Encraft statement on rejection of DECC’s appeal against the High Court Judgement concerning solar feed in tariffs

Encraft welcome yesterday’s emphatic dismissal of DECC’s appeal against the High Court judgement in December that the sudden change in feed-in tariff rates was unlawful.

In our view the short-term implications of today’s judgement will be limited, as six weeks remains too short a time period to develop responsible and quality projects at any scale. Indeed one of the many frustrations we have with the government’s behaviour is that the main effect of their October announcement has been to create a market environment in which only risk-taking cowboys can thrive.

However, the longer-term effects are significant and encouraging. As a result of the High Court process, the FIT regime and the government’s ability to intervene in the regulatory system has been thoroughly tested and the boundaries set. The market knows where it stands and participants can act with confidence again.

Today’s judgement is that when the government offers 25 year promises through FITs or RHI, or any other scheme, they must stick to them, and cannot act retrospectively. This means investors in all small scale renewables and energy efficiency projects in the UK can invest with confidence. It means companies like Encraft can invest time and effort in developing innovative large scale projects on housing and buildings without risking this effort being wasted. It should also be a wake up call for the government, so they realise that they need to think and act more carefully when setting and managing the details of energy and construction schemes.

We believe the government have a fundamental responsibility to manage the economy fairly and competently, and should be held to account by the judicial system for the way they implement democratically agreed policies. DECC were responsible for setting feed-in tariffs in the first place; for monitoring progress, and for adjusting them in response to market developments. Sadly, they failed to do any of these things in a prudent, practically-informed and measured way, and then sought to abuse their powers in a way that saw responsible market participants suffer most.

The constructive way forward is for DECC officials and ministers to develop a more robust and better informed, technology-independent perspective on the market, to avoid this kind of debacle in future. We will be writing to DECC today to invite the minister and officials to visit Encraft and some of our long-term multi-technology projects and clients, with a view to supporting this process.

Triumph for Local Businesses as Birmingham wins Global Retrofit Award

There was cause for celebration throughout the West Midlands this week as Birmingham City Council’s Birmingham Energy Savers (BES) programme was announced as the winner of the Urban Retrofit Award by the World Green Building Council (WorldGBC).

The announcement came during the UN Climate Change Conference in Durban on Monday and marks a great triumph for the council, as well as the local businesses involved in the project. Birmingham stood alongside New York, Tokyo and San Francisco as the award winning cities.

The achievement is particularly poignant for Encraft as it recognises the continuing success of the original business model, formerly known as the “Birmingham Green New Deal”, which Encraft developed with BCC and Localise West Midlands 2 years ago. The model was later rebranded as Birmingham Energy Savers.

The BES programme, for which Encraft helped raise the initial £2.5 million of seed funding as well as supporting council staff with their procurement approach, is set to lead to £1.5 billion of green retrofit work over the next 15 years.

By 2026 the scheme aims to secure 60,000 ‘green’ jobs in the retrofitting of 160,000 houses and 2,500 non-domestic properties across Birmingham and the West Midlands.

From an environmental perspective, too, the project is set to establish the West Midlands as the leaders of a low carbon UK economy. By 2020 a 4.3 per cent reduction in current CO₂ emissions is expected from domestic retrofits, and a further cut of 7.8 per cent is anticipated over the same period for non-domestic buildings.

Our contribution to this project was recognised in November 2010, when the Lord Mayor presented the city’s Attwood award to Encraft’s Managing Director Matthew Rhodes for his collaborative work on this project.

Cllr Paul Tilsley, Deputy Leader of Birmingham City Council, said:

“For Birmingham Energy Savers to be named as the best initiative of its type in the world is a stunning success for the city and the UK… I would like to thank every member of staff and all the partner organisations that have played a part in this win – the award is very much their prize.”

As one of only six awards to have been bestowed by the UN Encraft is proud to have supported Birmingham City Council in their achievements to date, and the success of the project highlights what can be accomplished when public and private sectors work together cohesively. As Paul King, CEO of the UK Green Building Council and chair of the WorldGBC Policy Task Force, said: “Birmingham’s leadership in urban retrofit is trailblazing, and highlights the critical role local authorities can and should play…if the public and private sectors work effectively together.”

http://www.encraft.co.uk/

The Green Deal needs more customer input

I spent a large part of this weekend reading the proposals for the new Green Deal framework published by DECC last week. These are important, because they could shape the construction and energy efficiency markets in the UK for some time.

