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Three ways we could improve UK feed in tariffs

I am a stalwart supporter of feed in tariffs, and anticipate a revolution in UK microgeneration in the next few months as a result. Their introduction is long overdue.

However, on Monday I sat through a lengthy discussion both of feed in tariffs (FiTs) and the proposed renewable heat incentive RHI) at the Renewable Energy Association in London, and it seems to me there are three very specific things that could be much improved in the proposed UK scheme. Without these changes, I think the UK risks missing the boat and we will be condemned to be a laggard, still, as the world economy transforms into its new low carbon, high technology shape.

1. The requirement for schemes to be carried out by accredited Microgeneration Certification Scheme (MCS) installers using accredited MCS equipment is wrong, and adds a completely unnecessary and illogical burden to the scheme. This should be eliminated altogether  (either left out completely, or at worst replaced with a simpler requirement that installations should be accredited by any one of a range of quality accreditations that already exist across Europe and even in the UK.)

The argument for including MCS in the scheme is that customers need protection, and thus the costs of the additional bureaucracy and barriers to market entry and innovation are worth it. But these costs are extremely high.

There was not a single voice at Monday’s meeting raised in defence of MCS, which is an unaccountable monopoly run by people who may have their hearts in the right place but who are anonymous and naturally most interested in defending the interests of their own businesses. It creates an additional learning barrier and cost for existing, completely skilled construction contractors who might want to enter the market, and thus slows down growth and keeps microrenewables as a relatively niche market accessible only to those in the know.

It also creates a whole heap of completely gratuitous technical arguments (and diversionary hot air) about whose standards should be adopted, and who should be on which committee, at a time when the industry should be focused on creating imaginative propositions for customers.

Personally, I cannot really see why we need to confuse customer protection with promotion of renewables at all, particularly in the context of a scheme which deliberately rewards quality installations over those that work less well.

In the end, a green kWh is a green kWh and can be measured accurately by your generation meter. If you employ a poor quality or cowboy installer, using dodgy kit, you will not generate many kWh so you will not get the FITs you expect and are entitled to get cross as a customer with the supplier and seek redress. You could be given stronger powers to achieve this, if we wanted, rather than hardcoding MCS into a perfectly good financial incentives scheme (although I understand there are already at least nine consumer protection acts you could call on if you wish). The market will doubtless also create accreditation schemes to help give you confidence as well (it already has) and customers will soon learn which ones work best.

This simply has to be the most efficient and sensible approach, and I really can’t understand how government can fail to see this!

2. The proposed use of “deeming”, or estimating output rather than measuring it, for large parts of the Renewable Heat Incentive (RHI) scheme is also a retrograde step. A deemed tariff is no better than a grant – it is totally fixed at the point of purchase, and thus independent of the quality or performance of the installation. This will mean, yet again, that market growth in the UK has little or no linkage to the quality of the installations, which will doubtless create a whole industry in London and Watford seeking to manage quality control centrally with little or no reference to the actual performance of energy systems in real buildings. This is unhealthy for the economy, unhealthy for carbon saving, and unhealthy for customers and the industry.

FITs and the RHI should mark a clean break from the culture of arbitrary grants, to a new culture of commercial openness and appropriate (necessarily political) valuation of carbon savings. This is the heart of a low carbon economy. As long as we deem outputs and try to run everything centrally from London, we simply demonstrate to the rest of the world that we haven’t ‘got it’ yet, consider low carbon technologies a trivial add on to the mainstream economy, and remain locked in the past. This is a tragedy for us all.

It should be a fundamental principle of incentive schemes that they are designed to both to reward quality engineering and installation skills, and also that they are as open as possible to new entry. These are the two features of potential schemes that will enable future economic growth,

MCS inhibits entry and deeming ensures economic incentives are aligned to filling in paperwork effectively, rather than doing a good technical job.

Output of heating installations should be metered, like electricity, and DECC should put its mind to ways to prevent people generating unwanted heat as a distinct problem – and one that is worth solving.

3.  Finally – and plenty has been written elsewhere about this so I don’t need to dwell on it – it is clearly unfair and petty to penalise early adopters by denying them access to feed-in tariffs on an equitable basis, and it would be relatively cheap and easy for the government to put this right.

I don’t know about anyone else, but any political party that adopted these three measures in the coming election would probably get my vote, and also restore my faith in a political system and public bureaucracy that otherwise seems to have lost all hold on common sense and reality.

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