Warm Homes Fund to Go All-in on Solar

 Announcement in January Expected to Include Grants for Solar PV

Zero Bills Homes by Keepmoat and Platform Housing Group (C) Viridian Solar

It is widely expected that a £13bn 'Warm Homes Fund' to be announced by Ed Miliband in January will include grants for the installation of solar PV and batteries.  If so, this will represent a big departure from previous policy in this area which have almost exclusively emphasised retrofit insulation measures.

Until recently the accepted wisdom has been coined 'fabric first’.  This catchy phrase summarised a prevailing energy-efficiency orthodoxy which held that until you fix the insulation and airtightness of a building (its fabric) there is no point using ‘expensive bolt-ons’ like solar.  

Fabric first became sacrosanct for some in the energy efficiency industry (and not only those who manufacture insulation), with every consultation on building regulations met with howls of criticism from some quarters for not going far enough on required insulation levels and any inclusion of solar or other technology criticised as 'green bling'.  

Numerous government policies have been influenced by fabric first thought – with ECO, Low Carbon Buildings Programme, and most recently the ‘Scottish Passivhaus’ rabbit hole that building regulations north of the border appear to be about to disappear down all prioritising insulation over renewable energy.

This dismissal of solar bling as unserious and insulation as the only ideologically pure approach to decarbonisation misses three important points: 

First, that thermal efficiency is a game of diminishing returns.  

Second, (and linked to the previous point), having run out of easy targets such as loft and cavity wall insulation, more ambitious retrofit approaches aiming for big improvements in thermal efficiency can be highly invasive, complex and risk unwanted side effects like damp and mould.

Third, that the orthodoxy arose at a time when our energy system was dominated by fossil fuel and renewable energy was expensive.  This is now out of date.  What matters more today and in future is when you use energy not how much you use.

Diminishing Returns

It's physics.  The more you insulate a building the more difficult becomes the next improvement in performance, until you are adding large amounts of insulation for only marginal gains.  Building regulations for new homes appear to have now reached this point since the Future Homes Standard consultation proposes no change to the fabric performance of new homes over those of current (2021) regulations.

In retrofit scenarios, the payback for simple low cost measures like loft insulation chimney balloons, lagging hot water tanks and pipes and draft excluders is measured in months while more expensive improvements like external wall insulation for solid walls can take many years to pay back their costs.

Unwanted Side Effects

Once you've lagged every hot water cylinder, topped up loft insulation where you can and blown insulation into walls with cavities, you're left with a large number of hard-to-treat properties with solid brick or block walls.  These require a layer of insulation to be fixed to the external walls either on the inside face which makes the rooms smaller or on the outside face which needs to be carefully protected against the weather. 

The challenges with solid wall insulation really became apparent once we moved from theory and pilot studies to pushing into volume in the real world.  The work is complex, expensive and intrusive and has sadly proven to be easy to get badly wrong at scale, with unwanted side effects such as damp and mould widely reported. 

A National Audit Office review of works done under the ECO4 and the Great British Insulation Scheme found that an amazing 98% of homes fitted with external wall insulation and 29% of those with internal wall insulation had major issues that need fixing.

The Economics Has Shifted

Fabric first approaches to energy conservation in buildings emerged at a time when renewable energy was ruinously expensive and the energy supply system was dominated by coal, oil and gas.  At this time, the careful conservation of energy was the only logical way to reduce emissions and lower energy bills.

Renewable energy is now the cheapest form of energy.  It getting more and more plentiful as investments in new solar and wind capacity expands.  The nature of renewables is that the timing of generation cannot be controlled in the same way as it can for fossil fuel based energy, but the falling cost of battery energy storage and advent of smart controls that react to time-of-use pricing signals are combining to overcome the weakness of intermittency in renewable generation.

Those who can adjust their energy demand to use power when energy is in over-supply can now take advantage of these tariffs to pay very low (sometimes zero, sometimes negative) prices for their power.  Space heating, domestic hot water and electric vehicle charging are all amenable to time-shifting or rate shifting.

