What do the RHI and FITs mean to industry professionals making renewable technology choices?
All too often customers can call their installation engineer and say “I want solar panels” without really considering that there might be better options for them. And of course we have all heard of unscrupulous companies blanket-selling a given technology no matter whether it is appropriate for a given project or not. Even with the best will in the world the speed of change in the heating industry means that installers are having to work hard to learn about new technologies, and as the Energy saving Trust’s field trial on heat pumps showed, there remains a widespread knowledge gap in installer expertise in this area. As people and companies chase the green energy “gold rush” in the light of the money being made available by the government for renewable energy technologies (and, of course to escape pressures on budgets from rising fossil fuel energy prices), we must protect the reputation of our industry and thereby our vital efforts to save carbon, by ensuring that we have a robust approach to consumer advice.
In this article I take a good look at the kind of information we need to gather when selecting technologies, how this has been changed by recent developments in government funding, and what this means for the way we carry out the process of guiding customers to make the best possible choices for their specific needs.
Much of how we advise customers following the Feed in Tariff and Renewable Heat Incentive will of course remain the same, but it does change one element of the equation dramatically: return on investment. Without these incentives solar technologies, in particular photovoltaic, were often not economically viable and many other technologies suffered from the barrier of high entry costs. With the advent of FIT and the RHI they become attractive and more accessible. Before the incentive schemes calculations for the choice of technology were largely driven by running cost savings and payback times were longer (often limiting renewable heat technologies to off-gas areas and affluent consumers). With the government schemes in place, the market for renewable technologies has expanded and the viable choice for each project is wider. So we have a new breadth of customers bringing differing needs and motivations facing a much wider choice of options. In short, we have added complexity to the selection process.
With this is mind we need to take a new and more systematic approach to advising customers. I would therefore recommend a matrix based approach to technology selection that takes into account and weights a number of different factors dependent on their importance to the client. In this new era of low carbon economy this must include:
- What constraints on choice does the site make? Which technologies are logistically possible or offer decent production potential for a given project and site? It’s no good having fantastic carbon saving scores and low install costs for a wind turbine if the area is sheltered from the prevailing wind. Are there listed building or conservation area planning requirements?
- Which technologies are going to be eligible on this site for the incentive schemes? For example, for a heat pump installation to be eligible for RHI payments the property must have a set level of insulation.
- ROI. It still makes economic sense to apply renewable technologies where the demand for energy is greatest because feed in tariffs are structured to reward generating and consuming more energy from renewable sources. So for example in an office block, where there is high demand for electricity from lights and computers photovoltaic panels are an obvious first technology to consider. In a leisure centre with a high demand for hot water for swimming pools and showers, solar thermal might be a better choice. By applying the technology that will have the highest demand you will harvest and consume more energy and therefore have a faster return on investment. However, many domestic customers who would still have found this approach did not pay (or those who were simply unable to install the most economically viable technology because of location or planning constraints) may now find that they can offset their existing running costs by installing a renewable technology which is outside the area where they make most energy demand. So for example your property may not be suitable for a heat pump because of poor insulation values, but because of the feed in tariff you could earn enough money from solar PV panels to offset your heating costs.
- Is there a set budget? Technologies vary quite dramatically in their initial installation costs per kWh required (see table below) and this may therefore rule out certain choices.
- Is the customer more interested in their carbon footprint or their running costs? On a similar sized installation solar thermal can save up to four times more than PV for example.
|Technology||Typical capital cost per kW* in £|
|Air source heat pump||700-800|
|Ground source heat pump||1100-1200|
|Water source heat pump||900-1000|
*these figures are a guide for comparison only and may vary dependent on the complexity or ease of installation in each case
This level of complexity in technology choice means that whilst gathering the customer needs remains a vital part of an installer’s role, the job of turning this information into a firm product recommendation is now best viewed as a specialist function.
At a recent meeting with Charles Hendry Minister of State for the department of Energy and Climate Change I called on him to consider the possibility of a sole independent body to provide impartial advice on renewable energy technologies to consumers. But his feeling was that this was not likely to be “on the radar” at the present time. So where independent consultants are not an option, customers’ requirements need to be referred to reputable manufacturers who have the expertise to provide specification services for free.
For example, at Stiebel Eltron we recognise that this means our installer base is going to need support to provide the best service for their customers. We therefore provide those who choose to partner with us with free specification services for their customers on our wide range of green technology options, so that customers get the benefit of our broad technical expertise and decades of project experience as well as our high quality products. We also offer access to useful tools such as our “heat pump navigator” which takes key input data to calculate the best heat pump configuration for a given project.
The advent of the new government incentives has in short simply underlined the need for best practice procedures to be followed by buyers, installers and specifiers of renewable technologies.
Following the findings of the EST’s field trial on heat pumps the government has also taken steps to help installers use best practice when selecting heat pumps for customers. In fact just yesterday (as I write) I was at the industry launch of the latest DECC and Energy Saving Trust installer guidelines to help ensure just this. Chaired by the Energy Saving Trust and attended by the Secretary of State for Energy and Climate Change, Chris Huhne, microgeneration certification scheme, DECC and the EST this event underlined the importance that all parties are placing on this effort.
To sum up, it is essential to investigate a customer’s requirements thoroughly, to have a good understanding of the possibilities and limitations of a site and to apply a thorough knowledge of the cost-benefits of each option to a choice. It follows that installers, consultants and manufacturers must develop closer relationships to provide a seamless service to consumers that will deliver the best possible solutions.