British building owners can now make money by generating renewable heat

The first scheme in the world that will pay owners of domestic buildings for generating renewable heat has been launched in the UK by Energy Minister Greg Barker (seen right with MP Chloe Smith opening a 'Mr Renewables showroom' at the beginning of April).

Like feed-in tariffs for generating renewable electricity from technologies such as photovoltaic solar panels, the financial incentive scheme offers householders a fixed amount per kilowatt-hour generated from various technologies, even though the heat is only consumed in the home and not made available for others (as with home-generated electricity that is fed into the electric grid).

Called the Renewable Heat Incentive, it is based on a similar scheme for business, the public sector and non-profit organisations, that has been in operation for some time in the UK, as well as a smaller domestic scheme aimed at solid-walled, hard-to-heat homes, called the Renewable Heat Premium Payment.

Property owners apply to all schemes through the Energy Saving Trust, a government-sponsored body which promotes energy efficiency and renewable energy at the domestic scale.

The purpose of the RHI is to stimulate the renewable heat industry in the same way that feed-in tariffs have done for the solar PV industry. This has seen remarkable growth in the last four years with the cost of a typical PV system installation dropping by more than half.

The UK Government and industry body the Solar Trade Association (STA) have a target of covering over one million roofs with solar thermal and solar PV panels by the end of 2015. Over 200,000 solar thermal systems are already installed in the UK.

Global capacity for solar thermal is over 200GW - around double global installed capacity of solar power. The technology is proven and well established across Europe and elsewhere, and back in the days of previous support systems when grants were offered for installation of many types of renewable energy technologies, solar thermal was by far the most popular technology of choice for householders.

Stuart Elmes, Chair of the Solar Thermal Working Group at the STA, welcomed the launch of the RHI, saying: “Solar heating is popular with householders and quick to install, integrating easily with existing heating systems. We calculate that the returns from solar water heating are similar to those from solar power when you take into account the high price inflation for gas and heating oil.”

Paul Barwell, Chief Executive of the STA said: “With the launch of the Domestic Renewable Heat Incentive the final piece of support for household solar technologies slots into place. Together with the Green Deal for insulation improvements and the Feed-in Tariff for solar power, householders now have a great choice of Government-backed financial incentives to choose from to best suit their clean energy needs.”

Launching the scheme, the Government Minister for Energy Greg Barker (pictured right) said: "Not only will people have warmer homes and cheaper fuel bills, they will reduce their carbon emissions, and get cash payments for installing these new technologies. It opens up a market for the supply chain, engineers and installers – generating growth and supporting jobs as part of our long-term economic plan."

Technologies and payments

The technologies currently covered by the scheme are:

• Biomass heating systems, which burn fuel such as wood pellets, chips or logs to provide central heating and hot water in a home. Biomass-only boilers are designed to provide heating using a ‘wet system’ (eg through radiators) and provide hot water. Pellet stoves with integrated boilers are designed to burn only wood pellets and can heat the room they are in directly, as well as provide heat to the rest of the home using a ‘wet system’ (eg through radiators) and provide hot water.
• Ground or water source heat pumps, which extract heat from the ground or water. This heat can then be used to provide heating and/or hot water in a home.
• Air to water heat pumps, which absorb heat from the outside air. This heat can then be used to provide heating and/or hot water in a home.
• Solar thermal panels, which collect heat from the sun and use it to heat up water which is stored in a hot water cylinder. The two types of panels that are eligible are evacuated tube panels and liquid-filled flat plate panels.

Technology	Tariff
Air-source heat pumps	7.3p/kWh
Ground and water-source heat pumps	18.8p/kWh
Biomass-only boilers and biomass pellet stoves with integrated boilers	12.2p/kWh
Solar thermal panels (flat plate and evacuated tube for hot water only)	19.2 p/kWh

Only one space heating system is allowed per property but homeowners can apply for solar thermal for hot water and a space heating system.

The guaranteed payments are made quarterly over seven years for households in England, Wales and Scotland. (Northern Ireland has its own RHI scheme). The scheme is designed to bridge the gap between the cost of fossil fuel heat sources and renewable heat alternatives.
According to renewable energy expert Richard Hiblen, who has more than 14 years’ experience in this field, the RHI tariffs are ‘good for some and better for others’, but even the worst figures make the technologies more attractive than installing oil or LPG heating.

Phil Hurley, managing director, NIBE Energy Systems Ltd., a renewable heating manufacturer, called the RHI "a game changer for the renewable heating industry". He continued: “The introduction of the domestic RHI gives the industry the security and confidence it needs to realise its growth potential".

But Neil Schofield, Head of External and Governmental Affairs at boiler (furnace) manufacturer Worcester, Bosch Group, cautioned that: “the funding is weighted heavily in favour of biomass, which is one of the most expensive systems to install and one requiring the largest amount of user intervention. Questions have already been raised over whether DECC has backed the right horse in this respect."

UK Solar Strategy

Earlier this week, the UK Government also launched its Solar Strategy, which contains plans to turn the Government estate as well as factories, supermarkets and car parks in cities around the UK into “solar hubs”.

Energy Minister Greg Barker  said he believes that “there is massive potential to turn our large buildings into power stations and we must seize the opportunity this offers to boost our economy as part of our long term economic plan. Solar not only benefits the environment, it will see British job creation and deliver the clean and reliable energy supplies that the country needs at the lowest possible cost to consumers.”

The UK has an estimated 250,000 hectares of south-facing commercial rooftops, and the government believes that solar increasingly offers efficient and cost effective onsite generation opportunities to both businesses and domestic consumers.

In a further initiative, the Department for Education is working on ways to improve energy efficiency across the 22,000 schools in England, to reduce their annual energy spend of £500 million, and to encourage the deployment of PV on schools alongside promoting energy efficiency. The British Education Secretary Michael Gove said: “Solar panels are a sensible choice for schools, particularly in terms of the financial benefits they can bring. It is also a great way for pupils to engage with environmental issues and think about where energy comes from.”

Larger community renewable energy schemes to receive extra support

Energy and Climate Change Minister Greg Barker said: "The expansion of our reformed Feed-in Tariff will encourage even more communities to get on board.”

New proposals to benefit community energy schemes have been unveiled by the Government.

In its response to feedback from community groups on the type of financial incentive that works best for them, the Department for Energy and Climate Change (DECC) has said it will increase the generation threshold under which community projects are eligible for feed-in tariffs (FITs) to enable larger projects to benefit.

Support for community renewable projects over 5MW is currently available under the Renewables Obligation (RO). But this pays a lower amount per kilowatt-hour than that available under FITs.

The reforms, to be written into the Energy Bill and underpinned by secondary legislation, will permit community schemes up to 10MW in size to continue to benefit from the levels of support available to those below 5MW.

Projects such as solar PV on school roofs or panels on libraries, community owned wind turbines and hydro power from local streams could all benefit under the proposed new rules.

There is also money on offer to pay for excess power exported back to the grid.

Energy and Climate Change Minister Greg Barker said: "The Coalition is determined to drive a step change in the deployment of community energy.

"We want to help consumers, businesses and communities generate more of their own clean, green electricity locally, becoming less reliant on centralised power generation. The expansion of our reformed Feed-in Tariff will encourage even more communities to get on board.”

The announcement comes on top of the launch last week of a £15 million Renewable Community Energy Fund to help community groups with the cost of feasibility studies and seeking planning permission.

DECC is also keen to explore what needs to be done to kickstart even more projects across the UK, with a call for evidence currently underway and the UK’s first community energy strategy to be launched in the Autumn.

The call for evidence wants to hear about the potential benefits of community energy, the barriers to community energy, and what might be innovative and new approaches.

The proposed changes to the FITs rules will be made as part of the Energy Bill process. Once this Bill comes into force, the Government will consult on what it will mean in practice for community schemes.

The Solar Trade Association welcomed the proposals. Its chief executive, Paul Barwell, said: “Community solar farms on lower grade agricultural land help farmers diversify their risk away from increased weather risks to their land, while at the same time fostering dual purpose land use and biodiversity. Community ownership will help secure better community acceptance for more ambitious solar farms over the existing 5MW threshold.”

However, the STA  believes that there is still an issue which needs clarifying that is preventing many community schemes from getting off the ground.

Currently all solar schemes over 50kW (the size of e.g. a school scheme) are subject to very stringent capacity constraints. For example, in any quarter, if more than 200MW of capacity of 50kW+schemes is installed, this will result in a 28% cut in all the tariffs from 50kW through to 5MW.

