Saturday, 13 July 2013

Are PV Switches Abusing the FIT Scheme?

A first for the solarblogger, and something I’d really like to see more of.  Here's a guest blog by Tom Seppings of Solaplug, a UK manufacturer of an innovative immersion heater replacement that converts a standard hot water cylinder into a solar cylinder.

This outspoken article echoes an earlier solarblogger post, and I'm expecting it to stimulate some discussion.  Please use the comment box at the bottom to join in.

the solarblogger

Are PV Switches Abusing the FIT Scheme?

The FIT scheme is a fantastic success, which has brought renewable electricity generation to hundreds of thousands of homes.  But any subsidy scheme has to be tweaked from time to time. 

In the past few months we have seen PV switches which dump surplus renewable electricity into hot water tanks as heat, cross over in to the mainstream market.  Are PV switches exploiting loop-holes in the FIT scheme for financial gain? Do they bring environmental benefits?  Are they fair to solar thermal?

Installing electricity generation at the micro level incurs disproportionate overhead and "hassle" costs.  In 2009 DECC considered, pragmatically and practically, that mass export metering was too complex and costly, and that 50% of electricity generated through the FIT scheme should be "deemed" as exported to the grid.

However 3 years after the FIT scheme was launched, this loop-hole is being exploited on a large scale.  Microgenerators of electricity are paid for exporting 50% generated, whether they export it or not.  Many, with the help of PV switches, are choosing to be paid for exporting electricity, and then retaining the power by degrading it as heat in their hot water cylinders.

We have a Feed In Tariff Scheme that does not require the generators to feed in!

Electricity is a very versatile and still highly subsidized form of energy, heat is less subsidized and a much less versatile form of energy.  Also electricity is a much more carbon intensive form of energy, in the UK on average 0.508 kg of CO2 are emitted to produce each KWh of electricity. To produce 1KWh of heat by burning grid gas emits 0.187kg of CO2.

So if a home owner with a PV installation and grid gas heating decides to dump his surplus PV power as heat to replace some of his gas heating, he is effectively increasing his CO2 emissions, and reducing the carbon benefits of his PV.

Installing a PV switch may be within the FIT rules, but is this following the spirit of the scheme?

It could be said that PV switches abuse the FIT scheme environmentally and financially.

Over the past (nearly) 4 years with FITs for PV, and until yesterday no comparable subsidy for solar thermal, PV has far outsold solar thermal. To the extent that many people don't even realise that solar thermal exists.

Now with the help of a PV switch, a PV installation can generate hot water.

We effectively have 2 types of solar water heating, solar thermal and solar PV, and they cost similar amounts.

A 2KW PV system should generate 1700KWh/yr of electricity, and it could cost between £3000 and £4000.

A 4m² solar thermal system should produce a similar amount of heat, and cost about the same.

The main difference for the home owner, will be the subsidy rate. For PV 15.44p/KWh over 20 years, and 19.2p/KWh over 7 years for solar thermal.

Even after yesterday's announcement, the vastly different levels of subsidy amount to a chronic distortion of the solar water heating market.

Solar thermal still has some advantages. It takes up less roof space, and performance is less susceptible to shading. So there are many more homes in the UK suitable to solar thermal than PV.  
Also, solar thermal has not yet enjoyed the "kick start" so successful with PV to enable costs to reduce, there will be opportunities for cost reduction from today's prices.

It is still possible to imagine a time 20 years from now, when energy will be much more expensive and subsidies for microgeneration are minimal or zero. And solar thermal outsells PV.

Tom Seppings, Solaplug Ltd


  1. If you assumed the average 2.75kW system produced 2300kWH a year, under the current scheme over 20 years it would produce around £6500 in generation payments and £1000 in export payments (ignoring inflation and panel degradation).

    A typical 4msq thermal system producing for arguments sake 1500kWH would generate only £2000 in tariff payments. Its not exactly a kick in the teeth for the thermal customer / industry, but it does seem grossly skewed in favour of PV!

    I seem to remember reading somewhere recently that when this issue was brought up with someone from DECC they said they were "not aware of such devices"... oh dear.

