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Three ways we could improve UK feed in tariffs

Posted by Matthew Rhodes on 22 February 2010 at 9:17 pm

I am a stalwart supporter of feed in tariffs, and anticipate a revolution in UK microgeneration in the next few months as a result. Their introduction is long overdue.

However, on Monday I sat through a lengthy discussion both of feed in tariffs (FiTs) and the proposed renewable heat incentive RHI) at the Renewable Energy Association in London, and it seems to me there are three very specific things that could be much improved in the proposed UK scheme. Without these changes, I think the UK risks missing the boat and we will be condemned to be a laggard, still, as the world economy transforms into its new low carbon, high technology shape.

1. The requirement for schemes to be carried out by accredited Microgeneration Certification Scheme (MCS) installers using accredited MCS equipment is wrong, and adds a completely unnecessary and illogical burden to the scheme. This should be eliminated altogether  (either left out completely, or at worst replaced with a simpler requirement that installations should be accredited by any one of a range of quality accreditations that already exist across Europe and even in the UK.)

The argument for including MCS in the scheme is that customers need protection, and thus the costs of the additional bureaucracy and barriers to market entry and innovation are worth it. But these costs are extremely high.

There was not a single voice at Monday’s meeting raised in defence of MCS, which is an unaccountable monopoly run by people who may have their hearts in the right place but who are anonymous and naturally most interested in defending the interests of their own businesses. It creates an additional learning barrier and cost for existing, completely skilled construction contractors who might want to enter the market, and thus slows down growth and keeps microrenewables as a relatively niche market accessible only to those in the know.

It also creates a whole heap of completely gratuitous technical arguments (and diversionary hot air) about whose standards should be adopted, and who should be on which committee, at a time when the industry should be focused on creating imaginative propositions for customers.

Personally, I cannot really see why we need to confuse customer protection with promotion of renewables at all, particularly in the context of a scheme which deliberately rewards quality installations over those that work less well.

In the end, a green kWh is a green kWh and can be measured accurately by your generation meter. If you employ a poor quality or cowboy installer, using dodgy kit, you will not generate many kWh so you will not get the FITs you expect and are entitled to get cross as a customer with the supplier and seek redress. You could be given stronger powers to achieve this, if we wanted, rather than hardcoding MCS into a perfectly good financial incentives scheme (although I understand there are already at least nine consumer protection acts you could call on if you wish). The market will doubtless also create accreditation schemes to help give you confidence as well (it already has) and customers will soon learn which ones work best.

This simply has to be the most efficient and sensible approach, and I really can’t understand how government can fail to see this!

2. The proposed use of “deeming”, or estimating output rather than measuring it, for large parts of the Renewable Heat Incentive (RHI) scheme is also a retrograde step. A deemed tariff is no better than a grant – it is totally fixed at the point of purchase, and thus independent of the quality or performance of the installation. This will mean, yet again, that market growth in the UK has little or no linkage to the quality of the installations, which will doubtless create a whole industry in London and Watford seeking to manage quality control centrally with little or no reference to the actual performance of energy systems in real buildings. This is unhealthy for the economy, unhealthy for carbon saving, and unhealthy for customers and the industry.

FITs and the RHI should mark a clean break from the culture of arbitrary grants, to a new culture of commercial openness and appropriate (necessarily political) valuation of carbon savings. This is the heart of a low carbon economy. As long as we deem outputs and try to run everything centrally from London, we simply demonstrate to the rest of the world that we haven’t ‘got it’ yet, consider low carbon technologies a trivial add on to the mainstream economy, and remain locked in the past. This is a tragedy for us all.

It should be a fundamental principle of incentive schemes that they are designed to both to reward quality engineering and installation skills, and also that they are as open as possible to new entry. These are the two features of potential schemes that will enable future economic growth,

MCS inhibits entry and deeming ensures economic incentives are aligned to filling in paperwork effectively, rather than doing a good technical job.

Output of heating installations should be metered, like electricity, and DECC should put its mind to ways to prevent people generating unwanted heat as a distinct problem – and one that is worth solving.

3.  Finally – and plenty has been written elsewhere about this so I don’t need to dwell on it – it is clearly unfair and petty to penalise early adopters by denying them access to feed-in tariffs on an equitable basis, and it would be relatively cheap and easy for the government to put this right.

I don’t know about anyone else, but any political party that adopted these three measures in the coming election would probably get my vote, and also restore my faith in a political system and public bureaucracy that otherwise seems to have lost all hold on common sense and reality.

About the author:

Matthew Rhodes is chief executive of Encraft

If you have a question about anything in the above blog, please ask it in the comments section below.

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Comments

7 comments - read them below or add one

Cathy Debenham

Cathy DebenhamComment left on: 1 March 2010 at 10:13 am

On Ashtreex's point ... I've just had a 2.1kW PV system installed, and in the first month I've exported almost exactly half of what has been generated - which is more or less what I expected. 

On Monica B's point ... The RHI is currently under consultation. You can download the consultation document (all 90 pages of it) and let DECC know what you think. The closing date for responses is 26 April 2010, and responses should be emailed to rfi@decc.gsi.gov.uk.

