Solar PV and Primary Energy in Building Regulations

The Future Homes Standard consultation has proposed that a new requirement based on Primary Energy use should be brought into the next building regulations .  In this article we look at how the Primary Energy use of a house might be calculated, and what is fair or desirable for solar.

Primary Energy is energy found in nature that has not undergone an artificial (man-made) transformation process.  Electricity generated from gas, oil, coal, nuclear or biomass is secondary energy - the original fuel found in nature has been extracted, transported and converted to electricity.  All the way along the process, energy is used or lost.  So to deliver one unit of electricity to your home, a greater number of units of primary energy is consumed.

In an earlier blog I explained the concept of Primary Energy and Primary Energy Factors, see What is Primary Energy.

The Primary Energy Factor (PEF) is a measure of how many units of primary energy are needed to get the unit of final energy to your house.

So, for example in SAP 10.1 (the draft calculation method for the next building regulations) the primary energy of natural gas from the gas grid is given as 1.13, meaning that for every kWh of gas delivered to your house, gas of energy content 1.13kWh needs to be taken out of the ground.  This figure is a weighted average of the PEF for all the different sources of natural gas that make up the UK supply - for example gas extracted from wells in the North Sea, Russia, USA and Qatar.

Primary Energy of Electricity

Electricity is even more complex.

The generation mix includes power stations that use gas, oil, coal, plutonium and wood as their feedstock, each with different Primary Energy Factors once they have been converted in a thermal power station and transmitted across the power distribution network to your consumer unit.

In addition to these thermally generated electricity sources you can add direct conversion renewables such as wind turbines and solar PV panels.  The convention is that, since the natural energy they convert is limitless, the PEF for energy generated this way is 1.0 at the point of generation.

So the electricity generation mix results in an average Primary Energy Factor that depends upon which types of electricity generation are in use at any time.  SAP 10.1 makes assumptions about what the UK's electricity generation fleet will look like in 2020-25 and estimates what the average combination will be in each month of the year.  The average figure through the year for grid electricity at the point of use is a PEF of 1.51.

A home fitted with solar PV panels will generate solar electricity.  At some times the solar electricity will exceed the electricity use of the house and electricity will flow back onto the distribution network where other buildings will use it, so called export.

Increasingly, homes with solar are also fitted with other technology that allows the building to retain more of the solar generated electricity and minimise amount exported to the grid.  Devices include PV power diverters that send excess generation to an immersion heater to heat water in a hot water cylinder, battery storage to keep the electricity generated during the day for use in the evening and smart car chargers that optimise car charging to use self-generated renewable power to the max.

Of these three technologies, SAP 10.1 includes provision for PV diverters and battery storage, but does not give credit when both are used in the same house.

The Primary Energy Use of a Dwelling

The Primary Energy used by a house is calculated by adding up the total of the different energy types used by the house, each multiplied by the Primary Energy Factor (PEF) for that energy type.

The building regulations is rightly focused on the Net Primary Energy use over the year - which takes into account both the flows of energy into and out of the building and allows for energy generation in the building.  Since the solar PV system is part of the building the solar energy flows that cross the boundary consist only of the solar generation exported to the grid.  (See image)

Solar energy generated by the building and used in the building reduces the electricity needed by the building.  So the first benefit of putting a solar system on a house for the net Primary Energy used is the solar energy kept in the building multiplied by the Primary Energy Factor of the electricity use that was avoided - the PEF of grid electricity.

The second benefit of a solar system on a house is that the solar energy exported from the house is a negative flow of energy and should reduce the net Primary Energy use of the house.  The government has suggested in the consultation that the PEF for this exported electricity should be 0.51.

Why not a PEF of 1.0?  This is the primary energy factor for solar generated electricity at the point of generation (before transmission losses).  A query to the team in charge of SAP received this explanation:

Since grid electricity has a PEF of 1.51, and solar electricity has a PEF of 1.0, the net benefit of the exported electricity is 1.51 - 1.0 = 0.51 per unit of electricity exported.

In effect what they're saying is that this unit of solar generated electricity with PEF 1.0 flows into a nearby building and saves that building from using electricity from the grid generation mix with PEF 1.51, so the net benefit (to the grid) of the exported electricity is 0.51

I can see that there is a logic to this, but on balance I think the net Primary Energy of the building can and should consider the building and not the grid - this means that the flows of energy that cross the building boundary are the ones that matter.  Unlike carbon emissions where you cannot apply a carbon saving to the exported electricity without considering the carbon emissions avoided where that energy is used, Primary Energy for solar energy has an agreed value for the PEF, and that value is 1.0.

Grid connected PV feeds into the grid at 1.0, why should microgeneration be treated any differently?

The government is keen to promote the uptake of smart technologies such as PV diverters, smart hot water tanks and battery storage, and so is the solar industry.

Does a lower PEF for exported solar energy not create a stronger driver for the uptake of these technologies in new build?  Surely the lower the PEF of exported electricity the greater the value of installing equipment to use the solar electricity in the building?

The answer to this question is yes, but only up to a point.  If the calculation is set up in such a way that solar starts to look less appealing as a technology to achieve building regulations, housebuilders may not use it at all, and then there will be zero incentive to add in smart technologies that increase solar energy utilisation.

Giving solar export a PEF of 1.0 still creates an incentive to use smart technologies, but without so significantly diminishing the benefits of solar PV.  In addition, there will be a new affordability criteria in building regulations and this will create an incentive to keep energy in the building (saving 16p/unit) rather than exporting it (yielding only 5p/unit).