Sadly, I found the proposals confused, over-bureaucratic and lacking in customer understanding. I’ll be recommending our customers take the initiative and start forming consortia to shape the Green Deal and its delivery vehicles more in their own interests.

I think the government has tried too hard with this set of proposals. There are over 850 pages of analysis and complexity, but at its heart they have made a number of fundamental mistakes, and having made these mistakes, their efforts are just driving unnecessary cost and complexity into the whole framework.

My main criticism is that the proposals do not start from any sense of customer interests and demand. Building owners and occupiers are treated as targets for policy, rather than potential enablers of delivery. Instead of worrying about how to bribe people to participate to do something decided by third parties (the optimum package of measures for a given building) the government should be focusing on what customers are interested in and how to use this to motivate building occupiers to want to find out and invest in energy efficiency and microgeneration. If we can find mechanisms which motivate people to act out of self-interest we will get a lot further a lot faster and more cost-effectively. This is eminently possible, as shown (accidentally) by the recent explosion in interest for feed-in-tariff schemes.

People will not be motivated if the Green Deal can’t make up its mind as to whether it is addressing consumers or investors; whether it is a commercial proposition or a state subsidy or charity; or whether it can trust the market and end customers or not. Nor will they be motivated if there is any sense that Whitehall knows what’s best for you.

Throughout the documents customers are inconsistently and variously called consumers, bill payers, customers and households. We should call them investors, because this is how we want them to behave, and we should give them the power to invest, make mistakes, and learn because that is in the medium-term interest of a thriving and competitive market, with lowest cost regulation.

The proposals talk about creating “a new, open and dynamic market for businesses” but put in place warranty requirements for Green Deal providers which will ensure the market is controlled by a small number of large financial middlemen. They also pull back from making the new Energy Company Obligation (ECO) fully accessible to all scales of company, and are proposing that 50% of these funds (amounting to £1.3 billion annually) remain under the exclusive control of the six major utilities. Believing this power will not be used to distort the market in the interests of the utilities is naïve in the extreme.

The way forward with schemes like ECO is to place them under the control of customers as far as possible, so that local demand and self-interest in getting a good deal drives the market, not suppliers and bureaucrats. FITs and RHI, for all their critics, are much more efficient ways of stimulating markets and delivering policy objectives, because they allow customers to choose what works for them, and take responsibility for their choices (so long as the key measure is metered kWh delivered or saved). This is what I mean about trusting the market and customers.

I also find it depressing that the government still clearly feels Green Deal-type measures are somehow charitable or public-good-type activities which require subsidy. This is implicit in much of the way their market research is structured, and yet directly contradicts their own analysis which says Green Deal measures will in fact be economically viable and commercially sensible on many properties today – even before the cost reductions and efficiencies which are likely to come with the scale of delivery envisaged. Treating the sector as charitable encourages customers to behave as aid-recipients, and to wait for support rather than seeking to sort themselves out. This is counter-productive to competitive and well-functioning markets.

The problem is not the economics, it’s the attitudes and market structures created by the government. The solutions do not lie in perpetuating these attitudes, denying the economics and resorting to direct state subsidy, they lie in thinking about this whole market and sector in a more fundamental and in depth way.

I would like to see a Green Deal that is structured consistently and coherently by starting from a clear vision of a future mainstream and thriving commercial market in the UK for energy efficiency and microgeneration products. We should start by understanding what such a market might (indeed must) look like and then start creating the institutions and frameworks today to support it, instead of working from today’s backward looking industry structures, particularly in the utility sector.

Such a market will have many thousands of small firms competing and innovating to offer a wide range of solutions to empowered, interested and informed customers (investing to support their own futures). There will be no need for engagement of energy utilities (let alone control of the market by them) because the supply of commodity kWh is very different from the delivery of bespoke energy and construction services to individual buildings on a mass scale. The skills and business models required for this kind of market need to evolve through the proven mechanisms of free market economics and innovation, best supplied by small companies, which will in turn create tens of thousands of jobs. The market will have no more bureaucracy and middlemen than in today’s construction industry, and it will not need public subsidy at all.