    At the moment I am still feeling unjustifiably happy that we even have a domestic heat tariff at all, but as the dust settles the industry must now push for a levelling of the playing field. After all, we are supposed to be aiming for carbon reductions aren't we?

    1. Ben

      remember that all the heat generated by a solar thermal system offsets your bills, because you accumulate it in a hot water cylinder. Whereas only the proportion of the electricity you manage to use yourself offsets your electricity bills (see my latest article)

      Remember also that the FIT is paid over 20 years, the RHI over seven. This is going to make it more attractive to the residential market. You only get your 10% return under FIT if you stay in your home for the entire 20 years to collect the payments (or if your PV array increases the sales value of your home when you sell - a questionable assumption based on how some insensitive PV installations look on the roof see this ever-popular article).

    2. Thats true, but it is also impossible to pass any "excess" benefit into any type of grid to reduce fuel use for other users, and when you are talking about "feed in" tariffs this is an inherent part of the strategy. I believe that is part of the reason why the FiT should be re-worked, to encourage the passing on of excess production.

      Having said that I am not philosophically opposed to battery storage, (the electrical equivalent of a hot water cylinder after all), just the use of hot water as the storage medium when it will increase CO2 emissions as noted in your previous articles.

      I think banning PV switches would probably be very difficult (how would you police it?), and there is probably a much better solution to be found. The best solution probably revolves around a much lower generation tariff, a higher export tariff and actually metering export... but until export meters are fitted its all just a line in the sand and won't actually stop people buying these devices, because they will see actual lowering of their bills while they use them.

      I think a lot of people are also attracted by the monitoring / info side of these devices as well, they are in effect installing their own "smart meter".

      So maybe the solution is to make the PV installer fit an accredited gsm based "smart meter" with all their installations, doing the DNO's work for them? a win/win ?

  2. While Tom has outlined the issue very clearly, he hasn't proposed a solution. Is it:

    1/ "Ban" these products...? - but the products do have a place, just not displacing gas heating with electric

    2/ Change the FIT so that export is metered for all size installations (after all in the original consultation response to the FIT, the deeming was referred to as temporary). Can this be done with just another generation meter, or does it require the electricity meter to be updated?

    3/ Only pay the export payment where such products are not fitted - ask the householder to sign a declaration that they have not and will not fit such a device if the water heating is not electric?

  3. Tom Seppings

    PV switches do have a place, but the FIT scheme does need updating.

    I believe the following is correct:
    Distribution Network Operators (DNOs) manage electricity connections (import and export) they operate as supervised monopolies in each area.
    So anyone who wants a new electricity supply or export meter must arrange it through their DNO. Each connection (import or export) is assisgned a unique MPAN no.
    When the FIT scheme was introduced, many DNOs offered meter export for small FIT installations, but the export connection for smaller PV installations was too expensive, and everybody chose deeming. And after a while the option of metered export for small FITs was withdrawn.

    The introduction of Smart Meters is a great opportunity to solve this problem, and hopefully the Smart Meter project will be designed to accommodate these issues. When Smart Meters are rolled out, it would make sense to prioritise existing and new FIT installations in the first wave.

    In the meantime, withdrawing the deemed export payments for any home with a PV(FIT) switch would be fair, and hopefully an easy first step towards solving the problem.

  4. Quite agree with the comments so far - these PV switches are terrible! Terrible because they stop the export of clean electricity onto the grid which is supposed to displace dirty high carbon electricity. Also terribly attractive to the PV system owner to exploit a huge loophole in the current FIT rules. I must admit that we therefore offer to supply and install them on demand, even though I can feel the bullet passing through my foot as I realise that's another solar thermal system sale lost and another 250kg of carbon up the power station chimney. So the loophole should be plugged, but not retrospectively for people who have quite legitimately taken advantage of the rules as they stand. Also with some advance notice (1 year?) for the sake of the companies who have spent £1000's designing and manufacturing this clever but ultimately anti-green technology. On the other such a device, intelligently linked to smart meters, and real-time linked to DNO requirements could be a great way to increase installed PV capacity beyond current grid requirements.

  5. The forthcoming domestic RHI might bring a mechanism for withdrawing deemed export payments for FIT installations with a PV switch.

