SAP 10 - Big Changes Afoot for Solar

Image: Viridian Solar

A new version of the Government's Standard Assessment Procedure (SAP) for the calculation of energy use in dwellings has been published and it contains a number of changes to the way the impact of solar technologies is assessed. 

The key outputs of the calculation described in SAP are:

Dwelling Emission Rate (DER) - the carbon emissions from energy use to heat the house, provide hot water and power lighting, pumps and ventilation. It is expressed in kgCO2 per square metre of floor area per year.

SAP Score - a figure rating the energy costs normalised by floor area to heat the house , provide hot water and power lighting, pumps and ventilation. A house with a score of 100 has energy cost of zero each year, a house with a score of 0 has huge energy costs. The scores from 0-100 are divided into bands corresponding to EPC ratings from 'A' to 'G'

Fabric Energy Efficiency (FEE) - the space heating requirements for the dwelling in kWh/m2

Energy Consumption per Unit Floor Area - which can exclude plug-in appliances (as the above measures do), or include an allowance for appliances and electrical equipment.

Not Just for New Build

SAP is used to calculate the energy efficiency of newly built homes to meet Building Regulations. New homes must currently have a Fabric Energy Efficiency and Dwelling Emission Rate below a mandatory maximum.

Through Reduced Dataset SAP (or RdSAP), the calculation is also used to generate Energy Performance Certificates for existing properties. Over time the SAP rating of homes has become embedded in a range of government initiatives and incentives, for example EESSH in Scotland requires that all social rented homes in Scotland achieve a minimum SAP score by a certain date, and access to preferential Feed in Tariffs are linked to the house having an EPC rating higher than D.

What's Changed?

Carbon Intensity of Grid Electricity

The electricity grid has decarbonised with the move away from coal burning power stations and greater input from gas fired generation and from renewables (see my blog on this subject here). The proposal is to reduce the carbon intensity of electricity from 0.519kgCO2/kWh in SAP 2012 to 0.233 kgCO2/kWh in SAP10.

Discussion

This is a huge (55%) reduction compared to the current version of SAP, and lower than the figure consulted upon (0.398 gCO2/kWh). However, it is only a reflection of the huge progress that has been made in decarbonising the grid.

The impact for solar photovoltaics is that solar systems will need to be more than double the size of current systems to produce the same carbon benefit in the calculation, which could reduce the competitiveness of solar PV as a means of meeting building regulations. SAP10 will only be brought into use for the next update to the Building Regulations, and government will need to carefully consider whether it is now time to change the primary focus of the regulations away from emissions and towards energy consumption (like for appliances).

For example, emissions from mains gas will be 0.210kgCO2/kWh in SAP10. When you take into account efficiency losses from burning gas in a boiler to heat a house, developers will be able to achieve the same dwelling emissions rate using simple electric heating instead of gas - for example panel heaters and a hot water tank with immersion heater. It may be possible to remove the whole wet heating system and gas supply from new homes, yielding considerable construction and maintenance savings, but possibly saddling house buyers with unaffordable energy bills (unless, perhaps, solar is also fitted).

Export of Solar Generated Electricity

The value of exported electricity in SAP10 is 3.8p/kWh, whereas the cost of grid electricity is 16.6p/kWh on standard tariff. In SAP2012, exported solar electricity is assumed to be of the same value as electricity bought by the householder (which was dubiously justified by the existence of Feed in Tariffs - despite that in solar schemes for social tenants the tariffs went to financiers).

SAP2012 also assumed that 50% of generated electricity was used in the house (called the beta-factor) and 50% exported.  While this generally accepted assumption has started to look rather shaky as installed solar systems got larger, it didn't really matter because the value of exported electricity was the same as the saving made for energy not bought from the grid.

For SAP10, a more sophisticated treatment of the beta factor is used. The proportion of energy used in the house is now a function of the size of the solar system's energy output as a proportion of the energy demand. Larger solar systems attached to small energy demands will have a smaller beta factor and smaller solar systems attched to a large energy demand will have a higher beta factor. Adding a battery into the property will increase the beta factor.

PV diverters can also contribute towards energy for hot water in SAP10, so long as a battery is not present and the hot water cylinder has a sufficient volume (more than daily demand). 80% of generation, less the beta factor is available for input to the hot water cylinder, and the benefit is further diminished by a factor of 0.9 to take into account increased cylinder losses due to higher average storage temperatures.

