The Dogs are Already Running

The Absurdities of the Feed in Tariff Review

The solarblogger has met  a number of officials from the Department of Energy and Climate Change (DECC) over the years and holds them in very high regard.  Make no mistake, these are smart people we’re dealing with.

Which makes the recent Feed in Tariff (FIT) review all the more perplexing.

Government is proposing to place a cap on the cost of any future deployment of solar under the FIT.  If events over the course of the consultation period indicate that this cap will be breached, government proposes to close the generation tariff to new entrants.

But at the same time it has created the perfect conditions for a ‘gold rush’ by announcing that the tariff payments will be cut by up to 87% infour months time. (January 2016)

A kind of self-fulfilling prophecy has been formed.

It doesn’t matter if industry provides evidence to support less draconian cuts to the proposed levels of the tariffs.  The cap has been set at such a low level that even a modest spike in solar installations during the consultation will ensure it is all spent.

They say the definition of madness is to repeat the same actions again and again and expect different results.  Well, back in 2011, DECC did almost exactly the same thing.  It announced a 50% stepped reduction in the FIT.  Installation rates exploded.  Within six weeks the industry was installing solar at a rate nearly 16 times higher than in the run up to the announcement.

The same thing has already started.   The dogs are already running.  And this time there’s four months for people to get their installations registered on the Feed in Tariff and claim the current payment levels.  Naturally, this is what the press has focused on, with headlines stressing that people need to get in now if they want to make money from solar panels.

If we rule out stupidity, and assume that the big brains at DECC are able learn from past experience, then there’s only one conclusion to draw.  DECC deliberately set things up for a gold rush, thereby creating an excuse to close the scheme entirely (or at least the generation tariff part, the export tariff appears to be slated to continue).

The most dismal part of this whole sorry episode is that under the guise of ‘controlling energy bills for hard working families’ the government has manufactured  conditions to ensure that the costs of the Feed in Tariff will be higher than ever, the country will get less solar installed, but at a far, far higher cost to those hard working families.

There was an alternative.  The Solar Trade Association, published  its Solar Independence Plan in the run up to the FIT review.  Clearly no-one at DECC read it.  It proposed a glide path to zero subsidy over the next four years by reducing the level of FIT payments to new entrants little and often.  This would have avoided the inevitable spike in installations that will now occur.  Because more of the installations would have occurred in the future (at low levels of Feed in Tariff) it would have ensured that the country got more for its money.

Government should act quickly to prevent the boom and bust and protect consumers from the higher energy bills this ill-considered proposal will inevitably produce.  The solar industry should demand the immediate withdrawal the consultation.  DECC should try again.


This article also appeared on the Solar Power Portal:
http://www.solarpowerportal.co.uk/guest_blog/the_dogs_are_already_running_3425

Fabric First, but not Second and Third

3kWp integrated solar system on new build home.  Image: Viridian Solar

There’s an interesting shift going on in attitudes to solar in low carbon building at present.  Solar panels, previously seen by many in construction as a necessary evil, something to get you over the line if you couldn’t quite reach energy performance targets, are starting to feature more significantly in developments.  Instead of just one or two panels per house (0.25 - 0.5 kWp), we are seeing more and more developers installing solar arrays of a size someone might actually pay to have on their own home (typically in the range of 2 - 4 kWp)

Previously, voices in the sector have encouraged designers to ‘build in performance’ by using as much insulation as possible.  The argument, pitched under the catchy slogan ‘Fabric First’, goes that ‘bolt-ons’ such as solar panels can easily be removed from the building and only insulation can ensure the performance of the building for its lifetime.

This line of argument ignores the possibility that the performance of insulation can deteriorate over its lifetime (possibly a subject for a whole other blog, but see links 1, 2, 3 for starters).  It assumes also that when a solar array reaches the end of its life, or even before, the householder won’t replace it with a new one (with the benefit of 30 years of technical improvement to the technology in the meantime). 

It also ignores the inconvenient finding that some of the benefits of higher levels of insulation are lost to ‘temperature takeback”  (where people just run the house hotter so they can walk round in their underpants in winter, thus offsetting some of the expected energy efficiency gains). By contrast, the people with generating technologies such as solar have been shown to be more engaged in monitoring and managing their own energy use.

Building ever-more airtight homes has also raised concerns about indoor air quality and over-heating in summer.  For sure, there are technical fixes to both these issues, but doing it properly adds yet more to the cost of achieving very high levels of thermal performance.

And there’s that word, the thing the construction industry focuses on with relentless intensity, the thing that matters above all others. 

