BY KATIE - MYGREENPOD, 13th Mar '14

THE DOMESTIC RHI IS SET TO LAUNCH THIS SPRING – BUT THERE COULD BE A KEY EXCLUSION

According to the government, the Renewable Heat Incentive (RHI) is the world’s first long-term financial system for renewable heat, and the ‘main scheme’ for its heat strategy. It was introduced in 2011, with payments provided to industries, businesses and public sector organisations that use their own renewable heating systems.

The financial incentives were designed to encourage a movement away from fossil fuels, in a bid to cut greenhouse gas emissions and help the UK meet national targets set to reduce the effects of climate change. Following a consultation in 2012, a domestic version of the RHI was expected in 2013; after a couple of delays it now looks as though the household scheme will launch this spring.

What’s happening?

To meet the government’s target, 15% of the UK’s energy consumption must be derived from renewables by 2020. This looks likely to be the last of our national targets for renewables; the EC’s energy and climate goals for 2030 apply across Europe and place no legally binding requirements on individual member states.

The RHI’s extension into the domestic sector is great news all round; the latest figures from DECC show that in 2012, domestic energy accounted for 29% of the UK’s final energy consumption, and that the majority of energy consumed in the domestic sector was for the purpose of interior heating. In 2012 this represented 66% of the total domestic consumption, with water heating accounting for a further 17%.

According to DECC, the point of the domestic RHI is to pave the way ‘for mass roll out of renewable heating technologies in the domestic heating sector during the 2020s by building sustainable supply chains, improving performance, reducing costs and reducing the barriers to take-up of these technologies.’

Hooray!

The renewables sector rejoiced in what appeared to be the warm embrace of a government in full support of the industry. Companies such as Newform Energy forged ahead with the research and development of hybrid photovoltaic thermal (PV-T) units that produce heat and electricity from one installation – a boon for those battling the logistics of maximising the renewable potential of their homes using separate, specialised pieces of equipment. The company’s pioneering and award-winning Hybrid Solar Solution (HSS) is the first in the world to combine photovoltaic, thermal and heat pump technology in such a way that the total outputs are far greater than those of the individual components.

Despite the delays, the domestic roll out of the RHI looked like a great step forward: homeowners would receive a financial incentive for switching to renewable heating systems, our future supply would be less dependent on imported energy and the UK’s economy would be buoyed by homegrown businesses researching and designing the technology upon which it all rests.

Boo…

But here’s the catch: draft legislation states that PV-T installations won’t be eligible for the RHI scheme.

The draft for the The Domestic Renewable Heat Incentive Scheme Regulations 2014 states that, in order to be valid for RHI payments, solar thermal plants ‘cannot also be used to generate electricity.’ This would mean that current and future owners of intelligent, hybrid systems – developed and designed with support from the UK government – would not be able to cash in on the real life gains of the technology. This is despite the fact that drawing the benefits of both the RHI and FIT tariffs from one single PV-T unit would technically be no different from doing so via separate PV and solar thermal installations.

We contacted DECC for clarification on what appeared to be an honest mistake; the UK is currently a global leader in the development of PV-T and its applications, and UK industry is involved in the biggest PV-T system planned on Earth. Our PV-T sector has been building up its European partners for export and has the potential to generate huge revenues for the UK, with the focus on British engineering excellence.

But it’s no mistake. A spokesperson from DECC told PQ, ‘The Government’s policies on the Renewable Heat Incentive (RHI) and Feed in Tariffs (FiTs) are designed to encourage people to be more energy efficient and drive down carbon emissions. Solar PV-T is a relatively new technology. We consulted on the domestic RHI policy in September 2012 when there was little evidence available on this technology. We therefore decided that it should not be eligible at the launch of the RHI scheme.

This is yet another barrier erected by DECC for those trying to innovate in the green industrial revolution that Coalition ministers championed so enthusiastically while in opposition. What a contrast to the bend-over-backwards policy approach shale frackers and nuclear benefit from!

Jeremy Leggett, founder and chairman, Solarcentury

‘If those who install measures through RHI were also paid a FiT, the Government may be paying them twice which would represent over-compensation and poor value for money for the tax payer. The Government will consider the appropriate level of support while examining the case for new technologies.’

This appears to be a complete misunderstanding of the technology involved in PV-T installations, which are – in every respect – the same as PV and solar thermal units installed as two separate entities. While the additional processing means the cost of manufacture is higher, the advantage comes in the efficiency gains of combining the two together.

