The Benefits of Microgeneration
- generating energy onsite can reduce energy bills e.g. when replacing oil off the gas grid
- tackles future rises in energy prices and helps contribute to UK energy security
- offers consumers and communities opportunities to make their own contribution to the fight against climate change
- avoids transmission losses associated with centralised electricity generation and gas and oil distribution
- attracts financial incentives which are designed to offer consumers a potential return on their investment of 6%-8% (depending on outputs)
- financial incentives are attached to a property, rather than to a consumer
- financial incentives may enhance the value of a property since the income will continue for a number of years. This effect would be enhanced by rises in energy prices
- can attract reduced VAT.
Consumer engagement with Microgeneration
By installing microgeneration, consumers and communities can make a contribution to EU renewables targets and cut carbon emissions. The UK’s target is to generate 15% of its energy from renewables by 2020.
The Coalition Government is supporting installation in a variety of ways, with the aim of helping home owners, small businesses and communities reduce their carbon footprint. ’A whole house approach’ means that energy efficiency such as insulation such as cavity wall insulation and double glazing (e.g. to qualify for heat payments) needs to complement microgeneration. However, there is no requirement for pre-insulation to qualify for Feed-in-Tariffs (FITs).
Coalition Government support for microgeneration
It is recognised that the up-front costs of installing microgeneration is still a significant barrier for consumers and communities . Costs can be quite high and without support, consumers would not be able to afford them.
Feed-in Tariffs for electricity
To help tackle this, the Coalition Government is offering incentives for micro-electricity (Feed-in Tariffs or FITs) to businesses to communities and consumers wanting to install solar PV, micro-wind, micro-CHP and micro-hydro.
Renewable Heat Incentives
RHI tariff payments will be made to commercial and industrial generators and communities generating renewable heat from later this year.
Tariff payments to households will begin in 2012, alongside the Green Deal, to facilitate a whole-house approach to heat production and energy saving.
In the meantime, from July 2011, support for the domestic sector will be available through the Renewable Heat Premium Payment scheme. This is a £15m fund to help people cover the purchase price of green heating systems and is intended to support up to 25,000 domestic installations.
VAT and Microgeneration
Microgeneration benefits from reduced VAT: small-scale onsite low carbon and renewable energy technologies pay 5 percent VAT.
This reduction does not apply to DIY installations). Biomass boilers qualify for a reduced rate but biomass wood burning stoves do not.
Microgeneration Strategy
DECC has completed a collaborative consultation process for a new Microgeneration Strategy. The first phase of the consultation process involved stakeholders participating in a series of working groups looking at quality, technology development, skills and information/ advice.
The formal consultation on the consultation document closed 16 March 2011. DECC plans to bring forward a new microgeneration strategy in the summer of 2011.
The objectives of this Strategy are to:
- Set out the priorities for action in the near and medium term, in particular tackling the non-financial barriers facing the sector e.g. by providing advice and information about Microgeneration for householders, communities and small businesses;
- Promote a holistic approach to reducing carbon emissions in homes through energy efficiency, local energy generation and behavioural change; and
- Develop the microgeneration supply chain to ensure it is able to meet the expected rise in demand, in the process creating and sustaining jobs and thus helping to maximise the benefits of the green economy in the UK for small-scale renewable and low carbon onsite energy.
The consultation will look at four key areas for development: Quality; Technology Development; Skills; and information/advice.
The Strategy will cover heat technologies up to 300 kW and up to 50kW for electricity. This will include heat pumps, solar PV, Solar thermal water heating system, biomass boilers, micro CHP, micro wind turbines, fuel cells, micro hydro schemes and passive flue gas recovery devices.
The Government will aim to publish the final Microgeneration Strategy in the summer.
Quality assurance and consumers
To tackle mis-selling, quality, safety and performance issues, MCS (Microgeneration Certification Scheme) has been developed for consumers seeking advice on products and installer companies. MCS is mandatory for FITs <50kWs, and likely to be mandatory for The Renewable Heat Incentive.
MCS offers consumer protection which meets OFT level requirements and routes for any complaints. MCS installer companies must demonstrates compliance with the MCS standards and offer consumer a written estimate of the likely energy output of an installation. More information is available on the MCS website
Installer companies must belong to a consumer code of practice. Currently, there is only one code in operation: The REAL Assurance Code
Identifying suitable technologies
The Microgeneration Strategy will look in more depth at the issue of identifying suitable microgeneration technologies.
Sources of further information about generating your own energy
For further background information on generating your own energy onsite, see the Energy Saving Trust's website[External link] or call the Energy Saving Trust’s “Act on Co2” advice line: Tel 0800 512 012
Suitable Technologies
For a “home energy selector” to advise on suitability of a particular property, see the Generate your Own Energy pages on the Energy Saving Trust's website[External link]
Suitable products
For approved MCS certificated installer and products visit the MCS website
MCS installer companies are able to give consumers advice on specific products and impartial advice on the suitability of individual technologies. They are required under MCS standards to give accurate written estimates of likely energy outputs from a technology.