With the UK government’s announcement of the introduction of the Clean Energy Cash Back system, essentially a feed-in tariff designed to attract investment in the British renewable industry, controversy has raged with solar industry insiders believing tariff rates to be too low.

It therefore comes as no surprise that the Federation of Master Builders (FMB) has also announced that they believe the tariff rate which has been set (5p/unit with a subsidy of 36.5p for units of energy generated by small scale solar and wind installations) will be too low to make the UK market competitive and have suggested a rate increase of 10p.

Speaking under the banner of the widely publicised ‘We support solar’ campaign the FMB’s announcement comes in the light of a number of criticisms aimed recently at the Department of Energy and Climate Change (DECC) legislation to be introduced in the April of next year. The FMB is being given the full backing of the National Federation of Roofing Contractors (NFRC), and Electrical Contractors’ Association (ECA) with around 16,000 building firms adding their weight to the ‘We support solar’ demands.

Feed-in tariffs are designed to offer premium, guaranteed rates to small scale producers for renewable energy which is fed in to the national grid and bought by the utility companies. In markets where they have been introduced elsewhere they have proved successful at attracting investment in new solar markets. In Germany and Spain, solar sectors have experienced booms thanks to the attractiveness of solar stocks in those countries with high returns on investment made possible by the feed-in tariff mechanism.

It is certainly considered that while the UK does not enjoy Iberian sunshine levels a strong tariff would enable the sector in the UK to take off and of course attempt to catch up with other mature markets. Some critics have argued that a strong anti-solar lobby in Westminster led by the utility companies has influenced the government’s decision to go forward with legislation which is generally accepted to be insufficient. With this in mind Liberal Democrat MP Simon Hughes stated,

“The proposed “cash back” payments are designed to dampen solar PV demand over the next three years rather than to encourage it. This mindset needs to change. Solar power can play a significant role in the “greening” of our towns and cities, while providing tens of thousands of new construction sector jobs.”

Indeed, with support among certain power brokers and pro-solar lobbies acting to add 10p to the current tariff it may well be possible to tweak the legislation, making it workable in the long term. If not, the ‘We support solar’ campaign may fail to see the fledgling UK PV sector take off.

The head of the newly formed New and Renewable Energy Centre (Narec), Tim Bruton, has made the claim that if every south facing home in the United Kingdom fitted solar panels, they would generate enough electricity to meet the country’s energy needs.

Speaking ahead of Solar Flair 2009, a conference to be held in Northumberland designed to highlight key issues regarding the take up of photovoltaic (PV) energy, Bruton gave his full backing to solar energy as a way of combating climate change.

With the north-east trying to put itself forward as a future leading light in solar PV expertise, Bruton is one of many academics from the region hoping to put the north of England on the PV map. As a fellow of the Institute of Physics and a reputation for insightful publications of articles relevant to the field of solar PV, Bruton asserted that the UK is on the ‘verge of something exciting’, commenting,

“The University of Northumbria carried out a study for the Department of Trade and Industry looking at the existing south-facing buildings in the UK”, adding,

“All we have to do is take the things we have already built and put solar panels on them and we can generate all the electricity we need.”

The claims made by Bruton have been made all the more possible with the announcement by the government that 2010 will see the introduction of the Clean Energy Cash Back Scheme, essentially a solar feed-in tariff (FIT) designed to attract investment in the new industry. The scheme would work by offering small scale solar energy producers guaranteed, premium rates for energy fed back in to the national grid.

The mechanism is designed as a way of off-setting the obvious initial costs of solar panel installation and where such FITs have been introduced elsewhere, they have proved to be very effective ways of nurturing fledgling renewable sectors offering returns on investments to investors which would otherwise have been impossible. Regarding a UK solar FIT, Bruton stated.

“If you look at what has happened in Germany, Spain and California where you have the right subsidy structure from the government, the market has taken off.”

Certainly, all involved in the UK solar industry will be hopeful that the government’s controversial tariff will be sufficient to see the fulfillment of Bruton’s prophecy in the coming years.

The government has recently introduced a new certification program for sustainable energy products. Called the ‘Micro-generation Certification Scheme’ (or MCS), the program is designed to protect customers by ensuring good quality in both products and installation. The scheme works by putting manufacturers and installers through an inspection process in which the applicant has to demonstrate a certain level of competency in the technology they offer, provide a documented, quality management process and show an example of a finished product or installation. In order to incentivize the industry to sign up to the certification scheme, the government has declared that customers may only apply for grants or feed-in-tariffs if their system is entirely covered by MCS which means there is little point in buying an installation without MCS accreditation.

Preventing cowboys from entering green-industry and exploiting customers trying to do their bit for the environment is essential. However, concerns have been raised regarding the real impact of the scheme on customers and regarding the credibility of the certification process itself.