Discussion

None of these changes affect the Dwelling Emissions Rate used for current building regulations. Solar PV saves carbon whether the electricity is used in the house or not.

These changes do, however, impact the SAP score and EPC band, as they impact on the calculation of the energy bills associated with the house.

The calculation of the beta factor was derived from a relatively small data-set, some of which was provided to BRE by the Solar Trade Association. An industry group is working to develop a much more comprehensive set of data to improve confidence in the value that SAP produces and to feed into the Microgeneration Certification Scheme guidance to solar / battery installers.

Shading

The PV shading penalty has been increased, that for solar thermal remains unchanged.

SAP2012 applies the following penalties to energy production - Modest shade 0.8, Significant shade 0.65, Heavy shade 0.5

SAP10 modifies as follows - Modest shade 0.5, Significant shade 0.35, Heavy shade 0.2
As an alternative the MCS overshading figure can be used.

Discussion

Industry were concerned about a complex two-step shading calculation process that was proposed in the consultation, and it seems that these concerns were noted, albeit with what look like penalty default values for systems with shading.

Hot Water Demand

A new, more complex calculation for domestic hot water demand reflects the growing importance of this area of energy consumption as increased insulation levels drive down space heating requirements. This is an area that the solar industry has been lobbying for change.

The new calculation takes into account the higher flow rates and lower inlet temperatures associated with the now more common mains hot water showers (either from pressurised hot water cylinders or combi boilers), when compared with header-tank fed systems.

Inlet temperatures have also been reduced for both header tank and mains fed systems as a result of input from the solar industry (by 2-3 degrees).

Discussion

I calculated a 10% increase in hot water demand for mains pressure fed systems compared to SAP2012. The decrease in inlet temperature will add a further 5% or so to the energy required to heat the water.

An increase in the assumed hot water energy will be welcomed by the solar thermal industry in particular, but higher general energy consumption will aid all energy producing technologies.

Solar Thermal Space Heating

In previous versions of SAP, solar thermal could only be applied to meeting hot water demand, which created an restriction on its potential contribution to household energy demands.

The Solar Trade Association proposed EN 15316-4-3 as a potential route to the inclusion of solar space heating in addition to solar water heating, and provided BRE with guidance and assistance in assessing the new method.

The published version of SAP 10 did not include details of the new method as testing was not complete at the time of publication, so the solar thermal appendix currently has holding text. I will be able to discuss more about how the new calculation works and the results it gives once the final version is revealed.

Discussion

The solar industry will welcome that SAP includes solar space heating. Less for the opportunities it brings in new build (where space heating demands are limited due to high levels of insulation), rather for the possibilities it opens up to improve the EPC ratings of existing properties with high space heating demand. The domestic Renewable Heat Incentive only supports solar water heating at present due to there being no approved method of 'deeming' (calculating) the expectd savings. The new SAP methodology will open up the enticing prospect of solar themal payments under dRHI linked to heat generated for both water and space heating.

A Brief History of UK Energy Efficiency Policy

The track record of UK initiatives to encourage us to make our homes more energy efficient has been patchy to say the least.

 
The schemes come and go, but the results are depressingly consistent.

ECO

A range of government schemes have required the larger energy providers to invest in energy efficiency measures such as loft and cavity wall insulation for homes. The current version is the Energy Company Obligation (ECO), but before that we had CESP and CERT and others. This bizarre concept - making a business responsible for implementing measures that reduce demand for its own products - seems like putting a fox in charge of security improvements to the chicken coop. It is perhaps unsurprising then 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 brazenly promoted as a charitable donation.  One is left wondering if the energy companies considered these fines a small price to pay rather than helping people spend less on energy.

Measures installed under this scheme crashed by more than 80% after 2012 when a panicking George Osborne announced huge cuts following a Labour proposal to cap the prices people pay for energy.

Green Deal

Greg Barker's Green Deal scheme to 'transform the energy efficiency market' was in trouble almost from the start. Having told us that he'd struggle to sleep if the number of home improvements it financed was less than 10,000 in the first year, the actual number came in at 626.

In what now looks like a rather desperate effort, Greg managed to convince the Treasury to throw in a few hundred millions to the Green Deal Home Improvement Fund (GDHIF), to give a further cash-back grant to householders who installed energy efficiency measures. Most of this stop-start funding was spent on boiler replacements (and how many of these would have happened anyway as they reached end of life is open to debate). The scheme was ignominiously withdrawn after writing only a few thousand energy efficiency loans.