BRE and DCLG should reconsider the logic behind the treatment of solar PV in the net Primary Energy calculation in building regulations as the approach being consulted upon runs the risk of unfairly under-reporting the benefits of solar electricity.

Options, Options - The Building Regulations Review & the Notional House

I have read commentary in recent weeks on the 2020 Building Regulations Review that suggests an alarming level of ignorance about the way the building regulations work.  It would be a real shame if the organisations behind these comments were to base their response to the consultation on such a fundamental misunderstanding.

The government consultation is proposing two options for new 2020 building regulations - one that it estimates would deliver a 20% reduction in carbon emissions compared to current regulations and another expected to deliver a 30% reduction.

So you would expect that groups interested in energy efficiency would support the second option - producing a 30% reduction.  But no, some seem to prefer Option 1, because they wrongly think it will result in homes with higher levels of thermal insulation.

It won't.

Let me explain.

The Building Regulations for Energy - How it Works

To comply with the Building Regulations for energy efficiency, housebuilders must use a calculation called the Standard Assessment Procedure (SAP) to demonstrate that the house they plan to build will meet requirements to limit carbon emissions and (new in the upcoming version of building regulations) primary energy consumption and affordable energy bills.

Related article: What is Primary Energy?

Focusing on carbon emissions and primary energy, the way the calculation works is as follows.  (See also the figure above).

1. You decide the geometry of the house you want to build (it's dimensions, shape and openings - number and size of windows and doors)

2. You calculate a Target Emissions Rate (TER) and Target Primary Energy (TPE) for a "Notional House".  The Notional House is the same shape as the actual house you want to build but has a technical specification based on Reference Values defined in Appendix R of SAP.  The Reference Values include insulation performance (U-values) for all the building elements (walls, windows, roof, floor), a maximum allowable amount of openings, as well as air change rates, a heating system and renewable technologies.

3. You then choose the technical specification you actually want to build the house to.  These can differ from the Reference Values - you are free to choose a different heating system, to build to higher or lower insulation levels, to aim for higher or lower air-tightness and whether to include more or less renewable or energy saving measures.  The only constraint is that insulation levels must be higher than so-called backstop values, which are also defined in the regulations.  You calculate the Dwelling Emission Rate (DER) and Dwelling Primary Energy (DPE) based on this house design.

4. So long as the carbon emissions and primary energy for the actual house are lower than the target figures generated by the Notional House, you're good to go, the design is compliant.

This elegant system defines a level of performance for the energy efficiency of new homes while giving developers a free hand in how they want to build.

Option 1 in the consultation sets the Reference Values for the notional house to have highly insulated walls, floor roof  and openings.  The Reference Values given for Option 2 come with slightly lower insulation levels, but add in solar PV and waste water heat recovery to the specification, resulting in lower overall energy use and carbon emissions than Option 1.

Just because Option 1 has higher insulation in the reference values it does not mean that houses will be built with this level of insulation.  As mentioned earlier, developers have complete freedom to choose a specification so long as it meets the target emissions and primary energy levels.  If it is a lower cost option, they are just as likely to reduce the insulation levels and add solar PV to meet Option 1.

If you are interested in lobbying for a 'Fabric First' approach, then you should focus on arguing for more ambitious backstop values for insulation and airtightness, but please don't argue for Option 1 Reference Values.  Option 2 will deliver higher-performing homes and will force housebuilders to push energy efficiency further and faster.  It will also likely result in higher levels of insulation in as-built homes.



 

What Is Primary Energy?

Primary Energy

Primary energy is a form of energy that is found in nature which has not been subjected to any artificial (human) conversion process. It is the energy contained in materials such as oil, natural gas, and coal which can be released by burning them.

The process of converting primary energy into other, more useful, forms of energy, involves energy overheads and efficiency losses and these mean that more primary energy is needed than is delivered as useful energy (heating for a building or electricity).  By way of example, let's follow the path of natural gas extracted from a giant gas field in Qatar and destined for the UK to make electricity in a power station (illustrated above):

Once extracted from the underground reserves, the gas is pumped through a pipeline to a processing facility.  Here it is cooled to -162C, the temperature at which it becomes liquid and loaded aboard a specialised Liquefied Natural Gas (LNG) tanker which transports it to the UK.  The gas needs to be kept cold during transport and this is done by insulating the containers it is carried in and allowing some of the gas to vaporise off.  Some (but not all) ships capture the gas and use it in turbines that drive the ship along.

At the UK port,  the liquefied gas is transferred into storage and kept at a cold temperature to remain liquid.  When it is needed it is re-gasified and pumped into to the UK gas network.  Finally, it arrives at an electrical power station where the gas might be burnt in a modern Combined Cycle Gas Turbine (CCGT).  This is the most efficient type of power -  because in addition to the heat from the combustion being used to raise steam and drive a turbine, the exhaust gases drive a second turbine.   The turbines drive rotating shafts which produce electricity in a generator set.

There are losses at every stage in this journey from gas deposit to electrical energy.  From an energy point of view, losses include the primary energy content of electricity or other fuels used as well as any burning or losses of the natural gas itself along the way.

A proportion of the gas is lost to the atmosphere and some may be flared (burnt off) at the rig or as part of the process filling the LNG tanker pressure vessels and during transportation.  The pumps to move the gas through the distribution system use electricity.

Up to 10% of the natural gas is bunt to drive turbo-compressors that refrigerate the gas to liquefy it for sea transport.