Since this is solarfeedintariff.co.uk, let’s look at the certification requirements for solar energy as an example. In order to claim the UK solar feed-in-tariff arriving next April, you have to install solar panels that have been through the MCS process. At this stage however, few manufacturers have obtained MCS accreditation for their products. In many cases it is simply because they haven’t heard of the UK’s MCS program yet. In other cases, manufacturers who have been told about the scheme may not immediately decide to go for it. To get accredited, you have to pay a private certification center (that in turn has been ‘accredited’ by the MCS administrators) to inspect its product and facilities. This is a costly and time-consuming process. In many cases, someone from the accreditation center has to be flown (at the expense of the manufacturer) to a factory in Europe or Asia so that it can be ‘inspected’ often by someone with little or no experience of the photovoltaic industry. Once you have MCS, the rewards for manufacturers are not clear. In the world of solar energy the UK barely even registers. I am often met with surprise (or worse still, laughter) when I say I’m from the UK at solar conferences. The German market will be over 200 times greater than the UK market this year. There is not a single ground mounted PV power plant in the UK. This means there is no guarantee that investment in MCS will be worthwhile.

The second issue is that certification processes for solar modules already exist. The most prominent is the IEC certification process that can be administered only by a handful or institutions worldwide. This is a rigorous performance and reliability procedure that tests the energy output of a solar panel under controlled conditions, and puts it through a large number of stress tests. These include the damp-heat test (thermal cycling in a humid chamber) and the hail-test (bombarding the module with pellets of ice fired from a canon). IEC tests are designed and continually improved by a committee of international solar energy experts. Wisely, the MCS recognizes IEC accreditation and requires it as part of its inspection. This does lead to the amusing situation where a UK inspector will visit mulit-billion dollar factory that has been supplying solar panels to the rest of the world under the IEC has ‘approve’ that everything in order.

In a photovoltaic system, there are many different components besides the solar panel, however MCS applies only to the solar panel. This is hard to explain. The other expensive part of a PV system is the inverter, which converts the direct current produced by the solar panels into mains 50Hz alternating current so it can be used by most appliances in a building or sold to the grid. The inverter is therefore critical to the good functioning of a system and is known to be significantly less reliable than solar panels which are normally guaranteed for 20 years compared to just 10 for the inverter. Why then is the inverter not covered by MCS?

The MCS for installers in the UK has a clearer role. Many people are familiar with cowboy builders or decorators providing shoddy service, and MCS could be an excellent way to reduce this. Questions remain about the implications for accessibility of micro-generation however. Does MCS mean that a competent DIYer interested in building their own micro-generation system is denied access to government support because they haven’t forked out for an MCS installer?

The main concern is that MCS reduces the amount of competition in the UK, limiting the choice consumers have when it comes to products and installers. Prices of Solar PV systems in the UK are already shockingly high compared to Germany (up to twice the price) and MCS risks being a barrier to entry so that certain manufacturers can now charge even higher prices to UK customers. The MCS could be hurting those it is designed to protect, to the benefit of the manufacturers and installers already within its program.

Certainly the intentions of the MCS are good and with time it could play a key role. The MCS needs to be very careful however not to stunt the growth of the UK solar industry from its current insignificant size. The biggest barrier to that growth is cost, so any measures that may increase costs to the end customer must be rigorously justified.

Labour MP and advisor to the Department of Energy and Climate Change (DECC) Alan Simpson has warned of the presence of an cartel acting against the interests of renewable energy in the UK. At an event organised by Solar Century to promote the government’s proposal of a feed-in tariff system, Simpson announced that there is currently a lobby opposing the renewable campaign headed by the big utility companies keen to protect their own commercial interests at the expense of the development of green energy in the UK.

With the government’s announcement regarding the introduction of the Clean Energy Cash Back system (essentially a feed-in tariff system) in April 2010 much debate has raged regarding the tariff rate which will be required in order to optimise investment in the fledgling UK renewable energy industry.

The feed-in tariff works on the principle that small, renewable energy producers are guaranteed a fixed, premium rate for all units of energy they feed back into the national grid. The renewable energy units are purchased by the utility companies, something which they are obliged to do by the tariff legislation. In actual fact, the government has set a rate of 5p/unit with a subsidy of 36.5p for units of energy generated by small scale solar and wind installations, something which Simpson has controversially asserted will not be sufficient to spark the must needed investment in the industry.

Simpson claims that with the current rate set at 5p, the ROI for solar investors will only be around 5-7 per cent, yields which would possibly not be generous enough to turn the heads of investors who would potentially be attracted by more generous tariff rates elsewhere in the world. With a tariff rate of 10p, Simpson believes that returns could be a more healthy 10 per cent, rendering the UK as a highly competitive market in the world for attracting renewable investment in the long term.

For the UK to finally become one of the major players in the world of solar drastic changes will need to occur within the coming years to catch up with established markets such as Spain and Germany who are currently generating 2,511 MW and 1,500 MW of renewable energy annually respectively compared to the UK’s peak 6MW. Simpson certainly believes that this shortfall can only be remedied with the introduction of comprehensive tariff systems. Speaking at the Solar Century event, Simpson announced,

“Current energy policy in the UK is dominated by the vested interests of “Big Power”. The national grid is monumentally inefficient as an energy system. It was a half-decent idea for the middle of the last century, but 70%-80% of energy put into the grid disappears before you or I even switch the light on. We need not an energy, but a power revolution that takes control from the centre and literally puts power back into the hands of the people”.

Those within the industry back the words of Alan Simpson and are well aware that the future of the UK renewable energy industry is completely reliant on a strong tariff rate. Come April, it will be there to be seen if the government’s rhetoric on tackling climate change can be matched by a determination to take on the big utility companies and drive through a system which will see the UK become a leading light in the green energy revolution.