Furthermore, for schemes over 250kW (larger commercial or community schemes), the FIT is too low to work, leading to just a handful of projects at this size since last July. This is despite schemes over 250kW being more cost effective than many large-scale renewables supported under the Renewables Obligation (RO).

STA Head of External Affairs, Leonie Greene, said: “Solar is being unfairly constrained. It is this 'normal' mid-size of solar, dominant in markets overseas, that needs urgent attention.”

The STA is currently finalising its best practice guidance for high standards in solar farm construction, which recommend avoiding prime grade agricultural land, and provide a set of criteria which developers, builders and land tenants can use to ensure best practice.

Should you consider the one technology whose feed-in tariff rate is increasing?

A micro-CHP unit installed in a kitchen: it generates electricity from gas and heats your water and building.

The Government will be hoping that Friday's announcement about Feed-in Tariffs will finally assuage the micro-renewables industry and provide some certainty for the future.

The Phase 2B Government Response to the consultation outlines the degression rate of different technologies, and the good news is that most technologies do not lose much support. One even gets enhanced support.

This technology is micro-CHP, which represents an opportunity for some householders and businesses to purchase a new boiler that not only heats the building but also generates electricity.

These gadgets run on gas and are fridge-sized. However, like their big brother, conventional CHP plants, they have high upfront costs which has deterred people from buying them. A unit can set you back anything from £6,500-£10,000.

It's in Japan that this technology began and has become relatively big-time, because many manufacturers are Japanese. The global micro-CHP market expanded by more than a third last year and was worth €466 million in 2011, but is set to expand to €1 billion this year, though mostly in Germany and Japan.

Baxi Ecogen's model (pictured above), for example, has a heat output of 24 kW (enough for three average homes) and a maximum electrical output of 1 kW, enough to maintain back-up power in the event of a power cut, or boil a kettle.

The rate of FIT payback is 12.5p for 1kWh. Suppose you had it going all year without stopping you would earn almost £1100. Simple arithmetic shows it would then take at least six years to pay off (though you would make further savings on electricity). But you probably wouldn’t have it on all the time.

Hang on a minute, you say, if it runs on gas, it's not renewable. So why is it being supported by the FIT? And if it is being supported, then when the Renewable Heat Incentive kicks in, surely owners will also get reimbursed for the heat they generate, too?

Besides the FITs announcement, the Energy and Climate Change Department has also just published for consultation its proposals on the non-domestic side of this scheme, which show what renewable heat technologies are supported and how much support they will get, so we can answer this question.

Up for support are biomass boilers and stoves, ground source heat pumps, and solar collectors for hot water and space heating.

But not micro-CHP.

So, the reason why it's being supported is purely because it makes more efficient use of the gas, making the boiler 90% efficient instead of, say, 55%. Not because it is truly sustainable.

This is interesting, because further down the line are different types of micro-CHP boilers which run on fuel cells, which can therefore, at least in theory, run on renewable energy.

As a result of this support, micro-CHP will see some increase in installations in the UK, but to really achieve this it will need far more public education.

In practice, the technology is very specific in application. The current crop of models are based on the Stirling engine, Organic Rankine Cycle (ORC) or internal combustion engine. The first two have high thermal efficiency and output but low electrical efficiency (10%), and this is a sticking point.

A 2007 trial by the UK’s Carbon Trust concluded that micro-CHP can cut electricity bills and overall CO2 emissions by 15–20% when they’re the lead boiler in larger contexts like care homes, district schemes, apartment blocks and leisure centres.

The best individual building for them therefore is a medium-to-large, moderately well-insulated one, maybe with solid walls, solid floors and no loft space, that is hard to insulate well and has a relatively large heat demand. Or they could be used in a cluster of buildings.

This is why there is, sensibly, no condition attached in the feed-in tariffs scheme for micro-CHP, announced last Friday, to having a certain level of energy efficiency in the building, as there is with the other technologies.

In the above context, micro-CHP units can potentially deliver carbon savings of 5–10%; fewer than a condensing boiler, since capacity is likely to be best matched to demand, for both heat and power.

This morning I was in a 200-year-old energy-inefficient house heated by a gas-fired Aga. Although it is the middle of summer (if you can call it that) the Aga had to be on in order to boil a kettle. Consequently, the doors were open to prevent the kitchen from overheating.

Micro-CHP is the only reasonable, more efficient upgrade option possible for such a house that gives them the same level of comfort and ease of use. Biomass wouldn't do that because of the space and labour requirement for pellets or timber. Modern pellet-fired boilers can also consume a fair amount of electricity in their motors. The roof of this particular house faces east-west, so no form of solar power is appropriate.

Micro-CHP offers limited benefits for smaller and newer dwellings, however, because they are more energy-efficient or have too little requirement for heat. The key to success in micro-CHP is matching the thermal output to the building’s pattern of use, so that they operate not intermittently but for many hours at a time, making the value of electricity generated, which will be helped by the feed-in tariff, pay for the marginal investment in as little as three years in a typical family home. It therefore works best with a buffer storage tank to save the surplus heat for later.

Grid connection for electricity export is crucial to micro-CHP’s widespread acceptance. On average, half of all electricity generated by a typical 1kWe micro-CHP device is exported to the grid, as it’s not needed at the time.

Reliability is also a key issue; service agreements will be essential.

So you shouldn’t yet trade in your condensing boiler, which has about the same overall heating efficiency without also producing electricity, but you might keep an eye on developments.

Superinsulated homes will have to wait until the next generation of machines, based on fuel cells. These generally come in two types – proton exchange membrane fuel cells (PEMFCs) and solid oxide fuel cells (SOFCs). They have a heat to power ratio that is approximately equal, so for example they could produce 5kW of heat and 5kW of electricity.

It's an interesting technology. As the Government is fond of saying: “we need a mix of different generation technologies in this country". The same is true at the micro level. There is no one size fits all. Micro-CHP has a valuable part to play, as long as it is installed in the appropriate spaces.

UK Solar industry predicts 1GW of installations in the next year

We're going to see a lot more of these in the UK.

The UK solar industry now sees a bright future for itself following last Friday's decision by the Supreme Court to refuse the Government permission to appeal on the ruling that solar PV installations registered after December 12 last year and before March 3 this year could qualify for the 43.3p kWh subsidy rather than the 21p rate the Government tried to enforce.

Many companies have plans for large-scale solar in particular because they see new possibilities from the Renewables Obligation Certification scheme (ROCs), which gives two ROCs for each MWh for schemes over 5MW, and under which there is no size limit.

There is even talk of solar farms as large as those found in Europe, up to even 40MW in size, in the south of England. One player predicts 1GW of plant installed in the UK over the next year.

Emma Hughes of Solar power Portal says that "now that the feed-in tariff fiasco has reached a conclusion many are looking forward to working in the UK solar industry in 2012, especially now there is opportunity under the Renewables Obligation."

REC Solar, Canadian Solar, Q-Cells and many others are all of the opinion that if the component prices decline as expected, and energy bills continue to rise, opportunities for ground-mounted solar to become cost-effective will increase.

REC Solar is hoping to double its capacity this year by installing approximately 60MW, a large proportion of which will be ground mounted.

Superhomes

At the domestic and business consumer level, more than anything else the government has done, the installation of panels on so many roofs across the country has got people talking about energy and its importance.

All over the country this weekend, owners of homes who had installed green equipment or upgrades threw open their doors for visitors interested in doing eco-refits themselves.

Besides solar PV systems, visitors to the 'green showhomes' on these tours saw every type of upgrade from simple insulation and draught proofing measures to complete overhauls and rebuilds, involving many types of green heating from woodchip fired boilers to solar water heating systems, and even in one case, a tank which combined four different kinds of heating.

Many of those on the tours had had their interest in the subject first aroused by seeing solar panels on neighbours roofs.

This indicates that a chief aim of government policy has succeeded: increasing public awareness in energy matters, even though investment in photovoltaic technology in this country is not cost-effective at the level of subsidy initially set by the feed in tariffs.

But although many of the thousands of people on these tours knew about the Feed-in Tariffs, a high level of ignorance was revealed about the follow-up schemes, the Renewable Heat Incentive and the Green Deal, indicating the huge amount of work that the Government yet has to do to publicise these initiatives.

The 'Superhomes' tours were organised by volunteers in many towns and cities in England and Wales, either by the network members themselves, or local Transition Towns groups.

Several were oversubscribed, indicating the increased popularity of the subject, further evidence of which was the changed nature of last week's Ecobuild exhibition in London, which was far more upbeat, corporate and mainstream than it had been in previous years, with much floor space taken up by solar and heat pump installers.