As it crosses the ocean, the LNG carrier will lose 0.1 - 0.25% of its gas each day.  This is allowed to boil off to maintain the low temperatures  - that means up to 5% of the shipment is lost between Qatar and the UK in a typical 18 day transit.  In addition the carrier uses either oil or the transported gas itself to drive its engines.  Some carriers can recycle the boil-off with re-liquefaction plant on board, but this also comes at an energy cost.

Gas sourced from the North Sea will consume less energy in its transportation than gas from Qatar or the USA, but taking a weighted average of all UK gas supplies (based on figures in SAP10.1) - energy or losses equivalent to around 12% of the heat energy in the gas is used up simply getting it to a house or power station in the UK.

The best CCGT power stations have a conversion efficiency of  54% (HHV) meaning that to generate one unit of electrical energy, gas with an energy content of 1.85 units must be burnt.

Putting all of these losses together - extraction, processing, transportation and then conversion to electricity - mean that to put 1 unit of electrical energy into the grid, you need to start off with gas in the ground that contains something like 2.1 units of heat energy - so the electricity generated this way is said to have a primary energy factor of 2.1

Primary Energy Factor for Grid Electricity

Other forms of electricity generation will have differing primary energy factors, so the average primary energy factor for grid electricity is a weighted average.  This will include energy from solar panels, wind turbines, burning biomass and bio gas, nuclear power as well as gas and oil, each with their own primary energy factors.
 
Although solar panels convert electromagnetic (light) energy to electricity and wind turbines do the same with the kinetic energy of wind, because these resources are considered inexhaustible, the convention is that renewable energy of this type has a primary energy factor of 1.0

According to SAP 10.1, the weighted average primary energy factor for UK electricity in the period 2020-2025 is expected to be 1.51.

The primary energy factor for electricity also varies depending on the generation mix that is contributing to UK electricity supply at any given moment in time.  SAP 10.1 uses monthly values to take into account that renewable energy contributes different amounts of energy as the seasons change.

The Future Homes Standard Consultation

Where next for Building Regulations?

In the week where Extinction Rebellion activists were arrested for hosing the Treasury in 'blood' in protest at the lack of progress on tackling a climate emergency, the consultation on the Future Homes Standard came out.  There's talk of solar panels for all new homes - so let's take a look under the hood of the consultation.

The consultation itself consists of two main parts - consideration of the Future Homes Standard due to come into force in 2025 which is intended to deliver "world-leading levels of energy efficiency" for new homes and  an update to the Building Regulations Part L (energy efficiency) and Part F (ventilation) in 2020 to provide a "meaningful but achievable" uplift in energy efficiency as a first step towards the 2025 vision.

There's also a raft of supporting documentation

The Standard Assessment Procedure (SAP) calculation version 10.1
An Impact Assessment, which includes details of cost assumptions
Approved Documents L and F 

2020 Part L - a Stepping Stone to Future Homes 2025

There's a lot to talk about here.  This is no 'tweak' but a significant revision, at least in part forced by the significant changes to the carbon intensity of grid electricity, but also by the Grand Challenge Mission for Buildings, announced by Theresa May about a year ago.

1. Primary Energy Use is the new Gold Standard

Until today, Part L has always used carbon dioxide emissions as its measure of compliance with regulations.  Buildings had to achieve a certain Dwelling Emissions Rate (DER) in kgCO2/m2.

DCLG has rightly concluded that as the electricity provided by the grid comes with a lower and lower carbon intensity, developers could switch to electric heating and hit a carbon target without improving the energy efficiency of buildings.  If energy efficiency of buildings is not improved, then decarbonising the grid becomes more challenging and costly.  So a new measure is required and primary energy, which has the benefit of aligning UK regulations with the measures chosen in the EU Energy Performance of Buildings Directive, is added as a new metric.

(See this article on the rapid progress made in decarbonising the grid.)

The latest revision to the government's Standard Assessment Procedure (SAP) version 10.1 has been published alongside the consultation.  This is the calculation used to demonstrate a house complies with the building regulations.  In this version of SAP the carbon intensity of electricity is set to 136gCO2/kWh, a projection of the average from 2020-2025, and a massive reduction from the value of 519gCO2/kWh in the current version of SAP 2012.  Electricity now produces less than 65% of the carbon emissions of mains gas (which is at 210gCO2/kWh).

By contrast, the primary energy content of a unit of electricity is 1.501 compared to gas at 1.130.

This document explains primary energy and how the values were arrived at

Fitting solar PV to a property reduces the grid electricity that is needed by the house, solar PV generation used in the building (self-consumption) reduces both the carbon emissions and primary energy by the same factor as grid electricity.

Electricity sold to grid also reduces both the carbon and primary energy use of the dwelling but it's primary energy factor is only 0.501.

The impact of this is that a unit of electricity generated by PV and used in the building would save 1.501 kWh of primary energy use, but a unit of PV generated electricity exported to the grid would only save 0.501 kWh of primary energy use in the calculation.

Since the benefits of battery storage (SAP Appendix M) and PV diverters (SAP Appendix G4)  have also been added to this update to SAP, the combination of using primary energy as the main regulatory target and the low primary energy factor for PV export has the effect of incentivising measures such as these to use as much PV-generated electricity within the building.

The trouble with this is that

(a) developers prefer combi boilers so there's no hot water cylinder in most new homes for a PV diverter to divert excess electricity into.
(b) batteries are approaching cost effectiveness but are likely to be seen by developers as an additional cost and not a sellable benefit.

We understand that the logic for choosing this value for exported energy is that the exported energy has a primary energy factor of 1.0 (renewable energy), and displaces a unit of energy from being fed into the grid at the grid average of 1.501, so the net benefit to primary energy added to the grid is 0.501.