The offer to consumers was complicated and unappealing. The interest rate was a hefty 7%, which compares unfavourably with mortgage finance. Only measures that met the so-called 'Golden Rule' could be fully financed - where the estimated savings on energy bills were greater or the same as the repayments collected through your energy bills. What this all added up to was - go through all the hassle of having all this work done in your house and your energy bills will be about the same as they were before.

The Green Deal Finance Company is now in private hands, but it is still unclear how the new owners will address the fundamental shortcomings of the scheme.

Feed in Tariff and Renewable Heat Incentive

These schemes pay for renewable energy - power and heat where homes and businesses install technologies such as solar PV panels, solar thermal panels, heat pumps and wood chip burning stoves in their homes or businesses. The intention was that these would provide long-lasting and stable support for renewables after a series of start-stop grant schemes that had preceded them.

The Feed in Tariff (FIT) is due to close in 2019 after a tumultuous few years in which government struggled to keep up with rapid reductions in the cost of solar PV panels. As a result of the payments being fixed while the costs fell sharply, the financial returns from the scheme rose rapidly. Returns of 15-20% were not uncommon, payback periods as short as four or five years reported. As more and more people joined the party the budget ballooned. Cue panic in Whitehall, an over-correction on the tariff rates and a return to the boom-bust market from which the scheme was supposed to mark a departure.

The Renewable Heat Incentive (RHI) for heat generating renewables came in after the first FIT crisis, and as a result was designed with many more controls to stop a runaway deployment if the tariffs were set too high (with the notable exception of Northern Ireland where the executive for some reason removed the controls and blew the budget - the whole Northern Ireland budget!). In consequence, the RHI suffers from a paucity of ambition and has only resulted in a few tens of thousands of households replacing their heating systems with a low carbon technology (33,500 new domestic installations of solar thermal, heat pump and biomass boiler from April 2014 to November 2017)

MEES 

The Minimum Energy Efficiency Standard (MEES) applies in England and Wales and requires private landlords of both domestic and non-domestic properties to ensure that their properties meet a minimum level of energy efficiency.  Buildings that do not cannot be re-let after April 2018 and cannot be let at all after April 2020.

Unfortunately, as I revealed in an earlier blog, a landlord can apply for an exemption if they cannot do the required improvements without upfront costs, which relied on the Green Deal being available.  But this has now gone, leaving a loop-hole in the legislation so large you could drive an un-insulated house with broken windows through it.  Similar legislation being consulted upon in Scotland only deals with domestic properties, but sensibly places a limit on the maximum cost for a landlord.  So far, there's no apparent interest in fixing this mess at Westminster.

EESSH

The Energy Efficiency Standard for Social Housing (EESSH) is legislation in Scotland that requires social housing providers to ensure that their housing stock is all above a minimum energy efficiency level by the end of December 2020, with an intention to gradually ramp up the required levels over time.

EESSH looks like its already producing some significant investments in Scottish social housing.  It really does look like the one to watch, at least of all the schemes listed.

Is There Another Way?

What all these schemes have in common is that they deal piecemeal with the challenge of making our buildings more energy efficient. They imagine that the 'journey' to having an energy efficient home fit for the future is taken one small step after another. First insulate your cavity walls and loft. Then change your boiler to an efficient new one. Have some solar panels on that roof. Now replace your whole radiator system take out your efficient new boiler and fit a heat pump.

Many also rely on government spending, a fickle foundation upon which to base investments in housing stocks or to build long-term business plans (as those of us in the solar industry will attest).

With the demise of the Green Deal, and no sign of anything to replace it, there's a huge hole in the government's policy to meet forthcoming carbon budgets. This is not something that has gone unnoticed by the government's own Committee on Climate Change (CCC), which in its 2017 report gave government policy for residential energy efficiency a red light for able to pay households and an amber light for low income households.

It is into this gaping hole left by the UK government inaction and disinterest springs Energiesprong.  This is a concept that originates in the Netherlands that could totally revolutionise the way we approach domestic energy efficiency and it is the subject of my next blog.

Is RHI More Trouble than it’s Worth?

To get support from the domestic Renewable Heat Incentive (RHI), there are some hoops it’s necessary to go through, but how much do these add to the cost of a solar thermal installation?