New housing developments such as Hollymead Square in Essex and Beeston Canalside in Nottingham offer so-called Zero Bills Homes where the combination of solar PV, battery energy storage and electric heating with time of use tariffs and smart energy controls allow the energy supplier, Octopus Energy, to guarantee that the householders will pay nothing for energy for ten years after moving in. 

In this approach to low-carbon living it's not how much energy you use, its when you use it and how you combine that with maximising the use of low cost renewable energy you generate for yourself.

Learn to Love the Bling 

The case for using energy sparingly has not gone away, and simple, low-cost insulation improvements will always be high up the to-do list.  

However renewable energy is combining with smart energy management, electrification of transport and heating and battery energy storage to offer an alternative vision in which the when of your energy use is as important as the how much.  If the Warm Homes Fund recognises this fundamental shift, then that is to be welcomed.

The Future Homes Standard Unwrapped

A Review of The FHS 'Wrapper' for the Home Energy Model 

The Future Homes Standard (FHS) consultation includes proposals for a wholesale revision to the underpinning calculation method by which the energy efficiency of new homes is evaluated.

I have already written about the Home Energy Model (HEM) in an earlier blog.  It is planned that this will replace the Standard Assessment Protocol (SAP) currently in use by Energy Assessors to calculate whether a new home design specification meets building regulations.  An FHS version of the Home Energy Model will be used to demonstrate compliance with the building regulations, by preloading the Home Energy Model calculation with a set of assumptions and inputs and defining the outputs it needs to provide, collectively called a 'Wrapper' for the HEM.

The consultation document on the Future Homes Standard wrapper can be found here.

In this blog I go through the most significant changes the wrapper introduces compared to the current version of SAP.

Occupancy

When a new home is built you probably don't know how many people will live in it and even if you do it will change over time, so calculations for building regulations require a standard occupancy.

The number of occupants is an important factor - affecting the amount of energy used for lighting, appliances and hot water use.

In SAP the standard occupancy was taken to be a function of the total floor area of the building, but for the FHS this will change to be driven by the number of bedrooms, apart from 1 bedroom dwellings which will have an occupancy driven by floor area.

In the graph above the dots show data from a national survey and indicate that SAP 10 occupancy (wide yellow line) is not a good match.  the coloured horizontal lines show the new occupancy level based on the number of bedrooms.  

A higher occupancy will increase the hot water demand (although this is offset by other changes, see below), and electricity demand for lighting and appliances.

Hot Water Demand

As in SAP 10.2, hot water demand is driven by occupancy, but demand per occupant is lowered based on new evidence from a 2021-22 study of 45,000 combi boilers in UK homes, which suggests that measures taken to reduce hot water use (for example low flow taps and shower heads) have had an effect on hot water use.

For contrast typical consumption in SAP 10.2 is 120 litres per day for a two person household and 160 litres a day for a three person household.  This reduction of nearly 20% will be offset by the higher occupancy for three and four bed homes.

Weather

The FHS standard is consulting on the use of regional weather data.  Historically housebuilders have been against this as it means they cannot build the same house all round the country (or rather they can but would need to meet the regulations in the most arduous location and therefore over-provide in others).

Another possible change is to use 'future' weather files based on Met Office climate projections relating to the assumed use period of the standard (2025-29).  

Electricity Demand

The wrapper also contains assumptions on electricity use for lighting and other appliances (dishwasher, tumble dryer, fridge, freezer and electronic goods).  

The FHS wrapper has to support the 30 minute time resolution of the Home Energy Model so both lighting and appliance electrical use has been split into daily profiles.  For now, these profiles are aggregated and averaged whereas in real life electricity demand is more 'peaky' with kettles being boiled for only a few minutes and freezers cycling on and off.  This smoothing will over-state self consumption of electricity for solar PV.

Compared to SAP 10.2 the demand for lighting is increased, reflecting the fact that homes have more and brighter lighting than in the past, although the efficiency gains from LED bulbs more than offsets this.