We will need only basic standards and assessment methodologies (like in financial services) because it will be in customers’ own interests to find out about the best solutions for them, and there will be a thriving self-funded market of independent energy advisers helping them, regulated lightly by an energy services authority which has learned the lessons of the FSA.

I believe all this is easily possible within 3-5 years (and certainly 10) if the government gets the Green Deal right. It’s depressing to see so much effort having gone in to developing proposals without a coherent vision at the outset, but I do still think there is some hope, because if you look carefully, there are a few signs that DECC have made a limited amount of progress in the right direction.

Encraft will be holding a series of seminars and workshops for its customers and other interested parties across the country in the New Year to look in more detail at the Green Deal specifically from the customer perspective, and to develop and promote a vision to adapt the new framework so it works for the market and real customers, not just for the academics in DECC.

Inept and Inconsistent - FiT Cuts and DECC

Few involved with the UK solar industry would argue that the current level of governmental Feed-in Tariffs are sustainable. With the costs involved with production having dropped 30% since April 2010 it is right that the subsidies are adjusted to reflect this.

But DECC’s announcement this morning of cuts from 43p/kWh to 21p by December 12^th do not represent a balanced review of the tariffs, they do not represent a necessary trimming of funding to one of the fastest growing industries in the UK, and they do not represent a ‘sustainable growth path’ for solar businesses. They represent the execution of domestic solar installations.

Everything involved with this morning’s announcements reeks of governmental ineptness. As the blood of the solar industry collectively boils, this post will detail the government’s failings involved with this announcement.

1.       Uncertainty

Low carbon and renewable industries continually face the criticism that they are too unreliable to be invested in, and that there is too much uncertainty regarding their future. Now reputation is always a difficult problem to overcome for any industry, given its intangibility, but it is the one area where governments can have a real impact. Providing a solid base, being consistent in its support for the industry, and reassuring investor confidence is all an integral part of a government’s involvement with any area of economic growth. But this announcement is indicative of the government’s ability to do the complete opposite.

Today’s announcement will send shockwaves through the solar industry not just because of the halving of the FiTs, but because of the deadline of December 12^th. It is almost inconceivable that Greg Barker and DECC would allow the cuts to be introduced so early. It means that any large scale projects – predominantly those involving Housing Associations – will be almost immediately abandoned. This not only represents a great loss of work for the entire supply chain, but also has a knock-on effect throughout tenants of these HAs.

We have seen the halving of electricity bills for tenants of social housing, and the plug being pulled on these projects is only going to thrust the poorest into fuel poverty as winter approaches.

Furthermore, these measures are only supposed to be introduced after consultation. The consultation is due to end on December 23^rd. Nine days after the cuts are supposed to be introduced. I am not the only one who has noticed this discrepancy, as Jeremy Leggett (Solar Century) highlighted via Twitter.

So what does this actually mean? Will the consultancy period be changed, or is the 12^th only provisional? Nobody knows. I suspect not even DECC. The only certainty is the uncertainty.

2.       Timing

In today’s announcement on the DECC website Greg Barker writes:

The tariffs are broadly comparable to those offered in Germany, which has also recently reduced its tariffs.

Now excuse me for being a pedant, but when you are announcing cuts that will result in mass job-losses then there is no place for such loose hyperbole. ‘Broadly comparable’ is too vague. The German government has announced cuts to their tariffs. Cuts of 15%. Scientist, mathematician and layman alike can establish that when you are talking about subsidy reductions, 15% and 50% are very different entities.

Secondly, the German government also made the announcement on October 28^th, for the new rates to be enforced from January 1^st. Our government gave us six weeks to prepare for 50% cuts.

Furthermore, the Germans were aware that these cuts were coming and not completely blindsided. Admittedly predictions were for 12% reductions, but the difference between 3%, and the assumption that UK cuts would be introduced in March, is very different indeed. It is staggering that Greg Barker would assume that this vague reference would in some way soften his announcement. It only highlights governmental ineptitude.

3.       Leaks and Incompetence

Yet another unbelievable indication of the mess that was occurring behind the scenes at DECC was the leak by the EST on Friday. Not only did this force an announcement from Greg Barker today, but it plunged the industry into panic late on a Friday afternoon.