If you install a solar thermal system in the UK you can receive financial help from the government’s Domestic Renewable Heat Incentive (RHI).  RHI payments vary depending on factors such as the size of the solar panels, their location and orientation and especially the hot water demand of the house (which is taken from the number of people who live there).  It can be worth between £1,500 and £3,500, paid out over the first seven years.  In addition to the payments householders also benefit from savings on energy bills, the value of which are much higher the RHI payments over the long life of the solar heating system.

In order to qualify for the RHI, the solar panels must be of a certain quality - achieving accreditation with the Microgeneration Certification Scheme (MCS) or SolarKeymark, the installation company must also be MCS accredited and the household needs to demonstrate that it has taken straightforward energy efficiency measures such as insulating the loft and filling cavity walls (where there are cavity walls to fill).  The way that this last requirement is proven is to produce a Green Deal Advice Report that doesn’t show loft insulation or cavity wall insulation as a recommended measure.

In recent weeks it has come to light that some solar installation companies are advising customers that there’s so much cost and bureaucracy associated with installing a solar thermal system that qualifies for the domestic RHI that they are better off avoiding the scheme.

Let’s have a look at whether this argument stacks up.

Extra Costs for the Installation

Let’s assume that the installation is of identical quality both with and without the RHI.  The installer cuts no corners on the installation standard and that the equipment that is used is registered with the MCS or Solarkeymark.

The installer must log the installation onto the online MCS database for the customer to be able to claim the RHI. There is a charge from MCS of £15 to do this.  Let’s add £20 to that to pay for the time for someone to fill out the online forms.  Total £35

In addition, the household needs to pay a Green Deal Assessor to visit and produce the Green Deal report.  You don’t need to undertake any of the recommended measures unless they include loft insulation or cavity wall insulation.  The report costs between £150 and £250. 

So the total Variable Costs (cost per installation) are between £185 and £285

Annual Costs for the Installer

For an installer to be MCS accredited, there are annual fees to pay and administrative time required.  Let’s take a look at the costs for a smaller company, as it is generally thought that the burden is highest for these.

The solar installer must pay a fee to join the scheme and be audited each year.  For a solar installer with less than 10 employees the MCS annual registration and audit fee comes in at around £470 (see NAPIT fee sheet). 

In addition there is an MCS requirement that the solar installation company must be a member of an approved renewable energy consumer protection code.  Joining RECC depends on the number of staff, but for 1-6 employees it’s £250/year. 

Let’s assume the company wouldn’t operate a formal quality system if it wasn’t going to be MCS accredited and add £1,000 of admin time to these figures to pay an office administrator to maintain the paperwork that the scheme requires each year and make sure the document handover packs and quotes remain compliant with the scheme.

Both the fees and overhead costs fall (per technology) if the company installs other MCS renewable energy technologies as well as solar thermal, but let’s assume it doesn’t.

For this small company then, the total annual Fixed Costs of maintaining an MCS solar installer registration is £1,720.   

Total Cost

The total additional cost per installation of being RHI compliant is found by dividing the Fixed Cost by the number of installations the company does each year and adding this to the Variable Cost per installation.

This is where the costs of accreditation can start to look very high – it depends enormously on how many installations the installer does each year.  See the table below.

How the admin costs of an RHI compliant solar system varies with the number of installations
the installation company does each year

If the installer does only one or two solar installations a year then, yes the costs of RHI compliance is high compared to the benefit in claiming the RHI, but even at only one system a month the extra costs start to become really quite small compared to the RHI payments. 

The more installations that the company can do each year, the more the costs trends down towards the cost of the Green Deal Report.   Nor will every customer see this as a valueless piece of paper; some may value the guidance on further measures they could take to improve their energy efficiency.

The problem for the RHI is that until the scheme starts to drive demand for a reasonable number of installations, then for small companies that perhaps combine general plumbing with a very occasional solar installation the barrier costs of being MCS registered don’t look worthwhile. 

An excellent time to encourage a customer to consider solar heating is at the same time that a hot water cylinder is being replaced, but the plumbing company standing in front of the customer won’t offer this option if it isn’t MCS registered  If they do offer solar they might encourage the customer to ignore the RHI.  This is, of course, a classic chicken/egg situation.  Unless this plumbing company starts to offer more customers solar under the RHI, they’ll never see enough demand to justify MCS accreditation.