The solar industry might argue that considering things from the point of view of the building produces a different logic (and after all what we're supposed to be modelling is the energy performance of the building).  The net primary energy consumption of the building is the electricity imported at a primary energy factor of 1.501 less the PV generated electricity exported which should have a primary energy factor of 1.0. 

A minimum carbon emissions requirement is retained in addition to the primary energy requirement as this remains an important consideration for government and there is concern that certain solutions could produce low primary energy figures with high carbon emissions - for example heating oil and coal both have low primary energy but  high associated carbon emissions.

Finally, the current fabric efficiency requirement is dropped to make way for a new householder affordability target, with fabric efficiency now considered adequately protected by tougher minimum heat loss standards for building elements.  As discussed, electricity has low and falling primary energy and carbon emissions factors, and government is concerned that direct electric heating would be a viable option for meeting both the carbon and primary energy targets, but with the side-effect of saddling occupants with too-high energy bills.  To guard against this the new affordability rating is likely to be set at a level that means direct electric heating would only be an option when combined to other measures to reduce electricity bills such as increased thermal insulation, PV panels or battery storage.

2. Uplift of the Minimum Standard

The minimum performance standard is defined by publishing a build specification (insulation levels, heating system, light fittings, microgeneration technologies) to be used by the developer to model a 'notional house'.  The developer then has to design the house they plan to build to produce modelled carbon emissions and primary energy lower than that of the notional house.  It's an elegant way to allow the developer complete freedom in design but control the outcome.

 The consultation proposes two options for the minimum performance standard:

Option 1 - "Future Homes Fabric"

This specification would produce a 20% reduction in CO2 emissions when compared against the specification in current building regulations .  The standard is based on a notional home with improved insulation measures (including triple glazing) plus a gas boiler and waste water heat recovery.

The estimate given in the consultation is that this option adds £2557 to the build cost of a semi-detached house and saves households £59 a year in energy bills.  (Payback 43 years)

Given that by 2025 the Future Homes Standard needs to be at a 75% of the carbon emissions of 2013 regulations, 20% does not seem like a big enough step - it only brings England roughly to the level that  Scotland's developers have been achieving since 2015.  DCLG appears to agree, stating that it's preferred option is Option 2.

Option 2 - "Fabric plus Technology"

In this option, the specification of the notional house is set at a level to produce a 30% reduction in carbon dioxide emissions across the build-mix.  The specification has slightly lower insulation than Option 1 plus waste water heat recovery and a solar PV system.

SAP 10.1 Appendix R outlines the specification for the notional house.  The size of the PV system in kWp for the notional house is 40% of the building foundation area divided by 6.5.  So for example for a typical two-storey semi-detached house of total floor area 85m2, this would be

[40% x (85/2) ] / 6.5 = 2.6kWp (around 9 or 10 panels)

DCLG's modelling estimates that building to this new notional home adds £4847 to the building costs and saves £257 a year in energy bills.  (Payback 19 years).

The costs used in the accompanying impact assessment for solar PV are £1,100 fixed costs plus £800 variable per kWp installed.  This implies the following installed costs:

1kWp  £1,900  £1.90/kWp
2kWp  £2,700  £1.35/kWp
3kWp  £3,500  £1.17/kWp

Solar is a fast-paced technology and it would be unusual if a government consultation were to use up-to-date cost information.  My understanding is that solar installers operating in the new-build sector are typically charging an installed price the range of £1.10-£1.20/kWp for four or five panel systems (1 -1.25 kWp).  So it is likely that the costs of Option 2 are over-stated relative to Option 1.

If the solar industry can provide evidence that costs in Option 2 are over-stated, it will make it easier for government to hold the line on its preferred option.

DCLG reckons that Option 2 might result in developers moving away from gas boilers to air-sourced heat pumps.  A specification based on ASHP alone over-shoots the Option 2 target at a lower cost than the notional house (£3,134), which would allow some relaxation of the fabric for further cost savings.  The experience in Scotland suggests that housebuilders will avoid ASHP for as long as possible because customers neither like nor understand them.

3. Heat Pumps - "Lord Make Me Chaste - but not yet!"

The consultation steps away from banning gas heating in 2020, this change is timetabled for 2025.  However it does impose extra conditions on wet space heating systems to ensure that they are 'future proof'.  In practice this will mean that 'emitters' (normal people call them radiators) will be increased to a size that would work at lower temperature, and so the house would be suitable for later conversion to a heat pump heating system without the cost of replacing all the radiators.

A side effect of this requirement is that increasing the cost and space requirements for wet systems could push developers towards direct electric heating with panel heaters, simple underfloor electric or radiant heat panels.  The removal of the entire cost of the wet heating system would offset a considerable chunk of the costs for the additional measures (PV solar, more insulation) needed to stay within the householder affordability target.  A house without a wet heating system would be low on maintenance and low cost to build, coupled with better insulation plus lower cost PV and battery storage to keep bills down this could become a favoured option for new homes.

4. Transitional Arrangements

This proposed change is likely to cause significant concerns at housebuilding companies.

The current situation is that as new Building Regulations come into force, they apply only to whole developments as new planning applications are lodged with local authority planning offices and work has started on site.

The practical outcome of this rule is that new homes are still being built to versions of building regulations in force many years ago, because:

(a) Developers rush to submit planning applications in the run up to new regulations coming into force, banking large numbers of homes to be built under the old regulations
(b) Large sites of many hundreds of homes are built out over many years, but there is a site-wide application of the regulations.