Professor Peter Childs, Professorial Lead in Engineering Design, Department of Mechanical Engineering, Imperial College London, says, ‘PV-T technology has the ability to attain significantly higher total power conversion rates than either PV systems or solar thermal systems, therefore giving a higher CO2 offset per meter squared of roof space than any other PV or solar thermal technologies.’

Benefiting from both the FIT and RHI cannot be seen as double counting; for every 1,000 watts of the sun’s energy, approximately 15% is used for the production of electricity while a further 55-65% is converted into heat. This effectively means PV-T converts up to 80% of the sun’s power into useful heat or electricity, displacing more CO2 per square metre than any other solar technology. Simply put, solar energy is not being used twice — it is being used for the production of either electricity or heat.

Imagine the confusion for British R&D companies — including Newform Energy and Natural Technology Developments — that received substantial government funding to continue research into PV-T technology, only to find themselves apparently excluded from the government’s incentive at the eleventh hour.

In an email to Newform Energy, the Chair of the Solar Steering Committee said he had ‘no objection’ to eligibility for certification and listing as both a PV panel and a solar collector, provided the company was certified against MCS005 and MCS004 or Solar Keymark.

He concluded, ‘I don’t see justification yet for any special category for product certification. In order to be used in any MCS eligible PV and Solar system, it will need to be certified separately under both categories. Evidence is insufficient to justify allowing, within MCS, any special consideration in terms of energy performance or the development of any other performance calculation methods that might reflect some performance uplift for PVT systems.’

Newform Energy fought for two years to have PV-T technology recognised by the Micro Certification Scheme (MCS) and the Solar Steering Committee. After extensive lobbying and over 300 signatures of support, it was decided that the products would be included under MCS as two separate technologies, provided that the panels were tested separately as solar thermal and photovoltaics under IEC/EN standards. The cost of this testing programme to Newform Energy was nearly £60,000.

The company then spent a further £16,000 obtaining MCS certification for the technology, effectively paying twice for solar thermal and photovoltaic accreditation. It finally managed to obtain full MCS accreditation in 2011 and has maintained the certification, at a further cost of £2,000 a year, ever since.

Having fought its way through this process on the advice of the Solar Steering Committee – and marketing its installations as technology benefiting from both FIT and RHI – Newform Energy now stands to lose any chance of selling its products.

PV-T technology is real and in place now; 300 projects have been installed by Newform Energy alone, fully certified under the industry standard MCS for both PV and solar thermal. Customers have already opted to install the technology on the understanding that they will receive remuneration when the domestic RHI kicks in.

Logically, homeowners should be able to capitalise on the full benefits of PV-T technology: the FIT could guarantee a minimum payment for the electricity generated by the PV-T installation, plus an additional payment for power exported to the grid, while heat production would be acknowledged under the RHI.

Speaking to PQ, Anthony Morgan, CEO and founder of Newform Energy, said, ‘We have 300 installations — all potentially disappointed customers — and have just employed 20 new staff. We were looking to expand to 50 over the next 18 months to take advantage of the opportunity the RHI presented to us. It would appear that the decision by DECC to prevent the technology from benefiting from both tariffs will cut our ability to compete in the marketplace, effectively cutting our business off at the knees.’

The government’s stance is a bit like a decision to back double glazed windows that need additional sealants, when airtight versions are already available on the market. If we are to meet our carbon reduction goals and move towards a secure, sustainable future, a hybrid approach to energy efficiency is absolutely necessary. There’s no point in installing solar panels if your home’s not insulated, and there’s little chance you’ll cut your energy bills – or recoup installation costs – if you’re equipping an energy-efficient home with power-guzzling appliances.

British companies like Newform Energy have been ploughing time, money and resources into the research and development of technology that ticks several boxes at once, with a view to driving innovation in the field and providing homeowners with financially viable alternatives to traditional mainstream energy sources. Now it looks like their future could be at risk, and that the government could be about to miss a crucial opportunity to boost industry, streamline domestic power use and reward homeowners for adopting carbon reduction measures.

Preventing PV-T from entering the UK market flies in the face of DECC’s carbon reduction programme. DECC’s decision may be the nail in the coffin for one of the most cutting edge renewable energy developers and a very sad day for UK PLC!

Anthony Morgan, CEO and founder, Newform Energy

DECC openly accepts that a ‘step change in the uptake of renewable heat generating technologies’ is required to achieve our decarbonisation targets, and to ‘prepare the market for mass roll out in the 2020s.’ It recognises that companies producing the required technology are not in a position to compete financially due to various barriers and market failures. However, the government appears to risk undermining the future of the entire sector – and sounding the death knell for the very companies that could help it succeed.