There was nothing that could be done as the industry collectively turned to the government in search of an answer; the only forthcoming reply was ‘wait until Monday’.

It was dismissed as ‘inaccurate’ by DECC, but the only inaccuracy was that it comes into force on the 12^th, and not the 8^th, of December. Well, thank goodness for that. Rather than it coming into force on the Thursday, we have until Monday. It is truly staggering.

Anyone in the industry who has Twitter will have been seen the outcry spread around the UK this morning, and Encraft Managing Director Matthew Rhodes wrote to Greg Barker:

You have announced "bust" for every responsible SME in the sector and "boom" for speculators and big six utilities. Shameful.

This is the damage governmental incompetence can cause, and I haven’t even started on the RHI delays...

Encraft launch new Gateway

This week it's a new announcement from Encraft MD Matthew Rhodes.

Encraft have launched a new interface for their web applications customers at http://gateway.encraft.co.uk. The new site allows customers to access a new generation of the widely used Encraft micro-generation calculators and includes the ability for customers to embed the calculators in their own websites and also access the underlying code and databases as web services.

The new calculators are easier to use and include the ability to print pdfs of the output, reflecting user feedback that this would provide additional benefits.

The existing calculators will be maintained for several weeks while customers migrate to the new service, and all existing customers with embedded first generation calculators will find these continue to work unless or until they decide to move to the new service.

Methane, Money and Manufacturing: Encraft at the RESCO Conference

When the renewable and low carbon industries are discussed solar panels, wind farms and Feed-in Tariffs are the first to make an appearance. But last month Encraft Project Engineer Kate Ashworth attended a RESCO workshop in which bio-methane took the centre stage.

Bio-methane energy is generated by the decomposition of organic wastes, most frequently through the process of Anaerobic Digestion (AD). If upgraded, bio-methane can then be injected into the national grid.

The workshop, however, dealt with one significant element of the industry and that is the supply chain. This is the area by which bio-methane can be upgraded for use in the national grid, and it is also the area most likely to generate jobs. RESCO note that the engineering supply can include:

·         Fabrication & machining

·         Pipework

·         Valves, pumps & ducting

·         Electronics & process monitoring systems

·         Process  control systems

·         Chemical treatment technologies

·         Chemical sensors & data analysis

·         Mixing & processing equipment

·         Construction & building

Kate commented that ‘the market conditions are now conducive for a rapid expansion of this technology with the imminent, if somewhat delayed, introduction of the RHI tariff for gas injection, as well as other regulatory incentives, such as green gas certificates.’

Thus the lack of widespread knowledge in this area of the industry should not be considered a disadvantage. Perversely it should be regarded as an asset; an area into which those in the engineering supply chain, as well as specialist technical services providers, can grow.

The emerging bio-energy market in the UK is estimated to be worth £5 billion, and it is further suggested that bio-methane could provide up to 50% of the UK’s domestic gas in the future. Don’t be dissuaded by talk of gas, wind and methane; this area of the bio-energy market looks set to go far.

Photovoltaic-Thermal (PVT) Installation

In the heart of Gloucestershire Encraft was recently set a new challenge in the domestic photovoltaic market. An alternative energy source was sought not solely to provide electricity to the house, but also to provide heat for domestic hot water and a swimming pool.

With a South facing rear roof Encraft engineer Andrew Hanson began designing the project based around a series of AnafSolar H-NRG Photovoltaic-Thermal (PVT) panels. With a peak electrical output of 3.22kWp, and an average annual thermal output of around 8,917kWh, the system was designed to contribute towards both the domestic hot water load and the swimming pool itself.

The PVT panels not only provide the house and pool with electricity and hot water, but with the addition of an aluminium heat exchanger, which is applied on the back face of the collector, the solar thermal works as a cooling system for the photovoltaic collectors. This, in turn, improves the efficiency of the panels and thus increases the yearly kWh production.

With a nominal average electrical output of 2,122 kWh per year, along with gas and electric savings in the region of £650, and a Feed-in Tariff income of £918, the design, implementation and delivery was a great success.

Have a look at the photos below of the project:

For more information email us at enquiries@encraft.co.uk, or give us a call on 01926 312159.

Installation by Eco2Solar (http://www.eco2solar.co.uk/).