Emissions Factors

In the FHS, the emissions associated with mains electricity has fallen substantially from the value used in SAP 10.2, reflecting the decarbonisation of the generation mix providing UK power, and also a change in approach to predict the carbon intensity of the grid for the time the standard is in use rather than fixing it at the consultation value.

The big difference in the emissions factor for renewable generation is due to an 'accounting change'.  As explained in this document Fuel factors within the Home Energy Model: FHS assessment, the emissions factor for on-site generated is deducted from the emissions factor for grid electricity when calculating a reduction in dwelling emissions and primary energy.

This differs from SAP 10.2 where the onsite generated energy was a negative value and was multiplied by the renewable emissions factor to get a saving to take away from the total emissions or primary energy for the period.

A key factor to note is that solar generation exported to the grid produces the same benefit to carbon emissions and primary energy as solar generation used in the home.  The logic is that this exported unit of electricity is preventing the need to generate electricity at the grid factor and the benefit accrues to the dwelling.  This is in stark contrast to Scottish building regulations which since the 2023 revision have deliberately excluded the benefits of exported energy from contributing to the assessment of the dwelling performance.

Another feature of this approach is that energy storage in batteries produces no benefit on emissions or primary energy scores.  In fact the addition of a round-trip efficiency to energy stored in a battery for later use actually reduces the benefit of battery storage compared to export.  This will remain the case until the model can take account of the fact that grid emissions and primary energy varies during the day and a strategy of avoiding export by storing surplus solar generation for use in the evening will not only reduce energy bills but also result in a net reduction in carbon emissions and primary energy use because renewable energy is generally less of the grid mix at this time of day .

Conclusions

The addition of a time of day value for grid emissions and primary energy would be a welcome addition to the FHS Home Energy Model, but apart from this omission, the changes introduced compared to SAP 10.2 look benign from the point of view of the solar industry.

  

Stop Worrying About Lithium, Start Worrying about Cobalt

How the Energy Transition is Critically Dependent on a Failing State in Africa

I recently wrote a blog about how much Lithium we might need to make all the batteries to electrify transport, and whether we might run out of the stuff.  It's natural that people focus on Lithium - after all, the favoured battery technology is called "Lithium-ion", but  it turns out that Cobalt is a much greater concern.

Cobalt is a crucial element of many types of Lithium-ion battery cathodes.  The first Lithium-ion battery was commercialised by Sony and the cathode was based on Lithium Cobalt Oxide (LCO).  This type of battery is still widely used in electronic devices.

One of the most common types of Lithium ion battery for electric powertrain applications and power storage is the NCA lithium ion battery which contains lithium oxide in combination with nickel, cobalt and aluminium in the cathode together with a graphite anode.  This type of battery has higher specific energy.  Different manufacturers have their own 'recipes' but typical proportions for the cathode are:

Li(Ni 0.85, Co 0.1, Al 0.05)O2

Cobalt has atomic weight of 59 (compared to Lithium at 7), so although cobalt is present in the ratio of 1/10 the number of atoms in the battery, you need a similar mass of Cobalt as Lithium in the battery - around 600g of Cobalt for every kg of Lithium.

In my previous blog, we estimated the quantity of Lithium to electrify the world's fleet of passenger cars as 13.2 million tonnes, which would imply that there's a requirement of 7.8 million tonnes of Cobalt to achieve the same goal.

How Much Cobalt?

The United States Geographical Survey (USGS) estimates the world reserves of Cobalt at 7.1 million tonnes.  The situation is similar to that of Lithium in that identified reserves of Cobalt are about the same size as the amount needed to electrify the whole world fleet of cars.  Just like for Lithium, it is likely that once there's a strong demand for the material, exploration will result in the identification of other locations and technological development will convert known resources into exploitable reserves.

Unlike Lithium though, take a look at where in the world Cobalt is found.

Lithium is spread around politically stable countries such as Chile and Australia.  By contrast, half of the world's identified Cobalt reserves and more than half of global production comes from The Democratic Republic of the Congo (DRC).

