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