We are not campaigning on equality for existing generators on this issue (and I'm one of them - I have solar thermal panels installed three years ago), as we believe the case is quite different from the one for feed-in tariffs. The latter have been known to be on the agenda for some time, and many of the early adopters bought systems in the belief that they would be getting them. This isn't the case for the renewable heat incentive, which is quite groundbreaking. Most people won't have factored it into their calculations when deciding whether or not to invest.

However, if I hear of any campaigns I'll post details here.

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Ashtreex

AshtreexComment left on: 28 February 2010 at 8:28 pm

When you start to really try to work things out it's very complicated. But a very helpful engineer from Solstice UK has provided me with this info about a possible 3000 kWh installation, which I hope he won't mind my sharing. I haven't fully taken it in but it seems reassuring:

"The important missing information is when you use this power.
The system will generate 3000 kWh/year or more, but that will mostly be generated on sunny days at lunchtime, I suspect that most of your usage is in the evening.

"In any case you will get 41.3p for each unit you generate so that is
£1239.00 each year. Then for every unit generate and use, you save 12p (depedning on what tarrif you have) so that varies from £0 to £360 or from every unit export to the grid, you get payed 8p so that's £0 to £240.

So you will either save or make an additional £240-£360 each year. Which means the total is £1479-£1653 per year, depending on usage.

The complicated part is working out how much energy you will use from your panels, which is free and thus saves you 12p/kWh vs how much energy you will export, where they only pay you 8p. However as the uncertainty is only 4p/kWh the annual uncertainty is only £120, as shown above.

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Monica B

Monica BComment left on: 26 February 2010 at 1:29 pm

You say much has been written elsewhere about early adopters - the RHI is worse in offering nothing at all to them. Can you direct me to suitable sites for campaigning about this? Thanks

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Cathy Debenham

Cathy DebenhamComment left on: 26 February 2010 at 11:36 am

Thanks for your comment sylviob. An average for domestic PV systems of around 2kWp seems to be that people use about half of what they produce and export half. 

The FiT rates are designed to encourage people to use what they've  generated, rather than export it, and changing when you do things like running the washing mashine, dishwasher and doing the Hoovering so that they are while the panels are generating might be a better option that getting batteries. 

Of course the main source of income is the generation tariff which pays 41.3p per kWh generated wherever it is used.

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Cathy Debenham

Cathy DebenhamComment left on: 26 February 2010 at 10:11 am

My understanding it that the MCS accreditation scheme doesn't cover pressure selling techniques, whether people are being given holistic advice about their whole house, rather than being sold a product, or the whole customer experience. This is exactly why I set up YouGen. One of the barriers consumers face is not knowing which suppliers to trust, and our recommend your installer section is aimed specifically at helping people distinguish between them, based on previous customers' experiences. So we're really keen to encourage suppliers to ask their customers to rate their service on YouGen, and encourage people with renewable energy already installed to add a profile to the site; share their learning; and rate their supplier.

Research from Oxford University into the first two years of the Low Carbon Building Programme shows that prices vary enormously between MCS accredited installers, so we aim to help people distinguish between them.

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Barry Nutley

Barry Nutley from Viridis Energie ConsultantsComment left on: 25 February 2010 at 11:51 pm

I agree whole heartedly with points 2, and 3. But with regard to point 1. There needs to be some sort of "monitoring". I take your point re. dodgy installations, but ..... How are people going to know before hand?? True, there are ways of recompense, but these are often lengthy affairs? With no monitoring, every electrician, plumber and builder will add renewables to their "armoury". This could have an adverse effect on the industry, especially those who specialise purely in renewables, and have (to a degree) been struggling for business for the last couple of years? Many of the aforementioned will do a very good job, I'm sure, but some won't. This will make a great TV programme ("Renewable installers form Hell!"), and ultimately give the industry a bad name, and put many people off installing renewable energy techs, which will in turn lead to some form of consumer protection scheme??!!

Whether MCS accreditation is the right model is questionable? But we need to have something??

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sylviob

sylviobComment left on: 24 February 2010 at 10:24 pm

There is one other aspect that seem to have been missed out of all the articles I have read that give example calculations of how the feed in tariff could work out:

Most of the energy produced by solar pannel is during daylight hours, whereas most of our electricity consumption is not.

All the calculations I have seen are misleading with typical examples like:

"With a yearly consumption of 1600kwh

and a yearly production of 1800kwh, you save 1600kwh at 12p/kwh and export 200kwh at 3p/kwh"

In reality, If feed in tarif work with a two way meter, then you only save 12p/kwh if you're using directly what you are producing, otherwise, you are exporting it at 3p, then buying it back at 12p, saving only 3p/kwh, which I guess is going to be the case for over 50% of our consumption.

A large battery could potentially help to store the electricity produced during the day, in order to benefit from it in the evening and at night, however, I expect that a battery that could store a day's worth of produced electricity (around 2kwh) would be pretty expensive, and since batteries don't tend to last very long, I doubt it would work out financialy, plus you might need to install some additional circuitery to prevent charging the battery from the grid, which is the last thing you would want.

 

Strange that nobody has picked up on it?!

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