This was clearly demonstrated by the 2015 Scottish building regulations change, where it is only now (nearly 4 years later) that pretty much all new sites coming forward for tender require solar.

The consultation proposes moving from a site-based application of building regulations to one based on specific buildings.  Large developments spanning many years would have to redesign to meet new building regulations that apply as the building is being built.

Housebuilders will be alarmed by this proposal because all developments still under construction under 2013 regulations will be caught in this net.  The land for these sites would have been bought at a price based on the construction costs expected under those 2013 regulations and the housebuilders will argue that this measure is a retrospective action that will harm their profitability.  How much sympathy there is for the housebuilders having to shoulder the extra costs remains to be seen, when government has been subsidising the housing market through the Help to Buy scheme and the chief executives of some companies have been given bonuses amounting to £10,000 per house built .

 5. Other Stuff

Solar PV on Apartment Blocks

 In the original SAP10, PV on apartment blocks connected to the landlords' supply did not improve the DER of the individual apartment, whereas in SAP 2012 the carbon savings were apportioned across apartments by floor area.  The Solar Trade Association argued that connection to Landlord's supply was often by far the most cost-effective and practical way to install solar on apartment blocks, that the changes would force systems to be split into mini-systems serving each apartment at great cost, and that the carbon savings were real.  It seems that this argument has prevailed as SAP 10.1 has changed the treatment of solar PV in apartment blocks back to as it was in SAP 2012. 

Heat Networks Get a Free Pass

SAP 10 introduced punitive heat losses on district heating networks, based on evidence that large amounts of heat are lost in the underground pipework of these systems (40-50% even for best practice new ones).  It seems that government thinks that heat networks will be an important part of the energy future, and that their drawbacks should be ignored.  So a fudge-factor (they call it a 'technology factor') is applied to buildings that use a heat network.  These are allowed to emit 45% more carbon for heating and 5% more primary energy.

The Government's enthusiasm for heat networks is baffling considering that there is a perfectly good electricity network that loses far lower energy in transmission and is already connected to every single property.  A heat network is not of itself low carbon - it depends what you're doing to make the heat.

The Future Homes Standard - for 2025

The second part of the consultation is some early range-finding questions for the Future Homes Standard due to come into force in 2025.

The government reckons a 70-80% reduction in carbon emissions compared to current housing is possible.  This will be achieved by adding low carbon heating (heat pump or district heating) to the Option 1 fabric proposed in the 2020 regulations, and relying on further decarbonisation of grid electricity to do the rest.  Government is seeking views on whether this is achievable.

Local authorities which have been using planning powers under the Planning and Energy Act 2008 to require developers in their region to build to standards above those of the current building regulations.  This role for local authorities has been crucial for pushing forward on energy efficiency during a period of inaction from Westminster.  The consultation considers whether these powers should be removed alongside the 2020 regulations, the 2025 Future Homes Standard or not at all.

Summary

This change is significant and there's still some modelling to be done to figure out which packages of technology developers are likely to favour, but given the simplicity and popularity of solar it seems unlikely that the technology will not be a big winner from these changes to building regulations.

The Smart Export Guarantee - Will we get a Fair Price?

Image: Viridian Solar

Selling Green Electricity For A Quote-Unquote Fair Price 

People who know the solarblogger will tell you he's a bit of a swot.  Invited to participate in a panel discussion on the Smart Export Guarantee (SEG) at Solar and Storage Live 2019, he made sure to do his homework.  So it was that reading through the government's response to the SEG consultation, one thing kept leaping off the page.

The use of quotation marks to bracket the words "fair price" in the document.

And indeed the government's representative on the panel, William Marks from BEIS did exactly the same thing - that thing people do when they curl the first two fingers on each hand to imply quotation marks - whenever he uttered the words"fair price".

Before we get into the problem with setting a "fair price", let's recap the SEG.


The Smart Export Guarantee

By January 2020, all electricity suppliers with more than 150,000 domestic customers are required to offer at least one tariff that pays generators for exported electricity.

This applies to PV generators up to 5MWp capacity, also onshore wind up to 5MWp and anaerobic digestion, hydro-power and micro combined heat and power up to 50kWp.

Electricity suppliers with fewer than 150,000 domestic customers may choose to participate but are not required to do so.

The government has not set a value for the tariff, apart from it must be more than zero.  The tariff can be fixed or the price can float around, for example tracking dynamic wholesale prices.

Exported energy must be metered with a meter capable of reporting exports on a half hourly basis.
Generators already accessing the Feed in Tariff can join the SEG if they give up their deemed export payments under the FiT.

There will be no central register of SEG installations.

Suppliers must be satisfied that installations are safe, which in practice means they must be certified to MCS or equivalent.

A "Fair Price"

The government had proposed in the consultation that the electricity companies could set the price that they bought exported electricity at, subject only to the proviso that the tariff was always positive, i.e. higher than zero.

A number of respondents to the consultation, including the Solar Trade Association had raised concerns at the government's proposal to allow the electricity suppliers themselves to set the price that they wanted to pay for electricity exported by small generators (for example homeowners or businesses with PV solar).  They worried that the electricity suppliers would not set a fair price and called for a floor price.

In their response Government ignored these concerns and pressed on with letting the electricity suppliers decide the price.

And every reference to people asking for a "fair price" was put in quotation marks.

As if to say that these people didn't really get it.  Didn't understand what the grown-ups at BEIS did, that only markets can set a fair price.