Speaking at the Ecobuild exhibition, Energy and Climate Change Minister, Greg Barker said: “This is an aspirational agenda. We know people are always looking to improve their home even in times of austerity. It’s part of the British DNA.”

John Gaffney, who organised a tour in and around Llandeilo in Carmarthenshire, said “many of the homes we have seen this weekend who have solar photovoltaic panels installed still think it is worth the investment even with the reduced tariff."

“It seems so complicated from the outside, knowing what to do," said one of the super homes tourists, Peter Jones of Llangadog, "But seeing what other people have already done is a terrific help in getting ideas about what is possible in your own circumstances."

A highlight of this tour was a home which had both water and space heating supplied by both a ground source heat pump and solar water heating panels, with the electricity for the pumps supplied by photovoltaic solar panels supported by FITs. “We generate more energy than we need, so we are still actually paid by the energy supplier after we have used all the energy ourselves," said owner Caroline Langdon.

Green Deal red tape removed

Last week, Greg Barker sought to remove doubts that the Green Deal implementation would be delayed, but did say there will be a “managed” roll-out of the scheme, meaning that some aspects will launch before others, chief of which may be the Energy Company Obligation, which is simpler to arrange.

He said that the Government would be responding to the Green Deal consultation in April and secondary legislation would appear “by summer recess”.

"This doesn't affect the planned October launch,” he said.

He told attendees to the exhibition that red tape was being removed from those who wanted to become accredited installers, including the requirements to have a surety bond in place prior to being authorised; to hold warranties for the 25 year length of the plan when they were longer than standard industry warranties, e.g. for boilers,; and the requirement that installers pay for an Independent Conciliation Service.

Instead, a new Green Deal Ombudsman capable of handling complaints will be appointed.

"Remove stamp duty"

UK Green Building Council chief Paul King has called the Government’s handling of the solar FITs “catastrophic” and said it is now crucial that the Government instills confidence in businesses preparing for the Green Deal.

This weekend, many visitors on the superhomes tours expressed fears that if they invested in renewable heat systems that the tariff rate for these would be reduced in the future. Many appeared unaware that tariff rate reductions did not affect those whose installations had met the deadlines.

In this respect the public perception arising from the solar FITs fiasco has been extremely damaging.

To rebuild confidence, and create more publicity, Paul King has called on the Government to link the Green Deal with stamp duty and council tax, making less energy efficient homes pay more through the tax system.

He said it didn't matter if the implementation of the Green Deal was delayed if it meant that its integrity would be preserved and the fine detail was in place and did not have to be amended subsequently.

He said: “I would much rather delay it rather than go and blunder it as it will take 10 years to get it out of the public consciousness.

Collective energy purchasing

In a further bid to engage consumers with energy purchasing, today, Ed Davey has written to all of the energy suppliers asking them to support collective purchasing schemes as another way of helping householders engage easily with the electricity market and bring prices down.

He wrote: "I want to make it easier for consumers to club together and use their collective purchasing power to engage with the market and to get good deals on their gas and electricity."

This was a key part of the Consumer Empowerment Strategy that Ed Davey launched as a Minister in the Department for Business Innovation and Skills last year.

He said particular you want to see schemes that reached out to “include more vulnerable customers and people who don't shop around for their gas and electricity".

The purpose of the letter is to encourage all energy suppliers to engage with these organisations on their ideas.

FITs reductions get mixed reaction from renewables industry

One installer says the new proposals "could spell Armageddon for the industry".

The solar industry has responded with mixed feelings to DECC's new proposed changes to the Feed-In Tariff system for small scale renewable energy, announced yesterday.

In its response to the consultation on FITs for solar PV, the Government admits that 81% of respondents disagreed with their proposed reduced tariffs for solar PV installations and with the proposed reference date of 12 December 2011, compared to 12% who agreed.

Nevertheless, it is proceeding with the tariff reductions, and the appeal to the Supreme Court over the legality of the cut-off date for the high tariff rate.

The new tariff rate includes a drop to 21p/kWh for systems under 4kW, until June 30. It estimates the cost to taxpayers of all the new tariffs to be ￡1.2 billion over 25 years.

The reductions are based on research showing that the average cost of a 2.6kW system has dropped from ￡15,000 in 2010 to ￡12,000 in 2012. They aim to provide an approximate 5% rate of return to their owners for well located installations.

DECC projects around six million installations by 2020 based on the new tariffs, which over their lifetime will involve total costs, the Impact Assessment says, of ￡54.3 billion. [Note: the document contains several errors so this figure, high as it seems, may not be correct.]

Nevertheless, the Impact Assessment calculates a net benefit of around ￡400 million because the savings on social costs outweigh the overall costs, compared to a loss of ￡600 million under the original scenario.

The response does contain a concession to objectors from the solar industry: that the energy efficiency requirement that will be a condition of receiving FIT support should be based on an Energy Performance Certificate (EPC) rating of level ‘D’ or above, not the more stringent level ‘C’, as previously mooted, as this excluded too many homes.

Even so, it will almost certainly exclude the majority of old, solid-walled homes, that do not have wall insulation. DECC estimates that about half of all properties are already at the ‘D’ rating level.

A second concession is that the threshold at which the multi-installation tariff rates would apply has been increased from more than one PV installation to over twenty five. These rates are set at 80% of the standard tariffs to reflect the economies of scale gained from tackling several roofs at once.

Individuals or organisations with 25 or fewer installations will still be eligible for the individual rate.

"This will help community groups, small businesses and councils who do not benefit from the economies of scale that larger aggregators can obtain," said Energy Secretary Ed Davey.

DECC says it is using budget flexibility to cover the overspend resulting from high PV uptake of 240,000 installations over the last year, while still allowing ￡460 million for new installations over the Spending Review period.

The statement says this will not impact any further on consumer bills, since DECC is juggling overspends and underspends in the overall amount allocated to it for renewables under the Comprehensive Spending Review between the budgets for FITs, the Renewables Obligation, and the Warm Home Discount.

What happens beyond June?

A new consultation is beginning, and it is this which so far appears to be the most disheartening for the solar industry, for it proposes a reduction of 10% of solar PV tariffs every six months, with an added deployment trigger to ensure that subsidy levels keep in step with the market.

It is based on projections which estimate that system costs will fall by two thirds by 2020.

The proposals would make the tariffs from 1 July onwards dependent on the levels of actual deployment of new eligible installations seen in March and April.

They outline three ways of calculating the level, which could bring rates down as low as 13.6p/kWh for installations below or equal to 4kW.

This structure is aimed at protecting the scheme's budget and creating long term certainty for consumers and investors about what the FIT rates will be.

However, one installer said this "could spell Armageddon for the industry. Yet again the Government, even with a newly appointed Energy Secretary in Ed Davey, seem happy to watch the solar industry lurch from one crisis to the next," said David Hunt, a director with Eco Environments.

Friends of the Earth's Executive Director Andy Atkins also said that the "distinctly unclear solar road map leaves a dark cloud hanging over thousands of jobs".

But others welcomed the news.

Robert Goss, Managing Director of Conergy UK, called it "a very good day for British solar. There will be a boom in May and June as people look to complete installations before the June tariff reduction, with returns of seven to nine percent".

A spokesperson for Good Energy said they considered this "a step forward".

"The industry was in desperate need of more clarity and the government has moved to provide that," said its CEO, Juliet Davenport. "The rate changes proposed for solar PV are a reflection of the well-known problems with the FIT budget and it will take time to fully digest what they mean."

Ed Davey said the proposals, "will remove the need for emergency reviews, consistent with our commitment to a stable, predictable future for solar PV and for the whole FITs scheme.

"It will also help to keep the long-term costs of supporting solar PV down, increasing the number of people able to benefit from FITs over time," he added.

The consultation closes on 3 April.

Other FIT technologies

A further consultation has been launched on tariffs for technologies other than PV, including potential arrangements for community projects.

Significantly, it proposes an increase in the rate of return available for micro-combined heat and power, as ministers believe this could bring multiple benefits.

It also outlines potential tariff guarantees for wind, anaerobic digestion and hydro projects, to provide greater certainty about what rates of return they will receive.

This was welcomed by Don Leiper, Director of New Business at E.ON, which has been investing for a few years in micro-CHP for the home market.

He called it "a key step towards building a mass market for what is a smarter home heating and power solution that can save customers money and contribute to saving the planet".

