Great Britain/RHI: One Accredited Solar Thermal System in Nine Months

For over a year, the UK government has been heavily promoting the Renewable Heat Incentive (RHI). But by end of August 2012, only a tiny amount has been paid out for solar thermal: just Great Britain Pound (GBP) 60 (approx EUR 70). So why is solar thermal badly lagging in the UK’s flagship incentive for renewable heat?

Late in 2011, the Department of Energy and Climate Change (DECC) produced a report (see attached document) which set the agreed limit for the RHI for 2012/13 at GBP 133 million. Then in June 2012, DECC released a budget management report (see attached document) which announced this cap was to be reduced by almost half to GBP 70 million for the non-domestic sector. These were clearly ambitious figures and yet only one solar thermal installation for commercial use has been paid by the RHI so far, with a peak power of 8 kW (11 m²).  This can be compared to the 1,706 residential systems that were granted under the first phase of the Renewable Heat Premium Payment (RHPP).

The total figures for accredited installations and peak power for the UK, as of 16^th August 2012, are as follows:

Source: Ofgem

The DECC currently predict that the total RHI expenditure for 2012/13 will be around GBP 41 million. However, although this is almost GBP 30 million under the maximum it still seems very optimistic. The total payments made under the RHI have until now been extremely low with a total of GBP 652,273 as the following table shows:

Figures c/o Ofgem.

It is strange that so few solar thermal applications have been accredited by the RHI. Under the previous renewable heat incentive scheme, the Low Carbon Buildings Programme (LCBP), solar thermal had proven to be one of the most popular eligible technologies. By the time of the scheme’s closure in May 2010, solar thermal had accounted for 45% of grant applications under the LCBP. In fact, in a DECC report issued in August 2011 after the closure of the scheme, an internal stakeholder is quoted as saying: “If you ask the general public and commentators what they think [is] the most visible sign of success from the Government of this low carbon transformation, they will say solar panels on every roof.”

The same impact could not be said of the current RHI. But what is the reason for the extremely low number of solar thermal RHI applications?

Firstly, some companies are reporting that the publicity of solar over the last three years had been so heavily weighted towards PV due to the initially high rate of Feed-in Tariff (FiT) scheme that it is now difficult to sell the financial benefits of solar thermal to customers. Others cite the fact that the RHI scheme is heavily weighted towards biomass. One long-standing solar thermal specialist supply company who wished to remain anonymous stated in an interview with Solarthermalworld that they had found the RHI to be “slow out of the starting blocks on large-scale solar thermal, although this may be because developers don’t recognise the opportunity just yet and schemes take a while to be realised. Biomass is having the biggest chunk of it to date because the returns on investment are much quicker.”

They went on to say that they initially set up as a supplier of solar thermal equipment, but from 2009 had been forced to diversify into solar PV “because that’s where the money was. With the reductions in the Feed-in Tariffs, over the past six months we’ve been banking a lot on the solar thermal market coming back and we will also be entering other renewable technology areas for more revenue streams. But what we’re hearing is quite disturbing: it seems as if biomass is stealing the march on solar thermal. We’re now hoping that this will even out, but without a change in tariff this is unlikely to happen.”

The company spokesperson explained that another good indicator that biomass is the favoured renewable heat technology over solar thermal is the recent appearance of a number of companies offering free biomass installations. These companies used to offer the same deal for solar PV, installing the equipment on a client’s roof free of charge and then collecting the tariffs, with the client benefiting from the free energy produced. The move of such companies away from solar PV and towards biomass proves “that the renewable heat market is now stacked heavily in favour of biomass”. They concluded the interview by stating that, though their own solar thermal products were still selling and the company was still growing, it sounded as if “we’re the lucky ones. From what I’m hearing, if you’re steady then you’re doing well.”

The administration department from Solarsense Ltd. shared their experience of beginning the RHI application process for a solar thermal installation at the company’s own Bristol premises. For the RHI, it is the end user and not the installation company which completes the application process. Though Solarsense were both the installers and the client, they still found the actual registration and application process to be confusing and off-putting.

“Getting access to the correct part of the website to start the registration process was complicated at the very beginning”, said a spokesperson from Solarsense. ‘You have to scroll through many pages of the website before you get to the correct part to apply. There is a guidance document that they recommend you read before applying, but this is 119 pages long!’ They went on to say that ‘the layout of the application is done over many pages with just one or two questions included per page, so you have no idea how many pages there are until you get to the end and you cannot look ahead until you have completed the relevant answers on each page first. The questions are badly worded and can be quite confusing: it is difficult to know what they are asking for. This would be especially difficult for our commercial customers, who are expected to complete their own application without necessarily having a full understanding of the technology. The supporting documentation required for the RHI is also quite comprehensive and may cause a few problems for our commercial customers. I am aware that they are very particular about the schematic diagrams submitted, but as we haven’t quite got as far as submitting our own application yet I cannot say what details they are picking fault with. I know one of our customers is struggling to get their application accepted because of issues with the schematic.’

Although there is a telephone helpline provided by OFGEM, Solarsense said that “the level of advice I received did not inspire me with confidence. I used the number on several occasions and on a couple of instances felt that the person who answered the enquiry had no more idea than I did what information I should be recording.”

They concluded by stating: “The only positive thing I can say is that you can start the application and then save your information without having to complete it all in one attempt. You can then access the saved data at a later date and complete more details. Once you are happy with the information you have recorded you can then submit it for approval. For me the main complaint overall would be the way the questions are worded as they are technical and confusing.”

Meanwhile, another leading solar thermal company in the UK who also wishes to remain anonymous finds the RHI to be more trouble than it is worth: “In the domestic sector and because of the stuttering process, we now never talk about grants, tariffs, the Renewable Heat Incentive (RHI) scheme or the [soon to be announced] Green Deal, because it is pure guesswork as to what and when these will be implemented. If and when it becomes appropriate, we will then extol the virtues – if there are any.” Currently, this company have only one client who is going through the application process, as “once clients measure the level of the grant against their outlay, most have considered it not worth the hoops and paperwork”. Though this client is still in the early stages of their application, the company is confident in stating that “the figures are far from impressive compared to the early days of the Feed-in Tariff scheme”. They concluded that “in the commercial sector, mentioning the RHI could create a lot of work for no gain. The paperwork requires simplification and clarification if the scheme is to grow. For our small company we would have to outsource to push through a scheme, so as a whole it is not in our interest to advertise the RHI.”