This mineral-rich central african country has suffered almost continuous conflicts since 1996, including civil war, invasion and spillover from conflicts in adjacent countries such as Rwanda.  Largely unreported in the West, the situation is desperate with estimates ranging from 1m to 5.5m dying as a result of the wars and associated famine and disease in the last twenty years.  Foreign businesses have curtailed operations due to uncertainty, lack of infrastructure, corruption, inflation and the uncertain legal framework.

The latest news is not good.  Joseph Kaliba, the country's President since his father was assassinated in 2001 finished his last term in 2016, but still clings to power.  Currently 10 of the 26 provinces in the country are suffering from civil war.

Add a proposed new law that could increase government royalties on 'strategic' minerals such as Cobalt to levels as high as 10% and concerns about child labour and human rights abuses in Cobalt mines in DRC, and the outlook is extremely troubling.

Assault and Battery

So what does this mean for battery storage and electric vehicles?  Well, war, bloodshed and chaos doesn't always mean that the product doesn't get out of the ground, after all, bullets, guns and general carnage has to be financed somehow.  Whichever warlord is currently in charge of the area where the mines are will likely as not keep the Cobalt coming for a world hungry for battery storage.  Whether the world can turn a blind eye to batteries financing war is another matter.

However, emerging battery chemistries may reduce the need for Cobalt, and new sources may come on line as demand and prices rise, but these are not quick fixes.  In the short term we must hope that DRC avoids the worst.

So, if you are ever asked "is there enough Lithium in the world for all these electric cars and batteries?" the correct answer is "Sure thing,  but don't ask about Cobalt."

Battery Storage Blues?

Evaporation ponds concentrate Lithium salts for extraction

Could a Shortage of Lithium Hold Back the Market for Renewables?

Energy storage is increasingly seen as critical to the decarbonisation of transportation and the means to propel the integration of clean renewable energy into the energy supply system.  In this vision of our low carbon future, we all drive in electric cars and store energy from our rooftop solar PV panels in batteries for use at home in the evening. 

The scale of the demand for batteries could be immense.

The registration of electric vehicles is growing rapidly from a very small base.  Silicon valley start up Tesla is currently going through 'production hell' trying to scale up and deliver on its ambitions (and the demand it has stimulated for its electric vehicles -EVs).  Incumbent car manufacturers are falling over one another to announce their own development plans for EVs.  In 2017 we saw announcements from Volvo that all their vehicles would be electric by 2019,    Volkswagen announced that every model would be available with an electric powertrain by 2030, and Mercedes-Benz revealed plans for their own 'gigafactory' to rival that of Tesla.

Politicians and governments have  shown similar enthusiasm for electric vehicles.  The UK government announced that it will mandate that no new cars will run on petrol or diesel by 2040.  France has announced the same goal.

The lithium ion battery is without dispute the technology of choice for applications that are both stationary (home energy storage) and mobile (electric cars and trucks), and for good reason.  Lithium ion batteries have an exceptionally high specific energy (kWh/kg) and energy density (kWh/m3) compared to other battery chemistries, which are both useful attributes for mobile applications.  The technology also scores well for lifetime - the number of times it can be charged and discharged before the capacity falls away, and power output - how fast you can get the energy out of the battery.

So in discussing the emergence of the lower cost, mass produced batteries that will be needed to usher in this new age, one question comes up again and again.  Will the world have enough lithium for all these batteries?

Lithium ion is currently the battery technology to beat

How Much Lithium Do We Need?

The good news is that it turns out that lithium ion batteries are deceptively named. 

It's called a lithium ion battery because lithium ions are the charge carriers that migrate from the cathode to the anode as current is drawn from the battery.  In fact, lithium is the smallest component of a lithium ion battery chemistry.  One of the most common formats is called the NCA lithium ion battery and contains lithium oxide in combination with nickel, cobalt and aluminium in the cathode together with a graphite anode.  Typical proportions for the cathode are:

Li(Ni 0.85, Co 0.1, Al 0.05)O2

Because lithium is such a light element (atomic weight 7), it works out to be only 7% of the cathode weight, so let's estimate around 2% of the weight of the entire cell, including the anode, electrolyte and packaging.