The trouble with BEIS position here becomes immediately evident when you consider how a market arrives at a fair price:

A Fair Price is defined as the price for an item or asset agreed upon by a willing seller and a willing third party buyer, assuming both parties are knowledgeable and enter the transaction freely.

So, apparently unbeknownst to the big brains at BEIS we appear to be missing a pretty crucial element of the conditions required to arrive at a fair price by market mechanisms - a willing buyer that enters the transaction freely.  The very existence of the SEG proves that the electricity companies are NOT willing buyers -  they are being forced to enter into the transaction by regulation.  If they were willing buyers they would already be buying the electricity without the need for BEIS to intervene.

And why should they be willing buyers?  Every additional solar PV installation that the SEG helps incentivise is another house or office or factory needing to buy less electricity from the electricity suppliers for its own use.  Yes, each solar PV system represents an opportunity for the electricity suppliers to buy the excess generation, but the flip side is that they also sell these buildings less energy.  The electricity companies are completely conflicted.

From installing smart meters, to insulating people's homes and now the SEG, government never seems to learn.  It keeps coming up with ideas that require the energy companies to destroy demand for their product, and is surprised when the result is foot-dragging, delays and half-hearted, bare minimum efforts to comply.

In a fit of optimism, the Solar Trade Association created a web page to allow consumers to compare all the SEG offers that were being brought to market by these unwilling buyers of electricity.  As of today only one company - Octopus Energy has come forward with an SEG tariff.

I really wouldn't be surprised if  the big old dinosaur suppliers were to leave it right until the 11th hour and bring forward unappealing SEG offers priced at £0.001p (really - no mistake on the zeroes here).

Of course BEIS didn't need to pick a price themselves.  They could have looked for an analogous market where there are willing buyers - the half hourly settled wholesale market.  BEIS could have set a floor price based on this, or a period average of it.

Credit to Octopus for being first into the market with an attractive offer.  Clearly the rapidly-growing, so-called challenger energy suppliers are unencumbered by legacy systems and thinking and see an opportunity to attract valuable customers by requiring an SEG customer to also transfer their supply-side business.  The big six need to watch out, else they go the way of the dinosaurs and leave the energy market to these new, fast-moving mammals.

Solar Thermal Innovators

Are These Solar Thermal Entrepreneurs Going to Move the Dial for Solar Thermal?

At the "Setting Sights on Scottish Solar 2019" conference this week in Edinburgh,  we heard from three individuals that are hoping that their innovative ideas are going to set the solar thermal market alight again.

Since the glory days of 2010 when, according to statistics from the Solar Trade Association, the UK installed nearly 90,000 square metres of solar thermal panels the market has reduced in size every single year.  Only 7,000 square metres were installed in 2018.   In an introduction to the session, the Chair of the STA's Solar Heating Working group, Dr Richard Hall revealed that this is not simply a UK phenomenon - solar thermal is in retreat in almost all international markets.

Annual solar thermal sales in the UK according to statistics compiled by STA

Solar PV panels continue to decrease in cost and increase in power output.  Excess PV-generated electricity can be inexpensively diverted to heat hot water in your tank via its immersion heater but can also charge large batteries to provide evening electricity use, and prevent a trip to the petrol filling station by topping up your electric car.  Where is the place for solar thermal in this brave new world of smart electricity grids and electricity 'pro-sumers'?

Our three brave entrepreneurs each believe that they have found a new angle that can make a difference to the appeal of solar thermal panels.

Image: SolarisKit

Faisal Ghani of Solariskit  sidesteps the problem of declining traditional markets for solar thermal by attempting to create a completely new market for solar water heating in sub-saharan Africa and other hot countries.  His 'flat-pack' solar panel features a black slinky hose arranged in a conic spiral and contained within a clear plastic pyramidal cover.   It is intended to be low-cost and simple to install and maintain.

solarblogger says: Faisal has come up with a really striking geometry for a solar collector and it is clear that the material costs could be low, if SolarisKit can get enough volume in manufacture.  It's low-weight, flat-pack design will doubtless be helpful for supply chains across rough terrain.  However it will be up against the most cost-effective of solar thermal panels - the thermosyphon Chinese combi systems that include a panel and an outdoor cylinder at rock-bottom prices.

Image: Soltropy

By contrast, Stuart Speake from Soltropy thinks that dairy farmers with a large hot water demand are ideal customers for his solar panel, and his business appears to be the furthest along of the three in that is financed by product sales rather than investors and grant money.  Soltropy's evacuated tube solar collector is freeze tolerant.  Water heated by the evacuated tubes as it is pumped along a copper header pipe returns down a second pipe made from a flexible, compressible material that runs inside the first.  If the water in the pipe freezes, the inner compressible tube is squashed up to prevent the pressure build up that would normally cause pipes to burst in freezing weather.  A solar thermal system that does not require antifreeze has greatly reduced maintenance requirements.


solarblogger says:  I love this idea- it achieves the same goals as the old Solartwin freezable absorber, but elegantly avoids that product's serious performance compromises by removing the compliant tube from the heat transfer pathway.  There is no doubt that the breakdown of antifreeze over time is the source of many of the reliability issues of solar thermal, and that many customers simply don't do preventative maintenance on their solar heating systems.  Being able to reliably remove antifreeze from solar thermal is a big step forward, but I'm not sure that on it's own it is enough to change the fundamental attractiveness of the technology.