E.ON calculates that under the new Feed-in Tariff scheme, homeowners installing microCHP could see financial savings of more than ￡600 per year, including electricity savings of ￡194 and export payments of ￡46.

This consultation closes on 26 April.

Concluding the announcements, Climate Change Minister Greg Barker said: “Our new plans will see almost two and a half times more installations than originally projected by 2015 which is good news for the sustainable growth of the industry.

"We are proposing a more predictable and transparent scheme as the costs of technologies fall, ensuring a long term, predictable rate of return that will closely track changes in prices and deployment."

The impact of the FIT cuts on solar have captured the headlines, but they have also affected small wind power installations.

Trade association RenewableUK said tariffs for these have been slashed by over 40%, while farm and small business-scale turbines have seen cuts of over a quarter, and it expressed anxiety over the possible impact on jobs.

Story: David Thorpe, News Editor

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Chaos envelops Coalition's green policies

The High Court has ordered a judicial review of the Government's proposals to cut feed-in tariff payments for solar photovoltaic installations.

With the Committee on Climate Change also saying this week that there is no way the Green Deal will work, as presently designed, Government plans to reduce UK carbon emissions are falling into disarray.

FiTs cut challenge success

Following a legal challenge by Friends of the Earth and two solar firms, Solarcentury and HomeSun, the High Court agreed yesterday afternoon that proposals to cut feed-in tariff payments for any solar scheme completed after 12 December, eleven days before the current consultation closes tomorrow, were unlawful.

Friends of the Earth’s Executive Director Andy Atkins said the "botched" proposals were "jeopardising thousands of jobs".

“Ministers must now come up with a sensible plan that protects the UK's solar industry and allows cash-strapped homes and businesses to free themselves from expensive fossil fuels by plugging into clean energy,” he said.

He agreed with the Government that "solar payments should fall in line with falling installation costs", which have almost halved in the last two years, "but the speed of the Government's proposals threatened to devastate the entire industry".

Jeremy Leggett, Chairman of Solarcentury, also welcomed the decision, saying: "We encourage the Secretary of State to accept the judges' very clear ruling, not plunge the industry into a further period of uncertainty by considering going to appeal".

There seemed to be no sign of that happening last night. Climate Change Minister Greg Barker said the Government would be seeking an appeal, and hoped to secure a hearing as soon as possible.

"Regardless of today’s outcome, the current high tariffs for solar PV are not sustainable and changes need to be made in order to protect the budget which is funded by consumers through their energy bills,” he added.

FoE is also calling for more money to encourage solar installations, to be paid for by the revenue the industry raises for the Treasury, the removal of planned restrictions that would prevent poorer households from installing solar panels and more support for community-owned schemes.

Green Deal "will fail"

On Monday, Lord Adair Turner, who announced this week that he is resigning as Chair of the Committee on Climate Change in order to focus on his role as Chair of the Financial Services Authority (FSA), wrote to Greg Barker and the Secretary of State Chris Huhne, expressing concern about the detail of the Green Deal and Energy Company Obligation (ECO).

He slammed the current proposals as being "an inefficient way of spending ECO funding", which would not cut energy bills for householders or enable the Government to meet its carbon budgets.

He pointed out that DECC’s own draft Impact Assessment projects show that between 2013 and 2020, six million lofts and 6.3 million cavity walls must be insulated.

But the Government itself estimates that just 700,000 lofts and 1.7 million cavity walls will be insulated under the ECO.

Yet this policy is supposed to account for much of the cost-effective potential to improve energy efficiency in the residential sector.

Lord Turner therefore proposes that the current Carbon Emissions Reduction Target (CERT)'s targets for insulating lofts and cavity walls be included in its proposed replacement, the ECO.

This would make it much more likely that target emission reductions would be achieved (e.g. 4-5 MtCO2 in 2020, rather than 2 MtCO2 as currently projected).

Lord Turner adds, "a less energy efficient housing stock would raise costs and risks of investing in renewable heat" (under the Renewable Heat Incentive), because electric heat pumps work less efficiently in poorly insulated homes.

He rejected DECC's argument in the impact assessment that including loft and cavity wall insulation in the ECO would crowd out the Green Deal finance, saying that there is enough money to achieve this if the energy companies and Green Deal providers have appropriate incentives, which he describes, to keep costs down.

Lord Turner's replacement as chair of the CCC is expected to be appointed by the end of March.

No one is policing EPCs

Further doubt on the ability of the Green Deal to meet its targets is cast by Mike Ockenden of the Property and Energy Professionals Association, writing in the current print edition of Energy and Environmental Management magazine.

He points out that there is only one local authority in the country, East Sussex, which is still monitoring the adequacy of Energy Performance Certificates (EPCs). These are the documents which will be used to estimate the energy efficiency of homes and buildings under the Green Deal.

A similar situation applies to Display Energy Certificates (DECs), which are meant to be displayed by public buildings over 1000 ft.². Many of these do not have a DEC, and yet not one has been prosecuted for this omission.

Trading Standards Offices are supposed to police the situation, and yet their departments have had their funding cut and enforcement activity has ceased completely, says Mr. Ockenden.

Without a monitoring system in place, and certification available to purchasers of homes to show how energy efficient they are, the nation's energy consumers are being forced to consume more energy and have higher bills.

At the root of all of these troubles for the Government's energy policies can be found the spending cuts and the dispute between the Treasury and the Department for Energy and Climate Change over budget allocations.

This dispute looks set to continue in 2012, with the low carbon industry sectors looking anxiously for the reassurance they need that their future is secure.

New way of supporting solar PV floated as protests mount against FIT cuts

Caught between protests over cuts to feed-in tariff support for domestic solar PV installations and the need to reduce the impact on householders' electricity bills, the Government is considering a “capacity trigger” system to reduce the amount of the help larger systems are given, and spread the support over more installations.

It's one idea that will be proposed in consultation documents which DECC is expected to publish before the end of the year, and it is known to have the support of both the Secretary of State, Chris Huhne, and energy minister Greg Barker.

In Germany, FITs for solar modules will be reduced by 15% next year, but the amount of the tariff is reduced depending on the generation capacity of each installation.

The tariff is calculated by adding an overall reduction of the tariff (9%) to an amount relative to what is installed. For example, an installation above 3,500 MW of new PV capacity would entail a 12% reduction, while 5,200 MW would entail a 15% reduction.

A parliamentary advisor to Mr Huhne, Duncan Hames, is quoted as saying: “It would be naive not to plan for future cost reductions in panels. We need tariffs that will mirror reality and we should look to what they have been able to do in Germany to have a smoother path on the way to solar competing with other industries.”

The idea comes from a report looking at how to design solar PV tariffs to maintain rapid growth while limiting costs to taxpayers, which was published this summer by investment advisors Deutsche Bank, and called The German Feed-in Tariff for PV: Managing Volume Success with Price Response.

Under Germany's new Renewable Energy Action Plan, which is now based on ideas in the report, solar PV will generate 41 TWh of electricity per year for as much as 7% of 2020 consumption.

Wind energy will contribute 100 TWh or nearly half of the 217 TWh of renewable generation expected by 2020. Solar PV will deliver nearly 20%.

Policymakers are looking at ways to limit the cost of solar PV development not only in absolute terms but also relative to other renewables.

Triggers for cost reduction can also be time-based or cost-based.

As PV systems have seen a 50% cost reduction in less than two years, it is important that in 25 years time, the lifetime of the guaranteed tariff, electricity bill payers are not contributing what could by then be a completely disproportionate amount.

The Renewable Energy Association, which has fought the reduction in the FITs in the UK, has indicated that a capacity trigger "could be helpful to us" as "it would mean that if the price of panels doesn’t come down as anticipated, the model would account for that.”

One criticism of this solution is that, per installed unit of capacity, the cost of installing many separate systems is greater than that of installing a smaller number of higher systems. Therefore the cash available will support less, not more, generation capacity.

Judicial review

Chris Huhne has come under prolonged criticism over the FITs policy shift. Lord Teverson, LibDem spokesman on energy in the House of Lords, has said he should have thought through the changes earlier and had not shown “good management” of the process.

Almost three times as much solar capacity than expected by DECC had been installed by October, in 100,000 separate installations with over 400 megawatts of capacity.

Yesterday, the solar industry, backed by hundreds of supporters, took their protest to Parliament.

At a meeting chaired by Seb Berry, Head of Public Affairs for Solarcentury, a panel including Shadow Energy and Climate Secretary Caroline Flint, Caroline Lucas, the Greens' MP, Alan Simpson, the ex-Labour MP who helped design the Feed-in Tariff, and Chairman of the Solar Trade Association (STA) Howard Johns, attacked the cuts.