The Tesla Model S uses 18650 format cells assembled into 5.3kWh packs of 444 cells (see this 'teardown video'), making each cell 12Wh.  With 18650 format cells weighing in at around 45g each an 80kWh battery pack for a car would require 6,666 cells weighing a total of 300kg.  2% of 300kg is 15kg of lithium per vehicle.

With annual car sales at around 80m per year, a transition to a future where every single new car was fully electric would require 1.2 million tonnes of lithium each year.


At the rate of 80m new cars a year, it would take 11 years to replace the entire world fleet of cars, which is estimated to comprise around 900 million vehicles.  Lithium can be recovered from used batteries and recycled to make new ones, so in theory once the whole fleet is replaced then no more would need to be extracted.  So the total lithium requirement to move to fully electric cars would be 13.2 million tonnes.

Is there Enough Lithium?

Lithium is the 25th most abundant element in the Earth's crust and is also present in seawater.  It has been estimated that there is 230 billion tonnes of Lithium in the oceans.  The challenge is that it tends to be found in low concentrations. 

Lithium is found in highest concentrations in underwater reservoirs of brine, and in hard granitic rocks.  In Chile, brine is pumped up from the underground pools into vast  ponds (see image at top) where the water evaporates until the water is rich in Lithium Chloride, which can be precipitated out by reaction with sodium carbonate to create insoluble Lithium Carbonate. 

In Australia the mineral Spodumene is mined for Lithium.  The rock is crushed and heated in a kiln, then mixed with sulphuric acid and roasted again to produce Lithium Sulphate.

Pure Lithium is then extracted by the salts by electrolysis.

Lithium is available from many sources

The United States Geological Survey (USGS) estimates the world proven reserves as 14 million tonnes of lithium, distributed as shown in the chart.  While this figure is similar in scale to the requirement for electrification of vehicles, which leaves little extra for stationary applications and consumer electronics, there's good reason to believe that we have enough lithium:

• Reserves represent only those resources that have been discovered so far, and that are judged to be capable of economic extraction with current approaches.  The easily extracted crude oil was the first to be exploited, but as demand increased, reserves were discovered in more and more places and technologies capable of their economic extraction from difficult locations (such as under the the North Sea) were developed. It is likely that the same will occur as demand for lithium rises.  USGS currently estimates total resources at 35 million tonnes. 

• Lithium is already found in numerous locations around the globe (see chart), including many countries that could be judged to be politically stable.

• As the commercial importance of energy storage increases and the scale of the financial opportunity from battery storage becomes evident to investors, funding will pour in and this will accelerate the development of new battery chemistries that use other materials.   For example, Gridential, a company that claims to have given old lead-acid battery technology a revamp with silicon wafer technology adapted from the solar industry, recently received $11m in two financing rounds.

However, having enough Lithium in the ground is not the same as being able to get it out fast enough to keep up with demand.

USGS estimates that world production rate for lithium at 36,000 tonnes per year.  It takes around seven years to bring new brine extraction capacity on stream and three to four for extraction from hard deposits.  It is highly conceivable that there will be capacity crunches along the way and a scramble by automobile manufacturers to secure supplies, but in answer to the question of whether there is enough lithium for the electrification of transport - it looks like yes, there is.

 Cobalt, another essential ingredient of lithium ion batteries, on the other hand, that's a completely different story...and one for another blog.

The Carbon Intensity of UK Grid Electricity

What it Means for Low Carbon Buildings

Take a look at this chart. It's nothing short of astonishing. Up to 2012 the amount of carbon dioxide emissions associated with the delivery of one unit (kilowatt hour, or kWh) of electricity in the UK was hovering around 500gCO2/kWh. Since then, the amount of carbon dioxide that is emitted for each unit of electricity has plummeted. In 2016 the average was 269gCO2/kWh, a fall of nearly half in only four years. This change has far-reaching implications for regulators, not least those involved in ensuring the low carbon transition of the UK building stock, both newly constructed buildings and the improvement of the existing stock.