Image: Senergy

We also heard from Christine Boyle of Senergy, whose company has developed an all-polymer solar thermal panel.  The absorber, fluid flow channels and panel sides are extruded from specially developed material consisting of  carbon nanotube loaded polymer.  This new material has high softening temperature compared to most other plastics, improved thermal conductivity and increased strength. The latter of these properties of the material allows it to be made with thinner walls which also enhances heat transfer to the working fluid.

The extrusion is finished off with injection moulded end-caps to complete the fluid circuit and a clear polycarbonate coverglass is added on top.  There are inevitably some performance penalties compared to conventional solar collectors, the insulation is de-rated to limit the stagnation temperature and the absorber is not spectrally selective.  The energy yield will be reduced to some extent for most applications, but  Senergy claim that their panels are 50% of the price of regular solar thermal panels, which if it is borne out would represent a very significant saving.

solarblogger says: All-polymer panels have been seen as the holy grail of low-cost solar thermal by many people for some time.  Other advocates include Aventa Solar from Norway, which has developed an all-polymer absorber, but I really like the design for manufacture that Senergy has come up with.  However, I remain pretty sceptical that a lower panel cost will be a silver bullet for solar thermal.  Conventional solar thermal panels  made in vast quantities, for example by GreenOneTec  leave the factory for less than EURO 100/m2.  Consequently the manufactured cost of the panels represents less than 10% of the price of a typical domestic-scale installation, with other costs such as customer acquisition, roof access, piping, insulation and controller accounting for the rest.

So what do you think, are these three solar thermal innovators going to be the next big thing or are they trying to push water uphill in such adverse market conditions for solar thermal?

Why Choose a Career in the Solar Industry?

Why should anyone take a job in the solar industry?  It may seem like a strange time to be talking about a skills shortage just after Feed in Tariffs have closed, government is yet to set out a clear route to market for exported electricity, and in the week that Ikea pulled its domestic solar offer in the UK.

But that's what I'm hearing from colleagues.

They talk of job adverts sitting open for months on end, difficulty getting electricians to take roles in solar and people moving out of solar divisions and back into regular M&E contracting or roofing.

The challenge, I believe, is one of perception - that solar is just a fad - lots of installations while the government paid for them, but all gone today, right?

Feed in Tariffs were cut, and cut again, and have now been taken away.  Solar farms once popped up like mushrooms and then years went by without ground being broken for a new one.  Taxes have been imposed on businesses with solar panels, higher electricity standing charges are proposed for people with solar on their homes.  Solar boom then bust, and bust and some more bust is the diet that the news media has fed the public.  Little wonder colleagues across the industry are saying that attracting talent right now is proving to be a challenge.

Our industry has driven forward at a pace that has regularly sent waves of panic through those government departments tasked with supporting the transition to a green economy.  Support scheme after support scheme that looked well-designed and rational when announced were quickly overtaken  by the relentless and rapid innovation of the solar sector.  As solar costs fell, financial returns rose, deployment volumes exploded and government support schemes ran out of money.  Spain, Italy, Germany, UK - the list of countries rapidly back-tracking on support schemes goes on.

Economies of scale, automation of manufacturing, ever-higher solar panel efficiency, new financing models, reduced risk for investors - all these have driven down the cost of solar and increased the financial attractiveness of the technology.  Crucially, this happened at a speed that governments were unable to respond to.  The result was often a knee-jerk approach to policy development.

Our industry has often, by necessity, been complicit in the tone of the media coverage, publicly regretting the reckless treatment of theindustry by our government, while at the same time talking up the long-term prospects.  Inevitably, press coverage focused on the negative messages.  Faced with cliff-edges created by government flip-flopping, what would you expect a solar installation business to do, apart from tell people to 'get in quick' before they take it away?  Regrettably, the industry's own marketing has also helped create the message that solar is only a 'fad'.

No more!  The era of solar as 'subsidy-junkie' is over.  A tipping point is already here.  In more and more applications, in more and more climatic zones, solar stands without need for grants or support schemes.  Every new innovation that drives down the cost of solar energy simply expands the number of applications where it pays for itself and grows demand for solar equipment, installation and maintenance services.  As demand grows, economies of scale increase, which drive down costs again and a virtuous circle is created.

In sunny climates solar already competes with all othersources of electricity generation at wholesale prices.  In less irradiated places like the UK solar-generated electricity is cheaper than retail electricity, particularly large scale solar applied to commercial buildings or as ground arrays with an energy supply agreement with a large consumer of electricity.

For new buildings reaching for ever higher energy efficiency standards and for low energy refits of existing buildings solar is a necessary demand-reduction measure, reducing electricity consumption from the grid.

Millions of new electric vehicles will achieve similar results for the cost of batteries.  These vehicles, each with a range that far exceeds most people's daily requirements, will store electricity generatedduring the day and release it at night, enabling ever-higher quantities of solar on the electricity grid.

As well as electrifying our transport, it is now widely accepted that the heating of our buildings must also be electrified.  In a move away from carbon-emitting gas and oil - we will be using either heat pumps or direct electric heating and high levels of thermal insulation to keep our buildings warm.  Demand for electricity will increase significantly - greater efficiency of appliances and gadgets will only offset the increase in their number.

So the future for solar is bright.  Anyone considering a career move into the solar industry should consider the following points:

1. They would be joining a growth industry with strong fundamentals, an industry that will support a long career. 
2. Work that provides meaning and clear social benefits is more and more important to everyone, but especially younger people setting out on their careers. The solar industry offers socially rewarding work, where you feel part of the solution rather than part of the problem in the fight against global climate change. 
3. Roles in the solar industry offer transferable skills such as project management, risk management, international supply chain development, electrical and structural design.
4. You will become more popular at parties!  When asked 'so, what do you do?' the solarblogger can attest that saying you work in the solar industry is a real conversation-starter, in stark contrast to the conversation-killer of a previous job in 'instrumentation for genetic analysis'....