Friends of the Earth announced they had issued a request for a judicial review on the Government consultation's December 12 deadline for solar PV installations at the current tariff rate.

The campaign body's Executive Director Andy Atkins said, "The solar industry has been one of the UK's brightest success stories in the last two years, helping homes and communities across the country free themselves from expensive fossil fuels.

"We believe these plans are illegal as well as ill-advised - so we are taking action to bring ministers to court."

One casualty of the cuts in FITs has been a 26-acre solar farm in Chewton Mendip that was being developed by Ecotricity, which it says would have generated enough power for 1500 homes.

Also abandoned is a £6 million scheme to fit solar panels on 1,000 council houses in Kirklees.

The tariff rate for large installations like this has been cut by 70%.

"Too Fast, Too Much" – solar PV industry in shock

The UK solar PV Industry is in shock due to the severity and speed of the Government’s proposed cuts to the Feed-in Tariff for the technology.

With talk of job losses and legal action, industry bosses are searching for a way to soften the expected impact of the sudden fall in tariffs and the timescale.

Dave Sowden, Chief Executive of the Micropower Council, said: “Within four hours of these proposals being announced, we received our first phone call of a company starting a statutory consultation with staff over impending redundancies."

Most stakeholders understand the Government's dilemma, caused by the rush of PV installations rapidly depleting the extent of the £867 million fund.

There were over 16,000 new solar PV installations in September alone – nearly double the number installed in June.

“But these proposals go much too far," Sowden warned. "Under these proposals solar panels will simply become “eco-bling” for the middle classes, paid for by all, including the fuel poor.

"Yet those on lower incomes will no longer be able to benefit from offerings such as free solar or social housing schemes, due to the financiers of these schemes pulling out.

“The speed of the changes will also leave many companies with stranded assets, a plethora of contractual disputes."

A protest by the industry and supporters is being planned at Downing Street for 23 November to lobby for more modest reductions in the tariff and a less drastic timescale.

The Cut Don't Kill campaign has warned that such deep cuts would "kill the UK solar industry stone dead".

Industry veteran Jeremy Leggett, chairman of Solarcentury, warned that 25,000 jobs could go in one of the country’s few growth industries.

“There is not even any recognition that the industry will need some time to adjust to such a change,” he said.

He said he believed that the timing of the change makes it “wide open to legal challenge and we now expect a very serious industry challenge to be mounted”.

Daniel Green, chief executive of HomeSun, an installer of 4,000 solar systems, said in despair, “There is no business left, it is finished. It just doesn’t pay for consumers to do it now.”

The Government's consultation on reducing the tariffs states that from 1 April 2012 the tariff payable to retrofitted residential solar installations will be cut from the current 43.3p/kWh to 21p/kWh.

The tariff then reduces rapidly as the size of the installation rises.

In a blow to the social sector, used by housing associations and local authorities to put panels on their stock, “aggregated” schemes such as social housing and “free solar” will have an even lower tariff – 16.8p/kWh.

However, Greg Barker did say in the House of Commons that the Government is considering "whether more could be done to enable genuine community projects to be able to fully benefit from FITs", as the current scheme cannot identify a community project.

Because the proposals make no change to tariffs for projects installed by 12 December, which will receive the current rates for 25 years, a rush has begun to finish any projects now in progress before this date.

According to the consultation the 21p tariff would yield a rate of return to private individuals of 4.5%, presently higher than most savings accounts, but perhaps not so for 25 years.

The consultation has two phases. The first relates to changes to the tariffs.

A second one is expected before the end of the year and will cover all other aspects of the scheme, including the tariffs for other FIT technologies, adding to the sense of panic felt throughout the sector.

The Government is defending its line by arguing that the cost of an average domestic PV installation has fallen by at least 30% since the start of the scheme – from around £13,000 in April 2010 to £9,000 now.

It says that at this rate, without changing the tariffs, the cost to all electricity bill payers by 2014-15 would be "£980 million a year, adding around £26 (2010 prices) to annual domestic electricity bills in 2020".

The revised tariffs would limit the cost to £250-280 million in 2014-15, making domestic electricity bills around £23 (2010 prices) higher in 2020.

The Government now wants all PV installations from 1 April 2012 to come with energy efficiency makeovers for the property concerned.

As for the level of efficiency required, the proposals are for either an Energy Performance Certificate level of C, or the taking up of all measures potentially eligible for Green Deal finance.

If the building did not meet the energy efficiency requirement the installation would receive a lower FITs rate of 9p/kWh.

Energy Minister Greg Barker said, "This new requirement will encourage the industry to make the most of their skills and expertise and work much more closely with the rapidly expanding energy efficiency market".

Some suppliers such as Sharp Solar say they are already mobilising to offer this service to customers.

In a rowdy Parliament debate yesterday, Caroline Flint, shadow energy secretary, accused the Government of delivering a “kick in the teeth for those families who wanted to do the right thing by investing in solar.

"The new proposals guarantee that lower-income households will lose out, as fewer firms offer the lifetime deals that are currently available, and that solar will be available only to the well-off."

She asked why, if costs have fallen by 30%, the tariffs are being cut by 50%, and observed that so far the UK "has installed only 3% of the solar energy installed in Germany in the past two years".

Barker defended the 12 December cut-off date by saying that otherwise "there would be a massive gold-rush, and the entire budget for feed-in tariffs would be gone" by April 2012.

No more PV subsidy for energy inefficient buildings - Barker

Greg Barker has told the domestic solar industry that all new domestic PV sites from April 2012 must meet minimum energy efficiency standards.

Speaking at the Solar Power UK conference yesterday in Birmingham to an audience of PV installers angry at the cut in Feed-in-Tariffs for PV that has thrown their business models onto the rubbish heap, he defended the cuts but then said that there will be "no more PV subsidy for energy inefficient buildings".

Barker admitted in his speech: "It cannot be right to encourage consumers to rush to install what are still expensive electricity generating systems in their homes before they have thoroughly explored all of the sensible options for reducing their energy consumption first".

This is an official acknowledgement that the Government's three key domestic energy policies have been implemented in the wrong order.
Since it is more economical to improve the energy efficiency of a property than to install generation capacity, the first policy should have been the Green Deal, followed by the Renewable Heat Incentive, then by the Feed-in-Tariffs for renewable electricity, a reversal of the actual order.
This is because renewable heat is more efficient and practical on the domestic scale in this country than renewable electricity.
Mr Barker drew back from announcing the widely expected cuts to the subsidies for PV electricity from 43p per kWh to around 20p per kWh, and refused to take questions from delegates, who fear that the cuts will kill their industry.

Instead, he told them that he expects the successful renewable energy companies of the future will be more like Energy Service Companies (ESCOs) in the sense that they will "diversify into new sectors and join the transformation of the energy efficiency market" with the same "gusto" as they have microgeneration.

ESCOs sell the service of energy supply, and so it is inherently in their interest to do so in the most efficient way in order to maximise profit and competitiveness.

Barker said that the forthcoming Comprehensive Review of the tariffs which DECC will soon hold, will seek ways to put FITs in the context of a "whole-house approach which prioritises energy efficiency and supports the right low-carbon heat and electricity technologies".

The consultation will also ask how business premises and non-domestic sites should be treated in the future.

Barker promised that the scheme will also be streamlined to make sure it works with the minimum of bureaucracy.

In an attempt at contrition, he did confess the need for "much greater coherence right across the green agenda" to synergise the Green Deal and energy efficiency measures, Feed in Tariffs for Microgeneration and the RHI.

He said he hopes to put an end to "stop start reviews". "We owe you that much," he told the sceptical PV industry representatives listening and thinking about their job security.

He said that the lower tariffs would mean "uptake" of the FITs "could continue to grow in a sustainable way" - sustainable to the Treasury budget, that is.

"The future of solar PV in the UK needs to be one based not on subsidy but on sound underlying economics," he explained.

Solar thermal

He therefore emphasised that he wants solar thermal water heating to have an important role.

In most parts of the country this can cut gas or electric water heating requirements by around 40% over the year, and so have a much bigger impact than solar electricity on bills and carbon reduction.

Barker said he is "keen to see a much greater integration of solar thermal and PV offerings in the marketplace – providing consumers with the best advice and the right technologies for their situation".

He also said that he will shortly be announcing support for 34 renewable heat projects from social housing providers, valued at over £4m, which represents "an increase of 33% on the original budget set aside for this competition".

