Domestic micro-generation: Economic, regulatory and policy issues for the UK

Micro-generation in individual homes has been the subject of increasing policy and industry attention in recent years. Whilst it has been estimated that micro-generation could meet 30–40% of UK electricity demand by 2050, deployment to date has been slow. In its Micro-generation Strategy the UK government has started to outline how deployment could be increased. Various technical, economic, behavioural and institutional changes are needed to establish a UK market for micro-generation. This article discusses how different deployment models for domestic micro-generation might attract investments in these technologies. It considers not only investments by individual households but also by energy companies. Starting from an economic analysis of payback times for three different technologies (micro-CHP, micro-wind and solar PV) it identifies policy and regulatory recommendations. It argues for technology-specific support policies in the short term. It also suggests that a ‘level playing field’ for micro-generation technologies as a result of fiscal and market reforms could considerably increase the attractiveness of micro-generation technologies.