So what's behind the fall?

The first factor is the retreat of coal-fired power stations. In 2012, the government's Digest of UK Energy Statistics (DUKES) has coal fired power stations producing 44% of our electricity nuclear plants were suffering from outages and gas prices had risen, so coal use was at a high. By 2016 the corresponding figure for coal was only 9%. In the same period, gas fired power stations rose from 24% to 42% of UK power generation. This matters for two reasons. First of all, because coal is made up of long-chain hydrocarbons, with a higher ratio of carbon atoms to hydrogen atoms it produces about 60% more carbon dioxide than natural gas for each unit of heat energy produced in burning. Second, gas is more often burnt in a Combined Cycle Gas Turbine (CCGT) power plants with conversion efficiencies of up to 60%, compared to 40% for conventional steam turbines.

The second factor is the increasing contribution from renewables in the electricity supply. Enormous amounts of wind energy, biofuel fired generation and solar energy have come online. In 2012 renewables and 'other' represented 11% of UK electricity supply. In 2016, this had risen to 27.8%.

As a result the average carbon intensity of electricity in 2016 at 269 gCO2/kWh was only just higher than that for gas (216 gCO2/kWh). When you add in an efficiency for a gas boiler at (say) 80%, the gap disappears.

This is huge.

For years electricity has been the bad boy in low carbon building design. People fretted as a series of reports from the Energy Savings Trust showed that heat pump installations in the UK were operating nowhere near their advertised efficiencies and were consequently underperforming gas boilers for carbon emissions. Simple resistive electrical heating by panel heaters or immersion heaters for hot water were to be avoided at all costs.

Four short years later and all this is is turned on its head.

And we're only just getting started with renewables. In September, Dong Energy announced that it would move forward with the world's largest offshore wind farm, Hornsea 2 off the Yorkshire coast, with development costs that had fallen by half compared to previous offshore farms. A couple of week later, and not to be outdone, the UK's first subsidy-free solar farm was announced. It's still a bit of an outlier combining solar with battery energy storage and using pre-existing grid connections from with an earlier development, but it's a clear sign of the direction of travel. The carbon intensity of grid electricity is heading only in one direction.

But there's another wrinkle to consider. The carbon intensity of the grid is not a static value. It varies constantly as the mix of generators fluctuate to meet different levels of electricity demand and in response to changes in wind and sunlight. On 11th June this year, it was windy and sunny at the same time. Records tumbled. The carbon intensity of grid electricity in the middle of the day on was below 80gCO2/kWh.

So now the moment when you choose to take power from the grid is a strong determinant of the actual instantaneous carbon emissions your electricity use is creating.

Some uses of electricity - for example for preparing domestic hot water, or to some extent space heating buildings could be relatively time independent.  If I'd known ahead of time that carbon emissions would be so low on 11th July, I'd have been able to set a timer for my immersion heater to heat water for me at midday and got my tank of hot water at fully one third of the carbon emissions of using gas heating.

And the technology to do this is just around the corner.  This awesome new grid carbon intensity forcasting service has been recently launched by the National Grid the Met Office and WWF, with an API that software developers could use to do just this kind of thing.

 

So where does this leave low carbon building?

The current building regulations in England and Wales were last reviewed in 2012 and set minimum carbon emissions rates that developers must design to. The carbon intensity of electricity in the approved calculation (the Standard Assessment Procedure or SAP) is currently 519gCO2/kWh, which was accurate at the time. Now it is woefully behind the curve.

Buildings are normally intended to be long-lasting. If we allow ourselves to imagine a future where digital technologies, the smart distribution of electricity, demand response, energy storage and renewables combine in a so-called 'Smart Grid' then a number of significant observations about low carbon building emerge:

• Even based on the current carbon intensity, never mind the future direction of travel over the life of a building, it is utterly beyond me that any new build or significant refurbishment should include gas heating.