    Most domestic renewable heat production will be deemed.
    It is rumoured that DECC & Ofgem are developing an administrative mechanism, which requires an annual declaration from each owner of a renewable heating system that their system is well maintained and working, before they can receive RHI payments. Which makes sense.

    One would hope that the same principle and mechanism could be applied to deemed export of renewable electricity. In order to receive the deemed export component of their subsidy, the owner should be required to declare that they have not installed a PV switch to degrade their renewable electricity into heat.

    Hopefully, this would be seen as fair to all sides. And, if the administrative mechanism is already set up for the RHI, it ought to be relatively easy to apply it to FIT installations.
    It would reduce the sales of PV switches, but it certainly wouldn't kill their market.

  6. If you want to have fun... ...ask the PV switch manufacturers for proof that they comply with EN61000-3-3 or EN61000-3-11. Most don't and are therefore illegal, though courtesy of the way the CE marking system works and government's disinterest it would require a private company of substantial means to file the compliant that forces government to take action.

    Metering all installations is cheap (where integrated with smart meter rollout) and will largely fix the problem.

    Smart metering itself may even fix the problem, by virtue of it becoming economic to install local electrical storage (see: Maslow, PowerVault) in order to benefit from arbitrage between peak and off-peak periods and the electricity becoming more valuable as electricity rather than gas displacing heat. The increased need for UPSes (Smart Metering standards incorporate remote shutoffs for controlled brownouts or inept billing departments to wreak havoc) will also favour such installations.

  7. I appreciate this thread is getting quite old but never-the-less it may interest contributors that Ecobuild 2014 organisers have asked me to present on the subject of 'PV for heating and hot water - does this make sense?' at 16:15 on Tuesday 4th March in London. I will be covering many of the issues raised here with further quantification of the benefits using analysis via modelling software. There will a chance to ask questions afterwards and there will be speakers on other subjects in that session.

  8. I have a 2.5 PV, the Government encourages me to use my produced electricity, I have a switch which heats my hot water. I therefore do not use any gas to heat my water in the summer. The electricity I use is clean and produces no carbon. However, your comparison appear to have a huge flaw, in that the 0.18 kg/kw does not take into account the manufacture and distribution of the gas, just what it produces when burnt.
    When (and i mean when because it will happen) smart meters are produced the amount of electricity I export to the grid will be measured and I will drop from 50% to 10%.
    Until such time I will continue to make heat whilst the sun shines.
    My electricity \ gas bill has dropped, I produce less carbon than I did and as a bonus I make 10% return on my investment.
    was this not the point of the FIT - to encourage people like me to produce electricity

    1. Hi Anonymous

      thanks for your comments. The carbon emissions factors for fuel use were indeed updated for SAP2012 to include other factors and not just emissions from burning. For gas, this includes power consumed during extraction, flaring at gas rigs, methane escape and energy used in distributing the gas to the home.

      The carbon emissions factor for gas rose to 0.212 kg/kWh

      The carbon emissions factor for mains electricity also rose (for the same reason - carbon emissions during the extraction, processing and distribution of gas, oil and coal that make up the bulk of our electricity production)

      The carbon emissions for mains electricity rose to 0.522kg/kWh

      So the author's conclusion remains valid.

      When you degrade your high value, low carbon PV generated electricity into heat in your hot water cylinder, you prevent the emission of 0.212kg of carbon emissions for each kWh of heat you don't need to produce from gas.

      If, instead, you exported the same electricity onto the grid, you would avoid the need for someone somewhere else to make that unit of electricity, saving the emission of 0.522 kg of CO2.

      Yes, you are reducing carbon emissions if you pull up the drawbridge of your castle and consider it only in splendid isolation. But when you consider the bigger picture, hanging onto every unit of electricity you produce is increasing carbon emissions compared to exporting your excess (as the FIT pays to you do).

      You can read more on carbon emissions factors here:

    2. What are your thoughts on this loophole being exploited on a larger scale, with power diverters dumping potential export energy above an agreed export level (say 3.68kWp) to a heat dump. Say, a 50kWp installation that diverts 50% of its generated energy to a heat dump in order to satisfy a DNO export cap whilst still generating FITs payments when not usefully using using all power on site.