So what do you think?  Are you finding it difficult to recruit?  If so, what do you think the industry could and should do about it?

The Smart Export Guarantee Scheme (SEG)

Why is central government continually surprised that when the big energy companies are asked to ‘do the right thing’, they instead do what is right for them?

Central government seems to love handing responsibility for delivering energy reduction targets over to the big energy suppliers.  The scheme names come and go -  CESP, CERT and ECO – but the common factor has been to require energy companies to invest in energy efficiency measures such as loft insulation, and cavity wall insulation for homes.

Pause for a moment to think about it.  You’re asking a business to do things to reduce demand for its own product – energy.   How surprised should be we be that that foot-dragging, missed targets and ineffective measures have been the result?

In 2014, many of the energy suppliers were fined for failing to meet their targets to install insulation. British Gas was fined £11million, a development which their PR department brazened-out as a charitable donation.  One is left wondering if the energy companies see these fines a small price to pay instead of helping people spend less on energy.

With the government's new proposals for a Smart Export Guarantee (SEG) are we again about the make the same mistake by asking the big energy companies to decide what the ‘market price’ for electricity exported by householders and businesses with solar panels?

Why we Need a Smart Export Guarantee

Many people in the solar industry that I speak to have pretty mixed feelings about the Feed in Tariff.  They recognize the transformative effect of 19 years of subsidy on the industry, helping it to achieve scale and cost-competitiveness with fossil energy.  At the same time, they regret the reckless way that the scheme has been managed.  Successive ministers at DECC and then BEIS have inflicted real pain on many good people who had invested their time, energy and money in solar businesses an effort to be part of the solution.

As a consequence, the industry is genuinely looking forward to a future where it no longer needs ‘help’ like that from government and the technology can stand on its own feet as a significant contributor (maybe the dominant contributor worldwide) to the clean energy revolution.

It remains crucially important for the sector that householders and businesses that invest in solar are able to sell generated solar energy that they cannot use themselves.  This makes possible efficient and cost-effective solar systems that minimize the cost of energy rather than being sized to just meet demands in the building at times of peak output.

So, as the Feed in Tariff (FIT) draws to a close on March 31st, government is consulting on a new scheme, the Smart Export Guarantee (SEG) – that requires larger energy suppliers to purchase excess solar energy from small generators at a fair market price.

There is much to welcome in the proposals for SEG

• the Microgeneration Certification Scheme is thrown a life-line as the only way to qualify,
• there is to be no requirement for the building to achieve a certain energy efficiency level (EPC), a requirement in FIT that excludes many older and listed properties
• installations that occur after the FIT closes but before the SEG is available will be able to join the SEG as soon as it opens
• export will be metered and not estimated (as in the FIT), rewarding people that install larger systems
• a central database of solar installations will be maintained beyond the FITs
• the high price for bought in electricity compared to the low value of exported will encourage the deployment of battery storage and electric vehicle charging (when compared with other arrangements, for example net metering)

Concerns About the Detail

However, there are two big concerns with the proposals as they currently stand:

1. Smart metering IT systems are not up to the job at present
2. The reliance on conflicted businesses to set a market price

Smart Metering Systems

At recent Solar Trade Association meetings we were astonished to hear that the SMETS1 smart meters that have so far been installed ‘go dumb’ as soon as you change supplier.  Although second generation SMETS2 smart meters fix this problem, the IT infrastructure that collects the data is not yet ready to a point where this data can be shared between an energy supplier and a separate company that you have signed your SEG deal with.

It would be just like government to say ‘well, we’ve done our bit’ as they launch a completely theoretical SEG scheme, which nobody can use in practice because the billing arrangements are not ready.

That’s why we need something - dare I call it a ‘backstop’ - that makes the SEG work from day one and creates an incentive for energy companies to sort out the IT, rather than having a strong incentive to drag their feet and take as long as possible to prevent the SEG ever happening.

A backstop could look a lot like the export tariff part of the current Feed in Tariff:

• A fixed value, for example £0.04 /kWh
• A deemed export 50% of generation 

This would create a strong incentive for the energy companies to pull out their fingers because they are likely to be over-paying for generation where they cannot meter it.

Setting  a Market Price

Electricity costs vary during the day as supply and demand varies.  The industry would be absolutely delighted if export was paid a fair market price at the time of export – that is a price set between a willing buyer and a willing seller.

The preferred option in the SEG consultation is to simply leave it to the energy suppliers to set the price, with the only control being that the price is higher than £0.00

My concern is that the proposed mechanism will not result in a fair market price, because the companies that are being relied upon have every incentive to keep the amount of solar installed as low as possible.  They are conflicted because every time a household or business installs solar it will buy less power from the energy suppliers.  Setting a higher price for exported energy would make solar a more appealing investment and harm the business models of the energy suppliers.

The energy companies do not meet the requirement of being a ‘willing buyer’ for the power and a fair market price will not result. There is a market failure and government cannot leave pricing the invisible hand of the market – except that it can, it just needs another way.

The ‘market’ already sets a price for electricity – and one that is free from the conflicts set above.  For example market exchange Nordpool publishes day ahead pricing for wholesale electricity on an hourly basis.  These prices could be better taken as the ‘market price’ for electricity between a willing buyer and a willing seller.  Energy companies should be required to purchase from microgenerators at the wholesale market price.