• The current enthusiasm among UK policy makers and local authorities for district heating (for example this recent consultation by Scottish government) could also be a troubling dead end. District heating itself is neither intrinsically clean nor green - it all depends what heat source you put at the other end of the pipes you're going to dig up all the streets to install. Gas fired combined heat and power may be seen as low carbon at the moment, but how long will it look so appealing if electricity continues on its current path?

• Building codes are currently focused on regulating carbon emissions. In a world of low carbon electricity you can meet a carbon target with a draughty garden shed full of electric fan heaters. It's time to move to energy targets (kWh/m2) to create buildings that sip energy and liberate power for the demands created by the electrification of transportation.

If I was building my own Grand Design right now, my future-proof forever home based on these observations here's what I'd go for:

• High levels of insulation and air tightness to drive down space heating demand to a practical minimum

• Eliminate the wet heating system - I'd go underfloor electric coupled to a high thermal mass floor to allow price and carbon responsive electricity purchase to heat the slab at times of excess renewable generation

• Direct electric hot water cylinder - again allowing price-responsive purchase of electricity as well as diversion of excess generation from...

• the inevitable....beautiful solar panels on the roof - as many as possible!

Could this be the future direction energy efficient buildings? What do you think?

The Future of Grid Charges, Solar and Battery Storage

OFGEM, the regulator of the UK energy markets, has seen the future and it's worried. The era of solar powered homes, offices and factories generating their own energy and storing it in low cost batteries, will apparently create havoc in the way we pay for the running, maintenance and upgrade of the electricity grid (network costs).  So OFGEM has launched a consultation about how might be the fairest way to apply network charges to energy bills in future.  Here's their latest update on their thinking.

The current model is that the network costs are spread across every unit of energy delivered to an end user. OFGEM estimates the average network charges to be in the region of £120 for domestic electricity customers, or around a quarter of a typical domestic electricity bill.

A house that installs solar energy needs less electricity units from the grid each year. The problem is that as more and more households and businesses install solar energy, the network costs get spread across an ever-smaller number of delivered units of electricity.

The costs of the network don't get smaller though, because the solar homes still need to draw electricity from the grid at certain times. Even when you combine solar with battery storage, there will still be parts of some days when the house pulls from the grid. All that infrastructure still needs to be there and it still needs to be maintained.

 So the network costs charged against each unit of electricity used need to rise and OFGEM is fretting that this is unfair to people who don't have solar panels as they pay more of the increase due to their higher consumption.

But how big a problem is this really? What do these extra costs that are borne by the non-solar homes and how would they change as the level of solar penetration rises? The solarblogger has done the sums so you don't need to.

Here's a spreadsheet.

Assuming an average system size of (say) 3kWp with a yield of 2550kWh/year and self-consumption of solar electricity at 35%, the network charges avoided by one million solar homes works out at £39.16 for each house each year (they pay £80.84 of network costs in their bill). This means that the twenty six million other homes that don't have solar have to pay £1.51 more towards network costs than they would have if no one had solar (£121.51 for network costs).

Hardly reason for panic at OFGEM.

What about the argument that as more and more households go solar, that the problem of network costs being unfairly and disproportionately recovered from non-solar homes? What if more and more are coupled with battery storage and self consumption of solar generated electricity rises?

If we project that half of UK homes have solar and half do not, then the network costs per unit of electricity rises from 4.6pence per unit of electricity to 5.4 pence. Solar homes would then be paying £95.88 of network costs in their annual bill compared to £144.11 for non-solar homes.

Add in battery storage of electricity at this level of solar deployment and taking the self-consumption of solar generated electricity to 70% - the figures become 6.8 pence per unit of electricity as network charges. Solar/battery homes pay £59.63 per year towards network costs and non-solar homes pay £180.37. Even at this extreme scenario, the increase for non-solar homes is a modest £60.37 a year on network costs.

Of course, once everyone has solar the 'problem' goes away and the extra network costs provide a good incentive to install solar or find other ways to reduce your electricity consumption. OFGEM should go and find a real problem to worry about - they've got plenty to choose from!