Post date: Thursday, 23rd June 2011

Government worried that FITs could be victim of own success

 

The government's new strategy envisages the ideal cost of installing renewable microgeneration technologies to move to around £5,000-6,000 with a payback period of around five years so that millions of householders take it up. But it's worried that if its strategy is a success, then its support schemes may run out of money.

Its new Microgeneration Strategy and Action Plan for England, published yesterday, aims to remove non-financial barriers to the spread of these technologies, and calls for more demonstration homes, which are known to be the best way to promote uptake, and for industry, local authorities and government bodies to work together.

But the government is worried about the scheme becoming a victim of its own success. Its accompanying impact assessment warns that implementing the strategy "could encourage greater uptake than we have projected" which “would drive up subsidy costs of the schemes".

As a result it promises to keep a close watch on levels of uptake given that more funding would not be available over and above the £15 million allocated to the Renewable Heat Premium Payments, £850 million funding for the Renewable Heat Incentive or the £610 million a year for FITs.

Launching the strategy and action plan, DECC minister Greg Barker said: "The onus is on the industry itself to make the most of the opportunities presented by the financial incentives - supported by Government action to streamline regulation such as planning and standards, while at the same time ensuring consumers are protected."

As an example of what could be done, the government proposes that information on financial incentives could be included in Energy Performance Certificates (EPCs) to stimulate take-up of renewables. Market research by Consumer Focus has shown that more people would take up renewable energy in their homes if this was included at the point of property sale or rental as part of the green deal advice process.

An army of skilled workers will be required to meet the demand but accreditation needs to be standardised. A survey is to be undertaken of all training schemes to recommend what's needed to create the competent installers of tomorrow, to be completed by October 2012.

Industry must do its bit as well, including analysing the whole product life-cycle for each microgeneration technology to pinpoint where things could go wrong in advance and bolster customer confidence. It should do more to market the concept of microgeneration and the potential benefits to consumers with independent sources of advice by September this year, and produce a guide on warranties and insurance schemes for customers and factsheets for each technology with information on maintenance and the longevity of key components, by April next year.

Micro-hydro will be removed from the Microgeneration Certification Scheme for the purpose of Feed-In Tariff eligibility to make it easier for customers to find an appropriate installer. Schemes under 50kW are already rigorously regulated under environmental and planning consenting requirements. The chief executive of the British Hydropower Association, David Williams, called this "a great relief".

Importantly, the strategy recognises also the value of heat pumps, micro-CHP and, into the future, compressors and absorption chillers which could provide solar-powered cooling.

Wood fuel is also considered vital and the government is developing a Bio-energy Strategy for publication later this year, which will set out the government's strategic direction for bio-energy to 2020 and beyond.

Building Regulations and the Standard Assessment Procedure (SAP) will also be amended to better quantify the benefit of including renewables in developments.

Government and industry will work together to explore opportunities to expand the microgeneration sector by working with European level initiatives. This includes, for example, Smart Cities, which launched on 21 June, and addresses technologies, local production and energy networks, including electricity, heating and cooling.

Launching the initiative, Energy Commissioner Günther Oettinger said: "With an 80 million Euro package we plan to demonstrate smart integration of urban energy technologies in selected pilot cities. This will kick-start important new markets for European industry. Cities are key to the EU's objectives of 20% energy saving by 2020 and to developing a low carbon economy by 2050, because 70% of the EU's energy consumption takes place in cities." Manchester, where EAEM is based, is the English city taking the lead in this imaginative scheme.

Community energy

Connected with this, the government wants to encourage more communities to take up district level renewable energy schemes that would be owned by the communities themselves.

Currently there are many barriers facing communities that wish to do this, such as lack of knowledge about planning, local awareness, skills, time and access to finance. DECC has pledged to do more to address these issues with a stakeholder group to be set up next month, including developing the Community Energy Online web portal and engaging in collective purchasing of renewable energy in order to get a better deal.

The latter opportunity was identified earlier this year in a BIS proposal, Better Choices: Better Deals. It cites the pioneering example of Barnet in achieving this and, in fact, many of the initiatives set out in the microgeneration strategy.

Good Energy, in particular, has welcomed the recognition in the strategy that community energy projects come in all shapes and sizes and could be as large as 20MW in capacity, and that the government is committed to a wider distributed energy strategy as part of its Electricity Market Reform.

 

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