Cost.

When it comes to reducing the carbon emissions from a building, the cost structure of solar is very different from the cost structure of insulation, and it’s all down to the different way their cost-benefits change with the amount you use on a building.

Cost Curves for Insulation and Solar

Double the thickness of your insulation material and you halve the heat loss conducted through it.  If your starting heat loss was 100 units the new heat loss is 50, a saving of 50.

Double it again and the heat loss goes from 50 to 25, saving 25.  The saving from the next doubling is 12.5, the next is only 6.25.  By now our insulation is 16 times thicker than our starting point.

In real life, of course, the insulation is only a part of the wall, floor or roof build up, with other elements making up the total U-value.  Kingspan Insulation provide an online U-value calculator to have a look at this effect in real walls and roofs.

You can see that doubling the insulation thickness reduces heat loss by only 30%.  Doubling a second time knocks a further 26% off. 

Insulation is a relatively cheap material, but the more you have the more you need to add to make a difference.  This is a classic example of a diminishing return.

Thicker insulation doesn’t just mean a higher spend on insulation, for example different wall ties are needed for thicker insulation in traditional cavity wall construction.  Window reveals become larger with cost implications.  Rooms become smaller for the same building footprint.

The cost structure for solar is very, very different.

First of all, the energy output from a solar array is linear with size.  If you double the number of panels and scale up the inverter, you’ll double the annual output of electricity - right up until the point you run out of available area on your southerly roof pitch and start having to use less good orientations.

Granted, doubling the energy output doesn't necessarily double the benefit for the homeowner - until battery storage technologies become more common, the larger the solar system, the more electricity will be exported to the grid.  However for the house-builder, the important measure is most often the treatment in the building regulations.  Currently the energy calculations (SAP) give exported electricity equal benefit to that used in the building, both for the carbon production and for the energy costs calculations.

Secondly, solar follows a diminishing cost per unit.  The larger you make a solar array the lower is the cost of the next increase in power.  The spend on the solar panels themselves will scale linearly with the size of the array, but other costs do not. 

Equipment costs per unit of output fall with system size.  The cost per watt-peak of power of a solar inverter (the electrical equipment that converts direct current solar generation to alternating current  for use in the home) falls as the units power rating increases.  Other equipment costs such as for generation meter and isolation switches are the same for any size of domestic system.

As an example, looking at the Viridian Solar price list, the cost of an electrical kit suitable to connect a 4kWp (16 panel) system is about 3 times the price of a kit suitable for a 0.5kWp (2 panel) system, despite offering 8 times the annual energy yield and carbon savings.

As for the labour costs, once you’re up on the roof the extra time to fix down a few more panels is small and the time to wire up a larger array is only marginally more than for smaller one.

Implications for Design

Until recently, a designer aiming for a particular energy performance would typically increase the level of insulation up to what they consider to be a practical limit and then turn to solar to get the last little bit of performance for the building.

However, it is becoming clear that building designers are starting to understand that the different cost structures of insulation and solar mean that considering embodiments with a larger energy contribution from solar may yield a more cost-effective overall design. 

The diagram above illustrates the concept.

The cost of solar power has fallen spectacularly in recent years and continues to trend lower. Cost-effective roof integrated solar systems have improved the aesthetic qualities of solar.  Is it time to reconsider your approach to low carbon design?

Solar Attrition Rates

An Analysis of the MCS Installer List

I recently had the opportunity to have a look in more detail at the list of installers registered with MCS, and what I found came as quite a surprise to me.

The number of solar PV installers registered with the Microgeneration Certification Scheme (MCS) has been on a declining path since the boom of 2010-11.  This is not news to anyone in the industry.

Right now, the number of solar PV installers registered with MCS (removing duplicates) is around 2,640, a fall of 24% since 2013.  But when you look at the actual companies that make up this headline figure you find that less than 50% of the solar PV installation companies on the list in 2013 remain two years later. 1,822 companies have left the market, but 980 new companies have joined the list in the last two years.

Churn Rates in Solar Installation Businesses

Turning to the list of solar thermal companies, we see that the decline in numbers has not been as severe as for the PV installer companies, a 13% drop from 1,298 companies in 2013 to 1,130 now.  However, the churn rate is just as eye-watering.  Nearly half of the solar thermal installers registered with MCS in 2013 are no longer on the list, but the 635 that have left have been replaced by 467 new companies.

What's going on?  Are these attrition rates normal for similar industries (home improvements, heating, electrical works)?  Or is there something 'special' about our solar industry?

