June 14, 2018 / 2:54 PM / 3 months ago

Disputed power tariff regime in Norway may trigger battery storage market

OSLO, June 14 (Reuters) - A proposed capacity-based power tariff in Norway that will make it expensive for subscribers to overconsume electricity could trigger demand for battery storage, the country’s water resources and energy regulator (NVE) told Reuters.

The new tariff, proposed by NVE and due to take effect from Jan. 1, 2021, is designed to replace the current volumetric regime, as under the current system consumers have more capacity available than they actually use, making network investments inefficient, said NVE.

Under the new system, consumers may turn to energy storage solutions rather than pay the heavy premiums if their energy needs exceed their preset levels, helping develop Norway’s relatively small battery market.

“Customers subscribe to a certain amount of network capacity at a given price per kW. Consumption beyond the subscribed level is charged at a significantly higher price,” said NVE’s senior adviser Velaug Mook.

By Jan. 1, 2019 all electricity customers will have a smart meter installed, providing better information regarding installed and used capacity and prices, which will allow them to calculate the subscription level they need, he said.

“The proposed tariff model will give customers better incentives for storage of energy than today’s energy-based tariff,” added Mook.

“Customers can use stored energy when their consumption is high, and retrieve energy from the network for storage when their consumption is low... Furthermore, batteries can be used to reduce the cost of charging electrical vehicles,” she said.

The proposed change hasn’t found much support in the market, with companies fearing higher costs in case their energy needs’ assessment falls short.

After receiving feedback from public consultations, NVE said it understands the proposed subscribed capacity model is not preferred and will assess whether there is a need for adjustments.

Overall, costs are not expected to increase for network users, said Mook. Instead, the price for the use of electricity per kilowatt hour goes down, whilst pricing for simultaneous consumption in kilowatts is introduced. (Editing by Alexandra Hudson)

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