Microgeneration certification scheme – how to improve it. Renewable Heat Incentive – how not to waste money. Solar water heating panels and systems focus.

Will the UK government overpay £31M to users of mains pumped solar heating systems under the Renewable heat incentive?

If the UK government seeks:

• a simple way to fairly and justifiably save about 8% overpayment on nearly all solar thermal RHI payments
• to increase the credibility of MCS with consumers
• to balance the market better for solar thermal

then please read on.

Summary:

There is a deliberate mathematical omission in the MCS solar thermal document MIS 3001’s energy calculations which means that the RHI will overpay around 31 million pounds to solar water heating users over its budgeted £860M life.

This overpayment is worth £270 per RHI claimant, based on the RHI consultation figures and SAP’s 75 kWh per year figures on the electricity consumption of typical solar heating systems.

The scale of this overpayment can no longer to be ignored by MCS. If you want to sort out the problem then you just need a tiny revision to 2 lines in the solar installers specification, MIS 3001, to read, when amended:

4.4.4 Be accompanied by an estimate of net annual energy performance calculated as follows: For domestic installations, using Appendix H and table 4f of the Standard Assessment Procedure for Energy rating (SAP) methodology.

It makes sense for DECC’s RHI to reward system net energy gain rather than its thermal gain in isolation from any parasitic electricity consumption. It also makes sense for MCS to deliver accurate net performance estimates. There is a risk of Trading Standards intervention if they do not. Imagine the scenario: an MCS installer being prosecuted for making exaggerated performance claims and referring to MCS as their defence – no good for the reputation of MCS as a protector of consumer interests.

Surely net energy should be subsidised and the power used by mains pumps (SAP table 4f) needs to be deducted. This accounting flaw did not really matter too much when LCBP was handing out lump sums, but it really comes to the fore now that the RHI is to be performance based.

Here are more details:

It has been brought to my attention that MIS 3001 deliberately permits the over estimation of the energy performance of solar water heating systems by allowing gross performance instead of net energy gain to be quoted by installers. RHI is likely to be based on these over-optimistic figures.

Because of this performance inflation it seems that around £31M of RHI funding is about to be mis-spent because the MCS solar thermal installer document MIS 3001 legitimises this performance inflation. Inflated energy performance predictions are used for MCS and consequently will be used for RHI funding. The performance estimation requirement of MCS document MIS 3001 part 4.4.4 states that solar water heating systems shall:

“4.4.4 Be accompanied by an estimate of annual energy performance calculated as follows: For domestic installations, using Appendix H of the Standard Assessment Procedure for Energy rating (SAP) methodology.”

If DECC are interested in preventing such RHI overpayments here is a way to legitimately save around 8% on most RHI payments for solar water heating installations.

Now that potentially millions of pounds of public funds are likely to be spent, via the RHI, on the basis of deemed performance estimates, I think it is time to address this matter as a one of urgency and importance. Why is it important? Because the sums of money involved run into millions of pounds.

At a small scale, and on a per customer basis, over 20 years of a proposed RHI timescale, this overpayment is worth 75kWh x £0.18/kWh x 20 years, which is an overpayment of £270 over this timescale. This substantial sum must not be overpaid in error.

As for the national picture, if, for example 50% of the recently announced RHI funds of £860M were to be spent on solar thermal, of which 90% of installations were mains pumped, at 8% of overstatement energy benefit per year, then, assuming a 20 RHI year over payment of 18 pence per kilowatt-hour on 75 kilowatt-hours, this equates to a likely overpayment of   £31 million, all caused by the tiny omission of mention of table 4f of SAP in MCS document MIS 3001.

Besides this matter’s impact on the Treasury and on the credibility on MCS and of DECC as the owner of MCS which functions as the gateway to the RHI, this energy accounting error also brings competition impacts since genuinely zero carbon solar water heating systems (among which our company’s technology is counted) will be unfairly disadvantaged by 8% in terms of price/performance in UK’s highly competitive solar thermal marketplace, by MCS turning a virtually consensual industry-led blind eye to this mains pumping energy penalty. Set this 8% price/performance disadvantage in the context of our company making a maximum profit on turnover of 7% in a good year, and you can see just how commercially damaging this impact may be.

Of course, fairer competition is not the only issue. From the perspective of the public interest, it seems to be unacceptable that this accounting error can continue to be made and so I recommend to MCS and DECC that the above change in wording be adopted before any RHI-details announcement is made.

MCS claims to be a internationally recognised quality assurance scheme, but it still seems that numerous important customer-oriented aspects of quality have yet to be added, of which this net energy performance estimate matter is but one. Are DECC prepared to ask the MCS executive to press for this change to be implemented with the support of the Chairs of the relevant committees and for this matter to be submitted to the appropriate MCS decision making body, for their immediate consideration and support? Are MCS prepared to run fast with this correction?

Nobody can expect the solar thermal industry to welcome this issue warmly or promptly – far from it. But if MCS is really interested in supporting DECC as its owner, and in giving the customer transparency and a fair deal then I do think this matter of performance inflation needs to be corrected immediately unless, of course, it is already in the process of being rectified, perhaps by the RHI specifying net energy as the basis of reward.

And there are other ways for MCS to improve (apart from safety and Legionella bacteria aka the L-word)

MCS claims to be a internationally recognised quality assurance scheme, but it still seems that beside the issue of parasitic energy in solar thermal apparently being ignored in energy estimates, some other quite important customer-oriented aspects of quality have yet to be added.

Perhaps as a condition of RHI payment MCS installers should also be required to tell the solar thermal customer at the pre-purchase stage what the likely operation and maintenance implications are in all major areas such as:

annual mains power consumption (if any),
annual inspections of high pressure cylinders (if used),
frequency of scheduled maintenance visits (if any),
antifreeze life expectancy (if used),
pump life expectancy (if used),
and water hardness control requirements (if any).

Plus the likely costs of these. Plus key environmental indicators such as:

its coefficient of performance and
the number of years to energy payback.

Armed with such information, the microgeneration consumer could make a much more informed choice than at present – and suppliers of technologies which do well under such criteria would also thrive.