How Energy Efficient is UK Housing Stock?

If you've ever wondered how efficient UK housing stock is, take a look at the two charts below.  They show the proportions of homes that achieve each Energy Performance Certificate (EPC) rating in England and Scotland.  

The EPC is a calculation that takes features of a house (its size, window area, insulation values for walls, floors, roof, windows and doors) together with its heating system and any renewable energy generation (for example solar thermal or solar PV) and calculates an energy performance score.

The energy performance score ranges from 0 to 100, with 0 being a home with the highest energy bills and 100 being a home with net zero energy bills.

The score a house achieves is reported as a letter from A to G, with A being the most energy efficient and G the least.

I created the charts below from data in the English Housing Survey 2013-14 and the Scottish House Conditions Survey 2013.

A few observations from the charts.

1. Social Housing is more energy efficient than either private-rented or owner-occupied housing.

Social housing has a much higher proportion of homes higher than D rating and homes higher than E rating. Social landlords and councils have been investing in energy efficiency for their housing stocks through a range of government incentives and obligations on energy suppliers.

2. Private-rented housing has a greater proportion of highly efficient homes than owner-occupied

Private rented housing has a higher proportion of B rated or (B+C) rated homes than owner-occupiers, but see next point.

3. Private-rented housing also has a greater proportion of very inefficient homes than owner-occupied.

Private-rented also has a higher proportion of (F+G) and (E+F+G) rated homes than owner-occupied homes.  It seems like most people who own their own home take the energy performance (and perhaps comfort) of their homes to D, but no further.

4. Scotland has more energy efficient homes than England.

This is counter to what I was told in recent meetings in Scotland.  There was a view that homes in Scotland were less well insulated than the rest of the UK and more expensive to heat.  The EPC statistics tell a different story.  However, EPCs based on SAP 2009 do not take local climate into account and assume we all live in Sheffield.  If the average temperature in Scotland is lower than England then a house of the same EPC will be more expensive to heat in Scotland.

5. There's still lots to do!

There's almost no A rated homes, and very few at B.  Most homes are EPC D or lower.  In a previous blog I calculated that a 4kWp solar PV system will raise the EPC score of a home by 20 points - enough to jump it up one band.  A solar thermal will add 3 to 6 points to a score, enough to bring many homes from one band to the next.

The Impact of Solar PV and Solar Thermal on EPC Ratings

The EPC Rating is a score between 1 and 100

Introduction

The Energy Performance Certificate (EPC) is a fundamental plank of the government’s strategy to improve the energy performance of the UK’s building stock.

• Since 2007 it has been a legal requirement that homes for sale have a report of their energy performance for potential buyers.
• From 2018 it will be a requirement that rental properties have a rating higher than E.
• In Scotland, all social housing will have to achieve an energy rating of C or D (depending on house type) from 2020
• To access the Feed in Tariff for solar PV, it is necessary that the building achieves an EPC D rating
• To access the domestic Renewable Heat Incentive, it is necessary to undergo a Green Deal Assessment, which is essentially an EPC with added extras to factor in the way you use energy.

The certificate rates buildings with a score from 1 (least efficient) to 100 (most efficient), with the scores divided into bands A through G as shown.

How it is Worked Out?

An approved calculation called the Standard Assessment Procedure (SAP) is used to calculate the energy used to heat the home, provide hot water to occupants together with electricity for lighting, pumps and fans.  Electricity used by other appliances is not considered.

The actual number of people in the house and the way it is heated is ignored.  A standard occupancy and a fixed indoor temperature is assumed – the idea is to compare the building with other buildings, not compare one set of occupants with another.

The energy used (gas, electricity oil) is then multiplied by fuel cost factors to produce a calculated energy cost for the property.  The energy cost is normalised by the floor area of the property to give a score between 1 and 100, the higher the score, the lower the building costs to run (with a house with a score of 100 nominally costing nothing)

For new homes the current calculation is SAP 2012 and the calculations are updated every time the building regulations change.

For existing homes, assessors use RdSAP 2009 (the Rd stands for Reduced Data).  This is an extra appendix to the SAP 2009 calculation which provides guidance on what assumptions to make when you don’t know or can’t see the exact specification of insulation and equipment.

Solar PV

SAP 2009 gives an unshaded, south-facing solar PV installation around 858kWh/year per kWp installed, irrespective of its the location in the UK.

Its calculation of energy costs assumes that 50% of the energy from a solar PV system is used in the dwelling and 50% exported (and this assumption does not change with the size of the PV installation).