Reclaiming the green agenda

Both Barker and Chris Huhne have been keen this week to try and undo the perception of damage to the Government's green image caused by George Osborne's recent pronouncements.

This subject was debated in the House of Commons yesterday, where MPs discussed a composite motion suggesting that most of the Government's avowedly green policies were failing.

These include the attempts to attract global investment in environmental technologies; the Waste Review, the planning regime changes, and the 27% cut in flood defence investment. It also called on the Government to "ensure mandatory carbon emissions reporting for all large UK companies to kick-start green jobs and growth".

Defra minister Richard Benyon hotly defended the Government's record against Labour and Green Party criticism.

Voting was split exactly on party lines with the 302 Tories and LibDems voting against and the remaining 222 voting for the motion.

New source of company advice

Outside of all this political jockeying, the Carbon Trust continues its steadfast work to make it as easy as possible for companies to save energy and money.

It latest wheeze, launched yesterday, is a new limited company, Carbon Trust Implementation, which will help UK companies reduce their energy costs and install greener, more efficient technology.

It is to provide independent, objective evaluation of the most effective energy efficiency and renewable energy technologies for a company; and help them choose "trusted, accredited suppliers" to carry out the work, as well as helping customers to run competitive tenders for their projects.

In order to make up for the cuts in public funding to the Trust, the service is funded by a flat rate commission from suppliers. This also means there is no cost to the company itself in obtaining this support.

Tom Delay, chief executive at the Carbon Trust said the new business "will help unlock £9 billion of investment into energy efficient equipment".

"We are confident that our new business will catalyse organisations to take action and in turn benefit from implementing cost effective energy efficiency and renewable energy projects and help the UK capitalise on green growth,” he said.

This is because it dovetails with the flexible Energy Efficiency Financing scheme that the Carbon Trust and Siemens Financial Services Ltd (SFS) launched in April 2011.

Renewable energy now yields irresistible returns on investment for all businesses

Whatever kind of business you are running, you would be crazy not to take a serious look at using renewable energy - not just to satisfy your own power needs but as a sound financial investment. But you need to get the best, expert advice and think strategically.

The return on a sensible investment in renewable technology would average 11-12%, with the potential for returns of over 20%, according to a report from Carbon Trust Advisory released this week.

With much of the rest of the economy in the doldrums, and energy prices set to rise considerably, where else are you going to get a return like this?

The financial landscape is improving due to Government initiatives such as the Feed-in-Tariffs (FiT) for generating renewable electricity and the similar Renewable Heat Incentive (RHI) - which covers technologies such as solar water heating, heat pumps and biomass boilers.

This is due to kick in at the end of this month for businesses (a similar scheme for homes will follow next summer).

The big names are already leading the way. ASDA, IKEA, John Lewis and Marks & Spencer have all set a target of moving to 100% renewable energy. IKEA now obtains 80% of its total energy use from renewables and has invested in a mix of ground source heat pumps, biomass, solar panels and wind power.

In the US. Google has invested heavily in solar plants, with a 1.65 megawatt photovoltaic power array installed in 2007. But it has learnt that you can't just buy a renewable energy plant and then forget about it.

At the beginning, it failed to put in monitoring and maintenance facilities for each array that would clean the panels regularly and tell it when failures had occurred. A couple of years later it took a look and discovered in this survey that at any one time, the plant may be only generating 70%, and sometimes as little as half, of its potential.

Factors such as accidents, power and frequency matching, shading, potential annual degradation of cells by .5% to 9.5% a year can all affect a photovoltaic system's output.

Similar technical complications arise from all energy technologies, and few can simply be plugged in, switched on and forgotten about in the way that we rely upon the grid.

While The Carbon Trust is right to push the fact that "anaerobic digestion (AD), wind power, biomass heating systems and ground source heat pumps are some of the most attractive and practical renewable energy technologies for UK businesses", businesses need expert help, not just in choosing the right technology for their location but in designing an entire energy management approach that finds the most cost-effective interventions they can make for their particular circumstance.

Investing in demand reduction, energy efficiency, or voltage optimisation, for example, might create just as profitable returns and improvements to the bottom line.

The Carbon Trust can also advise whether a company should purchase or directly generate its own renewable energy, whether to do so on or offsite, where to find the expertise and the implications for an organisation’s supply chain.

UK’s largest renewable gas project

The Carbon Trust suggests that AD (selling the biomethane produced to the gas network) and biomass boilers, typically will offer the highest average internal rate of return.

Biomethane from anaerobic digestion is going to be in hot demand - it may comprise at least 15% of the domestic gas supply by 2020, according to a study by British Gas and the National Grid.

This week British Gas and AD plant manufacturer Bio Group led the way in this area with a joint project to build a £5m anaerobic digestion plant in Stockport to take advantage of the RHI. It will produce organic fertiliser and biomethane which, once upgraded to match the quality of natural gas, will be fed into the gas network.

The feedstock will include food waste from local hotels, restaurants and British Gas’ own offices. It will be constructed on an old landfill site in Stockport, Greater Manchester and will open in April 2012 when it will be capable of supplying 1,400 homes each year.

British Gas and Bio Group, with the Renewable Energy Association, helped to launch a scheme earlier this year called the Green Gas Certification Scheme (GGCS), that provides assurance to customers of British Gas' renewable gas tariff of the biomethane's authenticity as a renewable energy source.

Although complex, the renewable energy field is rapidly becoming easier to enter and more and more mainstream. And with energy prices set to grow by up to 37% by 2020, the opportunity to reduce bills is a strong incentive for all businesses to investigate renewable energy options.

Any business wishing to enquire about the Renewable Heat Incentive (RHI) should phone the accreditation enquiries line 0845 200 2122 between 8:30am until 5pm Monday to Thursday, and 8:30am until 4:30pm on Fridays or email RHI.Enquiry@Ofgem.gov.uk.

The large-scale solar gold rush draws to an end

The installed capacity of photovoltaic solar power in the UK doubled in the three months to June in the rush to complete projects before the reduction in Feed-on Tariffs by Monday August 1.

The tariff will drop from 29.3p per kWh to 8.5p per kWh on Monday and solar plant developers have just the rest of this weekend to complete large projects in order to benefit from higher tariffs.

Statistics released by DECC show that there was a 56% rise to 121.6 megawatts (MW) between March and June and 18 times more capacity than a year previously.

Installed capacity for anaerobic digestion also jumped in the second quarter of this year, nearly trebling to 177 kW

But this is expected to increase rather than fall, as Feed-In Tariffs for this technology, which composts organic matter to produce fertiliser and methane that can be burnt to generate electricity, will rise from August 1, by around 2 pence per kilowatt-hour for plants up to 250kW.

The largest single solar installation to meet the deadline is on the Body Shop's head office site in Watersmead, Sussex.

It consists of 3,840 solar modules over 6,355 sq meters (roughly the size of 24 tennis courts) estimated to generate approximately 900,000 kWh of electricity a year - 25% of the site’s energy. It is about equivalent to powering the needs of 250 houses.

The Body Shop says it took just nine weeks to install, cost £2.8 million and has a payback of 7-8 years with the higher tariff rate.

Paul McGreevy, The Body Shop International Director of Values, said that “while we understand the need to prevent commercial exploitation of the Feed-In Tariffs, we are disappointed that large, self-funded scale installations like The Body Shop's, entirely in keeping with the original intention of the initiative, have now reduced considerably in size, postponed or abandoned due to the increased investment."

Hw said he hoped the government would look at the situation again and extend the current Tariff, "or at least consider different methodologies to assess the installations to make it more viable" in order to help bring down the cost of solar modules.

Two other large projects to meet the deadline are in the sunniest part of the UK: Cornwall.

Lightsource Renewable Energy and Solarcentury have helped to build a 1.4 MW solar plant near Truro on a disused tin mine, the first of many renewable projects planned at the site.

"While it's been disappointing the government has decided not to support the large-scale solar sector going forward, the solar farms developed this summer will play a critical role in the supply of green energy in the UK," said Conor McGuigan, head of planning at Lightsource.

Another 1.35 MW plant nearby, that cost around £4m, was erected in just six weeks and is expected to attract up to £1bn to the Cornwall area.

The tariff reduction has not stopped a Cornish charity from yesterday launching a £20 million fund sourced from local PV installers to help community buildings, academy schools, churches, charities and farmers generate their own renewable energy from roof-mounted PV modules.

