Snapshot from PACE target markets – Insights from the UK: Manifold solutions to help increase uptake

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Snapshot from PACE target markets – Insights from the UK: Manifold solutions to help increase uptake

The fuel cell business environment in the UK is starting slowly, albeit steadily.

Broadly speaking there have been no significant policy changes to increase demand for Fuel Cell micro-Cogeneration in the UK. There have been suggestions to allow new technologies to be installed within the energy company obligation scheme, which is funded by the utilities, but this will have to be watched to see how this develops.

The Feed-in Tariff (FiT) for Fuel Cell micro-Cogeneration has been cut to 12,000 installations. Since the FiT scheme ends in April 2019, this volume should definitely be sufficient. The funding level allows a good rate of return of up to 14% for everybody who wants to self-invest in a Fuel Cell micro-Cogeneration unit especially for generator type models.  Since a serious cost-reduction, with expected volumes until April 2019 can’t be expected, a successor scheme or continuation of the FiT’s would be essential. Apart from the thus far continued FiT, there have been no moves to increase demand for Fuel Cell micro-Cogeneration in the UK. There are some Energy Company Obligation (ECO) suggestions to allow new technologies to be installed when the next phase of the scheme comes into effect in 2019. However, given that ECO is targeted at reducing fuel poverty and works on a cost optimal basis, it is unlikely that Fuel Cell micro-Cogeneration will see any take up from this.

The Department for Business, Energy, and Industrial Strategy (BEIS) launched the Clean Growth Strategy which sets the UK government’s ambition with regard to meeting the 5th Carbon Budget. This strategy mentions the need to reduce carbon emissions from heat and specifically states that new builds will be an initial policy focus, together with the need to comply with the EPBD in respect of NZEBs. Again without continuing FiT, it is unlikely that Fuel Cell micro-Cogeneration will see much interest here given the capital cost hurdle, as well as the fact that developers can achieve a comparable carbon saving by deploying other technologies at a lower cost, including heat pumps.

There are some other barriers preventing large scale uptake in the UK. The government appears unwilling to legislate on anything which will increase costs for consumers, be it up front capital for the purchase of systems or socialised costs for incentive schemes.

Implementation of the Renewable Heat Incentive/Green Deal for end-users has also been poor, which is why installers have become increasingly sceptical of the Microgeneration Certification Scheme (MCS), which is required for products and installers so that end-users can claim RHI or feed-in incentives.

Installers are generally reluctant to embrace new technologies because of the MCS certification hurdle and lack of time, whilst end users need to be educated to understand the true value of fuel cell technology. Meanwhile, Local District Network Operators (DNOs) provide little value for exported electricity at small scale and are also somewhat resistant to local embedded generation owing to perceived local grid stability and phasing issues.

Even though the UK carbon emission rating for electricity is planned to reduce significantly (from 0.51 to 0.39 kgCO2/kWh) the high conversion rate of Fuel cell micro-Cogeneration to provide electricity for your heat-pump remains the most efficient way to produce decentralized power and heat.

Solutions are manifold. The government must fully recognise the systemic benefits of and be willing to further subsidise decentralised micro-cogeneration, and there needs to be improved standards and regulations to acknowledge Fuel Cell micro-Cogeneration technologies. There must also be improved awareness of training standards for Fuel Cell micro-Cogeneration – low consumer demand means it is only of interest to niche installers. Finally, there should be a general improvement in how the benefits of fuel cell technologies are communicated in order to drive demand – for example, that fuel cells can offer a clean alternative to combustion-based technologies, particularly in areas of poor air quality.

Fuel Cell micro-Cogeneration is still a niche technology proposition at domestic scale with very little public awareness and recognition. We need well-presented case studies and tailored “use cases” for the UK market in order to display the benefits, together with a concerted effort to sell the wider system of benefits to National Grid and supply companies.

Policy-makers can help us by providing independent advice and guidance, as well as a thoroughly reworked and properly researched incentive scheme which offers an upfront payment rather than a FiT to assist with the capital hurdle.

In addition, properly recognising the benefit of small scale embedded generation within building regulations (SAP) would improve the value of this technology group to developers and thereby improve overall building compliance. A specific fund to drive uptake and engagement would also be of benefit.

Our three recommendations to policy-makers are to:

  • Promote Fuel Cell micro-Cogeneration as best practice to support ambitions for reduced or “no NOx” decentralised energy production, thereby de-carbonising power and heat
  • Reduce red tape for introducing new technologies under the MCS
  • Set up a national incentive scheme, similar to the German KfW433 Programme with an upfront payment, to help introduce new technologies and products.
2018-02-06T08:35:57+01:00 January 10th, 2018|Categories: News|

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