The saving on the energy bills is then:

50% x energy generated x cost of purchased electricity

+

50% x energy generated x payment for exported electricity

In SAP 2009 the cost of purchased electricity is set to 11.46p/kWh for homes on a standard tariff, and the payment for exported electricity is also set at 11.46p/kWh.

Solar Thermal

A solar thermal installation could benefit the household energy bills in two ways.  First the solar system will generate heat that the boiler or electric immersion heater no longer needs to supply.  Second, a new solar hot water cylinder with better insulation will result in a reduced escape of heat from the stored water.  Although this heat loss contributes towards space heating in winter, but is wasted energy in summer.

SAP 2009 calculates out a solar energy input of 1,316 kWh per year for an unshaded 4 square metre flat plate installation, facing south and heating a 250 litre cylinder in an 85m2 house.  This translates into a fuel saving of 1,586kWh when the replaced heating system is a gas or oil boiler (taking into account their lower efficiency in summer months).

In addition the replacement of an old cylinder (where there is one) with a new would reduce heat losses.  For example, replacing a 50mm jacket insulated 180litre cylinder with a new 210 litre solar cylinder with 105 litre auxiliary heated volume and declared loss of 1.8kWh/day will save 444kWh/year based on a boiler winter efficiency of 90%.

Impact on EPC Rating

The impact on EPC rating of solar PV and solar thermal was calculated as follows.  For every SAP 2009 rating from 1 to 100, the implied Energy Cost Factor (ECF) was calculated by rearranging equations (10), (11) and (12) –  Section 12, page 33.  A house of 85 m2 floor area was considered, being the UK average size.

The energy cost that had resulted in that SAP rating could then be calculated from equation (357).

The saving on the energy cost was calculated by multiplying the energy savings from solar (discussed above) by the fuel prices in table 12.  The reduced energy cost was then converted back to a SAP rating.  The table shows the improvement in energy performance score for solar thermal and PV.

The impact of solar on a home's EPC energy score

NOTE: Figures shown are for a starting EPC score of 40 or higher (beginning of EPC band E), below this the size of the improvement decreases a little.

Conclusion

There are a growing number of drivers that are pushing building owners to improve the energy performance of their buildings.

Until recently, much of the focus has been on insulation measures to achieve these goals, but as more and more of the available cavity walls and lofts have been treated, the remaining insulation options such as external wall, internal wall and under-floor become disruptive and costly.

Solar thermal and solar PV are low hassle – high impact measures that can help increase the energy performance of homes.

Solar PV can give a significant boost to the energy rating of homes, particularly those with a clear roof of adequate size.

Solar thermal can be extremely cost-effective when combined with other heating system works such as boiler or hot water cylinder replacement and is more suitable for smaller roofs and partial shading.

Is This As Good as it Gets?

The Case for Good Looking Solar

Is that really the best you've got?

Do you like your coffee regular, large, super size or in a 6-litre bucket?  Americano, double espresso, flat, cappuccino?  Perhaps chocca-mocha or the icy one (whatever that’s called).  With skim milk, full fat or a drizzle of lard?  Do you want them to sprinkle brown dust onto the foamy topping for you?

Henry Ford famously said that you could have his Model T car “in any colour so long as it’s black”.  From the vantage point of our highly developed consumer market how amusing it is to imagine giving customers such limited choice.

Well, dear solar industry reader, why not take a fresh look at what are we offering our customers.

“You can have any solar installation so long as the panels are 2m x 1m modules fixed onto a rack above the roof, the array size matches a standard kit from a merchant and the panels are arranged in a nice easy rectangular shape.”

Yes, we talk about black-on-black modules or silver frames, poly or mono, micro inverters, optimisers or string inverters and all the rest, but are these technical issues really of interest to any but the earliest of early adopters?

Your home is your single biggest purchase and the roof is a very visible part of its kerb appeal.  If, when you come to sell it, a proportion of your potential buyers are put off by an insensitive solar installation on the roof it could cost you a lot of money.

Image: Viridian Solar Clearline PV30 and PV15 roof integrated solar panels

Forward thinking solar installation companies are already positioning themselves for a ‘post Henry Ford’ solar market.  They realise that as we move past early adopters chasing lucrative Feed in Tariffs and on to convincing the early majority to go solar we need to listen to people’s needs and offer them more choice, for example

• Downsizing the installation to avoid over-crowding the roof
• Grouping panels to create a more balanced, symmetrical installation
• Roof integrated systems where panels look more intended and less like an afterthought
• Large format modules for less clutter on the roof
• Solar tiles and slates
• Complete solar roofs
• Offering solar thermal for roofs with limited space

As the costs of the equipment for solar installations have fallen, the extra cost of roof integration has fallen to the point where it can no longer be ignored as an option for customers.


