Wednesday, 25 September 2019

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.

Wednesday, 4 September 2019

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?