Community Energy Plus' ‘Solar Communities 2011’ was launched at the Cornwall Renewable Energy Show.

The installations will crucially be under 50 kW, so continuing to attract the highest tariff, but unlike other ‘rent a roof schemes’ will also receive an income from any electricity not used within the building that is exported to the National Grid.

If the maximum 50kW were to be installed, this would mean that building owners could save up to £7,000 a year on bills by using all of the electricity, or receive up to £2,400 a year for exporting it all to the National Grid.

Over 300 local organisations are expected to take up the offer before the deadline of the 1st April 2012.

Cornish Social Enterprises like this one are experiencing a boom. The Royal Bank of Scotland’s new list of the top 100 fastest growing Social Enterprises in the UK contains several from the region, including ReZolve and the Cornwall Sustainable Tourism Project.

The RBS SE100 Index is produced by the Royal Bank of Scotland and Social Enterprise to build intelligence and monitor performances of social enterprises in the UK.

Solar industry in danger of provoking green backlash

"Cowboy" solar PV companies are undermining consumer confidence in the technology by mis-selling, and the industry is failing to police itself in a competent manner.

The sting operation by consumer magazine Which? and evidence from the small scale renewable industry's own self-regulating bodies shows that consumers are not adequately protected from bad practice.

The sting operation in which mystery shoppers got solar PV installers to estimate for a domestic system funded by Feed-in Tariffs found that three quarters of solar PV companies overestimated how much energy the PV modules would produce, and most underestimated how long it would take for the system to pay for itself.

One company overestimated profit by £4,275 over 25 years and underestimated the payback time by three years, compared to their expert’s calculations.

Seven out of the 12 salespeople even recommended installing solar PV panels on a shaded part of the roof. Eight companies didn’t question customers about how much energy they used.

Hard-sell approaches were being used: one company, Green Sun, gave the customer 24 hours to make a decision. Another, Skyline Solar, said their discounts were on a 'first come first served' basis.

Ten out of twelve companies failed to mention that the inverter would need to be replaced at a cost of around £1000 every ten years.

And half the companies tested, such as Anglian Home Improvements, sent sales people to make a technical assessment to provide the quote.

Unsupervised selling appeared to be the main cause of the mis-selling problem.

Which? advises consumers needing impartial advice to check the Energy Saving Trust website.

The consumer rights body is also calling for installation quotes never to be given on the basis of sales visits alone, always to include a site specific estimate and clear information on the life expectancy of equipment and cost of replacements, and the full cost (including scaffolding) of installation.

Which? did another operation last year on solar water heating companies and found similar levels of poor selling.

The importance of location

The Government’s building assessment rules, the Standard Assessment of Performance (SAP), are used to work out a PV system's energy output by installers. Yet Which? criticises this practice because they do not take into account the location of the property, which can seriously effect the output of the modules.

It therefore suggests revising MCS rules on energy performance prediction.

“It seems extraordinary that the Government’s rules require companies to ignore whether you live in Cornwall or Scotland when working out how long it’ll take to pay for the solar panels," said Richard Lloyd, Which? executive director.

In fact the only place in the country which gets enough sunshine to make the modules work financially without a subsidy is Cornwall.

However, SAP and EIR ratings are supposed to be unaffected by geographical location in order to make it possible to compare buildings throughout the UK.

Yet, given that a large part of a building's performance is based on solar gain - the amount of heat from the sun captured by the building - this is bound to depend on the building's specific location. Therefore there is a strong case for changing SAP requirements to provide a more accurate overall picture of the building's performance.

To determine a PV system's output, rather than relying on a SAP rating, which is laborious to undertake, it is easier to use the latitude of the location together with the amount of shading the site receives throughout the year.

The failure of industry self-regulation

The industry is supposedly already self-policed, firstly by the Microgeneration Certification Scheme (MCS), and secondly by the REAL Assurance Scheme Code, set up by the Renewable Energy Association - a case of the industry policing itself. This is a consumer code for suppliers of renewable and low carbon micro heat and power generators to domestic consumers.

Consumers can only obtain Feed-in Tariffs for systems installed by members of the MCS.

Which? wants MCS and REAL to better monitor and enforce rules, remove rogue traders from the MCS scheme and publish results of enforcement action on an annual basis.

The efficacy of such confidence-boosting measures is crucial because unless the public has confidence in these schemes then there will never be the mass roll-out of energy-saving measures which the Government is hoping for in the future under the Renewable Heat Incentive and the Green Deal.

"We take the allegations in this report very seriously, and they will be thoroughly investigated," Gideon Richards, Interim CEO of the MCS and MCS Steering Group Chair said in response to the Which? report. He has set up a meeting with their investigators to discuss their findings.

The REAL Code is backed by the Office of Fair Trading as part of its self-regulation initiative, the Consumer Codes Approval Scheme, and supposedly specifically bans false or misleading information.

Virginia Graham, Chief Executive of the REAL Assurance Scheme, commented, "It is particularly disappointing to see one of the companies offering a discount to consumers for signing on the day and another offering a discount in return for providing monitoring information. These practices are expressly outlawed in the Consumer Code and we will be referring these two companies to the Non-compliance Panel."

It took a consumer watchdog to do what both of these bodies are supposed to do themselves, but neither did.

A staggering 2,791 companies are now registered with the REAL code to install solar PV.

For this reason, "we have to work hard to ensure 100% compliance with the Code," says the REAL website.

Many of the requirements demanded by Which? are already in the REAL Code. Its self-auditing questionnaire for its members includes the question, 'Are the company’s procedures for calculating its performance estimates, financial savings and payback time correct?'.

REAL claims to employ mystery shoppers to inspect one in ten of its members each year, but on questioning could provide no substantive evidence of how effective this is.

REAL does log customer complaints, which can be lodged and viewed on its website, but without the naming and shaming of specific members.

They received 75 complaints last year and have had 70 so far this year. 48% of this year's complaints are about PV installations, 14% about solar thermal (down from 27% last year) and heat pumps are receiving 35% of complaints - three fifths of which are for ground source and two fifths for air source.

For solar PV, half the complaints are about high pressure sales techniques and a quarter about a delay in refunding a deposit. Other reasons for complaints include making exaggerated payback claims, and falsely claiming to be MCS certified.

Last year there was a similar Which? report on mis-selling by solar heating companies. And 40 websites of such companies were reported for making exaggerated or misleading claims about the financial or environmental performance of solar water heating systems.

At least twelve of these forty solar heating websites were claiming to be run by supposedly REAL Code compliant companies – who displayed the REAL Code logo on their website.

REAL's Consumer Guide urges consumers to use well-established companies and obtain multiple quotes.

Solarcentury, for example, has been in operation since 1999. Its CEO, Derry Newman, attempted to reassure the public by saying, "Currently our network consists of 25 companies, those we consider the highest quality solar installers in the country. Many have been established and working with us for a number of years, otherwise they have all undergone an audit to establish the robustness of their business operations from accounting through to install.”

Barry Johnston, Managing Director of Solar Twin Ltd., also called for revising the MCS rules on energy performance prediction in order to improve the quality of solar PV installations, as well as for solar thermal.

Both companies are calling for the rogue traders to be punished or disqualified so that the rest of the industry does not suffer. "The last thing we want is a backlash," said Newman.

Microgeneration Strategy published - but will it over-achieve?

The government's new strategy envisages the ideal cost of installing renewable microgeneration technologies to move to around £5-6,000 with a payback period of around five years so that millions of householders take it up. But it's worried that if its strategy is a success, then its support schemes may run out of money.

Its new Microgeneration Strategy and Action Plan for England, published yesterday, aims to remove non-financial barriers to the spread of these technologies, and calls for more demonstration homes, which are known to be the best way to promote uptake, and for industry, local authorities and government bodies to work together.

But the Government is worried about the scheme becoming a victim of its own success. Its accompanying impact assessment warns that implementing the strategy "could encourage greater uptake than we have projected" which ″could drive up subsidy costs of the schemes".

As a result it promises to keep tight watch on levels of uptake given that more funding would not be available over and above the ｣15 million allocated to the Renewable Heat Premium Payments, ｣850 million funding for the Renewable Heat Incentive or the ｣610 million a year for FITs.

Launching the strategy and action plan, Greg Barker said, "The onus is on the industry itself to make the most of the opportunities presented by the financial incentives - supported by Government action to streamline regulation such as planning and standards, while at the same time ensuring consumers are protected."