It would be good if there was a way to encourage this plumber to promote solar thermal to customers, perhaps in cooperation with a local accredited solar installer.  For any installation company that’s doing more than a handful of solar thermal installations each year, the cost of the RHI requirements are small relative to the RHI payments.

However this is not to say that MCS couldn’t do something to reduce the burden on smaller installers to meet the ever-increasing demands of the scheme.

Slow Burner - how will the Domestic RHI Take off?

How much can the first year of the Feed in Tariff tell us about uptake for the Domestic RHI

How it went for the Feed in Tariff

A number of people (including the solarblogger himself) tried to temper expectations for the domestic RHI with the argument that the Feed in Tariff (FIT) took a bit of time to get going. The logic goes that it takes time for the public to become aware, for installers to work out how to market it, and especially for housing associations to get organised. 

I thought I'd take a look at the numbers to check whether they supported this idea. 

I wanted to compare the take up of PV in domestic installations before and after the introduction of the FIT. There is a wealth of data available from the Department of Energy and Climate Change (DECC) on the levels of PV deployment  under the FIT, but much less for the years preceding it. I relied upon this report on the Low Carbon Building Programme (LCBP) to build a picture of deployment rates before the FIT. 

Under LCBP phase 1 (the domestic stream) there were 4,428 installations of PV. The average size was 2.18kWp, for a total capacity installed under the scheme of 9.7MWp. 

Since the report doesn't disclose the deployment in each period, I estimated PV deployment based on overall scheme expenditure.  I then combined this with FIT data for systems below 4kWp, most of which is likely to be domestic. 

The results are very interesting. 

When you look at the plot of the overall data, it sure does seem that all the action started in year two of the scheme. But this is a trick of exponential growth. Look at the lower plot, where I have shown the data only up to the end of year one. The first year was spectacular. 

The level of deployment grew from round 700 installations a quarter before the FIT to 11,000 a quarter at the end of the first year. Before the FIT subsidy, solar thermal systems were being installed at a rate around 10 times higher than solar PV. By the end of the first year, solar thermal had declined slightly, but solar PV installations outnumbered them by almost double. 

And so to the Domestic Renewable Heat Incentive

There are a number of reasons why the domestic Renewable Heat Incentive won't take off like the Feed in Tariff did. 

1.  The Feed in Tariff.  

When the FIT was launched it was the only show in town. The grant scheme for renewable heat was derisory by comparison. As the domestic RHI launches, people interested in investing in their homes to reduce energy bills have the choice of both FIT and (I suppose) the Green Deal. 

2.  Installation complexity. 

With the exception of solar thermal, all the domestic RHI technologies replace an existing heating system, rather than being an add-on. People will be more cautious about installing a new technology when they worry that the impact of it not working is a cold house and no hot water.

Renewable heating installations are generally more intrusive too. A heat pump may require the replacement of radiators to cope with lower heating temperatures, biomass boilers can require a lot of space. New products such as this one which simplifies the installation of solar thermal to levels approaching that for solar PV may help overcome this barrier, at least for solar thermal where there's always the backup heater. 

3. Off Grid Target Market

The domestic RHI tariff levels were intended to stimulate a market in the 20% of homes that are off the gas grid. For sure, the returns are better when heating with oil or electricity, but returns for solar thermal on gas can also be good, as this analysis has shown. 

4. World First

The UK feed in Tariff followed the implementation of similar schemes in other european countries. Businesses could see the rapid take up of markets that had resulted and anticipating a similar trajectory for the UK, were pumped and ready once the scheme launched. By contrast the RHI this a genuine worlds first. There's no equivalent to look at to predict uptake. The many, many false starts for the scheme also didn't help. Many installation companies I spoke to weren't even willing to spend time thinking about it until they were absolutely sure it had launched. 

5. The Feed in Tariff (again)

My final reason is perhaps the most important. The way the government managed the Feed in Tariff has led to the widespread belief that as soon as any renewable energy scheme is successful it will be ruthlessly hacked back. The shadow that the treatment of the FIT scheme casts is long and pervasive. 

For all this, the scheme offers a level of financial support beyond anything that renewable heating technologies have benefitted from before. My plea to the industry is to give it a while before judging the success or otherwise of the scheme. 

It may take time to take some time to warm up, but warm up it surely will.