But  the industry needs to overcome some prejudices.

First, on ease of installation.

Removing a patch of tiles adds very little extra work.  This is especially true for large format concrete interlocking tiles, which are quickly lifted.  Integrated solar panels are not just for new build.

Second, on maintenance.

A PV system should last more than 20 or 30 years so the chance is high that some maintenance of a roof covering will be necessary.  Even new homes may suffer a single cracked tile from a manufacturing defect or mishandling during roofing.

Replacing a broken tile is a simple and easy job for a roofing contractor working from a roof ladder.  If the cracked tile is behind a solar array, then it’s a very different situation.  Scaffolding is required, an electrician is needed to disconnect the solar and then remove panels to hunt for the source of the leak below.  A simple job costing £100 has become a costly exercise that could comfortably exceed £1000.  Looked at this way, roof integrated systems are preferable.

Third, on energy performance.

Everyone knows that integrated systems are going to run hotter than systems that have more open to ventilation, but how big is the actual effect on energy yield?  Viridian Solar recently published research on this subject in collaboration with the University of Cambridge Department of Engineering.  The answer turns out to be only 3%.

A new, sophisticated and more demanding breed of customers is emerging for the solar industry.  Less interested in details of the technology and less accepting of “one-size-fits-all” solutions.

More and more solar installation companies are seeking to escape the race to the bottom by differentiating their offer.  Building integrated solar panels are a way to broaden the appeal of solar to more customers and add value to your business.


This article first appeared in Solar Business Focus UK Magazine

Solar Power in the CRC Energy Efficiency Scheme

The solarblogger spoke at a recent Solar Trade Association event on the commercial solar market.  In my presentation I discussed two drivers that were encouraging commercial customers to install solar power on their rooftops.

The first case study highlighted the importance of local planning requirements.  Many local authorities require that a percentage of energy consumption in new commercial buildings should come from renewable energy.  The calculation of the energy consumption of the building is woefully low because it doesn’t take into account heating or lighting in warehouse spaces or the use of the building.  However, the very fact of the planning requirement created the opportunity for the new warehouse owner to find out about the financial benefits of installing a solar PV system.  In the end they opted to install a system more than ten times larger than that required to discharge the planning requirement.

However, it was my second case study which raised an issue that this blog will clarify.

This case study was a company that operates a business and leisure park.  They have a very high annual power use of 5,500 MWh and an energy bill over £600,000 per year.

Any business with a combined electricity consumption across all sites and subsidiaries greater than 6,000 MWh per year must join the CRC scheme.

Once on the scheme, the business needs to inform government of details of all energy consumption - electricity and gas (where this is used for heating purposes).  A carbon emission level for consumed energy is calculated and the business must pay a carbon tax for every tonne it emits each year.

For 2014-15, the emissions factor for grid electricity is 0.5331 kgCO2/MWh.  The fees in this year were around £16/tonne depending on when you buy your allowances.

So any business breaching the 6,000MWh limit and qualifying for the scheme is hit with a bill for

6,000,000 kWh x 0.5331 x £16 / 1,000 =  £50,000

The asymmetric nature of the tax creates an enormous incentive for businesses that are approaching the cut off to reduce their use of energy.

A member of the audience questioned whether solar electricity counted towards energy use or not:

"We've been advised that because it's an efficiency scheme you have to total up all your electricity use, whether that comes from on-site solar panels, a diesel generator or grid electricity."

Further research has clarified the situation.  PV generated electricity should be reported, but is excluded from the CRC so long as the installation is eligible for, but has never received, Feed in Tariff (FITs) or Renewables Obligation (RO) payments.

See page 40, section 4.3.2 of The CRC Energy Efficiency Scheme guidance for participants in phase 2, version 2.  November 2014.

So there you have it.  An on-site PV solar installation is a valuable way for businesses that are approaching the CRC qualification limit to avoid the significant costs and administrative burden that come from having to join the scheme.

For businesses already on the CRC, the carbon tax rate of £16 a tonne translates into a saving of just under 1p for every kWh of electricity the PV offsets (to which you can add savings of around 10p of grid electricity not bought).  With the Feed in Tariff yielding 10p/kWh currently, to which can be added payments for export and savings on grid electricity, it seems like most businesses already on the CRC scheme would opt to take the FIT unless the PV installation could drive them below the qualifying limit for the scheme.