As an example of what could be done, the Government proposes that information on financial incentives could be included in Energy Performance Certificates (EPCs) to stimulate take-up of renewables. Market research by Consumer Focus has shown that more people would take up renewable energy in their homes if this was included at the point of property sale or rental as part of the green deal advice process.

An army of skilled workers will be required to meet the demand but accreditation needs to be standardised. A survey is to be undertaken of all training schemes to recommend what's needed to create the competent installers of tomorrow to be completed by October 2012.

Industry must do its bit as well, including analysing the whole product life-cycle for each microgeneration technology to pinpoint where things could go wrong in advance and bolster customer confidence. It should do more to market the concept of microgeneration and the potential benefits to consumers with independent source of advice by September this year, and produce a guide on warranties and insurance schemes for customers and factsheets for each technology with information on maintenance and the longevity of key components, by April next year.

Micro-hydro will be removed from the Microgeneration Certification Scheme for the purpose of Feed-In Tariff eligibility to make it easier for customers to find an appropriate installer. Schemes under 50kW are already rigorously regulated under environmental and planning consenting requirements. The Chief Executive of the British Hydropower Association, David Williams, called this "a great relief".

Importantly, the strategy recognises also the value of heat pumps, micro-CHP and, into the future, compressors and absorption chillers which could provide solar-powered cooling.

Wood fuel is also considered vital and the Government is developing a Bio-energy Strategy for publication later this year, which will set out the government's strategic direction for bio-energy to 2020 and beyond.

Building Regulations and the Standard Assessment Procedure (SAP) will also be amended to better quantify the benefit of including renewables in developments.

Government and industry will work together to explore opportunities to expand the microgeneration sector by working with European level initiatives. This includes, for example, Smart Cities, which launched on 21 June, and addresses technologies, local production and energy networks, including electricity, heating and cooling.

Launching the initiative, Energy Gnther Oettinger said: "With an 80 million Euro package we plan to demonstrate smart integration of urban energy technologies in selected pilot cities. This will kick-start important new markets for European industry. Cities are key to the EU's objectives of 20% energy saving by 2020 and to developing a low carbon economy by 2050, because 70% of the EU's energy consumption takes place in cities." Manchester is the English city taking the lead in this imaginative scheme.

Community energy

Connected with this, the Government wants to encourage more communities to take up district level renewable energy schemes that would be owned by the communities themselves.

Currently there are many barriers forming an uphill battle to communities that wish to do this, such as lack of knowledge about planning, local awareness, skills, time and access to finance. DECC has pledged to do more to address these issues with a stakeholder group to be set up next month, including developing the Community Energy Online web portal and engaging in collective purchasing of renewable energy in order to get a better deal.

The latter opportunity was identified earlier this year in a BIS proposal, Better Choices: Better Deals. It cites the pioneering example of Barnet in achieving this and, in fact, many of the initiatives set out in the microgeneration strategy.

Good Energy in particular has welcomed the recognition in the strategy that community energy projects come in all shapes and sizes and could be as large as 20MW in capacity, and that the Government is committed to a wider distributed energy strategy as part of its Electricity Market Reform.

The new post-carbon age business model

The idea of providing a service of renewable energy - rather than a simple supply - and reaping a return on investment from selling any surplus generated to the grid, or by claiming the difference between the regular and premium rate, is emerging as the favoured business model for financing the low carbon revolution.

The latest example is the announcement from Google on Tuesday that it will finance a $280 million retrofit of residential solar power systems in the United States through a deal with startup SolarCity. This is the search engine's largest single renewable energy investment to date.

Upfront cash payments will enable householders who can't afford a large upfront investment to have solar modules installed on their roofs by SolarCity in a leasing arrangement. This allows them to pay a monthly fee for the modules that would be offset by savings and electricity bills.

The systems will be owned by Google who would earn a higher return on their investment than if the cash was in a bank.

This business model is now becoming established in the UK. The latest example was announced on Wednesday by the Foresight Group and Our Generation Limited, who have agreed an initial £10 million programme of residential solar PV installations in the UK over the next 3 months.

Energy services company Our Generation will make the installations and utility E.ON will be responsible for recruiting and managing the customer experience through its SolarExchange initiative.

15,000 of its customers will receive solar power installations costing as little as £99 and save up to £180 on their annual energy bill.

Foresight already manages solar power assets worth over £150 million.

The model is being used by many companies in the UK to finance the installation of solar PV modules on rooftops. The premium 41p/unit paid by the utility for solar electricity provides the return on investment.

Britain's forthcoming Green Deal and Renewable Heat Incentive will see many more examples of this model rolled out, with both large (Tesco, B&Q) and small companies seeing opportunities.

The Feed-in Tariffs review fiasco

With a stroke, DECC has undermined the competitiveness of the UK solar industry in the export market.

Over 80% of respondents to the Government's review of Feed-in Tariffs opposed the deep cuts to the incentives with most calling for more modest cuts and for the retention of high levels of support for community-scale installations for schools, hospitals and offices.

Many investors are now changing their minds about supporting the industry.

The funding for Feed-in-Tariffs comes from everybody's electricity bills - estimated at an average £3 extra per bill by 2016. DECC's argument for the its U-turn on tariffs is that the £860m pot allocated for it cannot get any bigger because consumers would not tolerate the consequent higher bills, especially at a time when energy prices are rising anyway.

Its prime aim is to encourage awareness amongst the general public of the need to save energy and the importance of renewable energy rather than cost-effectively tackle climate change.


Putting solar panels on lots of homes is seen as the best way to do this. It wants to put the money from the FITs into the pockets of householders and not into the pockets of larger concerns.

It's a shame that this is an either-or alternative.

Because unfortunately, those large concerns are not just big companies but community groups and farmers, which flies in the face of the Government's localism agenda. It needs to make an exception in these cases and reinstate the higher tariff bands for PV.

But how successful is the policy at tackling the aim of reducing the country's carbon emissions? Pound for pound of investment, solar PV does not represent good value for money when seen from an environmental point of view in the UK when compared to some other technologies.

The UK does not get a lot of sunshine, except in the very south and south-west, the sun only shines some of the time, and so investment in technologies that can produce renewable and sustainable power all of the time more efficiently will therefore produce more carbon savings [see p. 40-44 of this CERT doc. for the supporting evidence that shows which domestic-level measures produce the most cost-effective savings].

This is where anaerobic digestion (AD) comes in. With a feedstock that can keep it generating every hour of the year, it is also an emerging technology that requires support to get it up and running. It may not be as sexy as PV modules, but it does the job.

The AD industry lobbied for much more support and has been devastated by the result. What it got was an increase in the FIT rates of just 1p. They are now 14p/kWh for schemes up to and including 250 kW and 13p/kWh for schemes up to and including 500 kW.

This is not nearly enough to stimulate further investment in the technology, as Lord Redesdale, chairman of the Anaerobic Digestion and Biogas Association (ADBA) has warned.

With a capital cost of around £7,745 per kWe, AD has the highest cost per MWh of any form of heating for district heating schemes - almost £250; twice the cost of a community biomass combined heat and power (CHP) plant. But put this in perspective: it is not as much as an energy-from-waste CHP plant.

And it has other benefits besides producing heat and power - such as discouraging N2O (a very potent greenhouse gas) emissions and nitrogen pollution by processing farm slurries, and the production of compost which can be sold for soil enrichment.

It is ideal for district heating. The main benefit of moving to district heating a declared Government aim - is saving carbon emissions. Here, anaerobic digestion CHP scores way higher than all other technologies, at around 5,100 kg of carbon dioxide per year compared to a conventional system. (Incidentally, air source heat pumps used for this purpose actually cost carbon compared to a conventional system.)

By the way, these figures are taken from a report commissioned by the Department of Energy and Climate Change itself two years ago on renewable heat and district heating networks.

So it is surprising to hear DECC's Greg Barker say that there is not enough evidence to support the industry's case for greater help.

Its own research shows that if you take into account the implied carbon abatement cost, anaerobic digestion actually ends up being one of the cheapest forms of renewable district heating at less than one fifth the cost of a community boiler using natural gas.

It is still not the cheapest by any means, but this is because the plant is doing more than just burning a feedstock, and because the technology is relatively new.

And the whole point of the Feed-in Tariffs and Renewable Heat Incentive is to bring down the cost over time.

The National Grid itself has said it can see a time in the not too distant future when up to 50% of the gas in the networks is renewable, much of it coming from anaerobic digestion of organic waste.

The Coalition Government is to publish a new anaerobic digestion strategy later this month. While this is not expected to include any more financial help, the more it can do to boost this potentially highly valuable technology, the better.