer consumers or certain types of network user who do not bear either the efficient or fair share of the total system distribution (and transmission) costs? Does the apportionment of charges between fixed, per kW peak and per kWh use of system charges need to be changed to be more cost reflective? We employ the data from the smart meters readings provided by the Customer-Led Network Revolution monitoring trial conducted with the 199 households in the Northern England that provides the data for the household electricity use and tariff behaviour between October 2012 and July 2014. Our analysis demonstrates that, similar to other studies conducted around the world, the increase in the solar PV resulted in a transfer of wealth and costs between customer groups. Due to their own production, UK solar PV consumers yield a lower share of the per kWh costs of the distribution system which leads to the increase of per unit charges as well as the changes in the distribution of their payment between different types of households.