MCS (MCS Service Company Ltd) OSE0068
Written evidence submitted by MCS
Submission by Ian Rippin
Title: Chief Executive
Organisation: MCS (MCS Service Company Ltd)
MCS (MCS Service Company Ltd)
Since 2008, MCS has been the only recognised Standard for UK products and their installation in the small-scale renewables sector. It is a mark of quality. We create and maintain standards that allows for the certification of low-carbon products and installers used to produce electricity and heat from renewable sources. We are impartial: technology neutral, manufacturer neutral, and supportive of Installers committed to quality installations and consumer protection. Membership of MCS demonstrates adherence to recognised industry standards, highlighting quality, competency and compliance. Our mission is to give people confidence in low-carbon energy technology by defining, maintaining and improving quality.
1. What role can developments in solar panel technology play in the UK’s transition to net zero?
Outside MCS remit
2. To what extent is the contribution of onshore solar technologies to the UK’s renewable energy mix limited by storage and distribution capacity?
Outside MCS remit
3. How significant are current technological developments in solar energy storage and distribution for the potential contribution of onshore solar to the UK’s renewable energy mix?
There is significant potential for solar energy storage to contribute to the UK’s renewable energy mix. The nature of the solar generation curve (which peaks in the middle of the day) means than solar generation is a natural complement to storage, because surplus produced during the day can be stored and used at night.
Evidence from solar technology wholesalers and distributors in the UK indicate that approximately 80% of new residential solar systems are now installed with a home energy storage system, such as a battery. The aggregate value of millions of home batteries is huge and could make a major contribution to the UK’s grid balancing requirements.
4. What are the current barriers (regulatory, technological or otherwise) to expanding the number of small and large-scale solar installations in the UK?
MCS specific focus is on domestic rooftop solar, therefore our response focusses on those areas only and does not address large-scale solar installations.
With that in mind, our answer is focused around the following:
• Grid and network capacity.
• Building regulations and related policy.
• The availability of labour.
• Access to finance.
Grid and Network capacity
We would note on this topic that onsite generation, such as residential and commercial rooftop solar PV – as well as long-duration, co-located storage, such as utility-scale batteries – provide a way to mitigate some of the short-term costs of grid upgrades.
In addition, co-locating electricity supply and demand means that electrified residential and industrial heating, for example, will be able to draw on power generated at the point of use. This helps alleviate pressure on high-voltage networks, reducing the need for significant re-engineering. Further, there are opportunities associated with co-locating complementary technologies – such as onshore wind and solar – to reduce infrastructure challenges and make best use of new and existing grid connections.
Building regulations and related policy
MCS believes that more should be done to highlight to homeowners and the private rented sector that solar PV is a ‘permitted development’, unless you have a listed building and/or live in a conservation area. Government should communicate the fact that the majority of homes can benefit from Solar PV without the need for planning permission, providing their roof space is suitable for solar as described in the MCS Standards.
We would also support more awareness raising around the smart export guarantee (SEG) that allows solar PV owners to export excess electricity generation to the grid. The SEG further decreases the payback period of solar PV, adding further weight to the already strong financial case for installing a system.
The government must also ensure that the full Future Homes Standard (the building regulations which will govern how new homes in England are built from 2025), is designed in such a way that solar comes as standard on all new homes. Doing so could directly support the deployment of at least 100,000 new solar homes as a result of this policy change alone, representing 400MW per year of new solar capacity.
Anecdotal evidence suggests that today housebuilders who deliver in roof solar tend not to deploy enough solar to support a home’s electricity needs i.e. they only fit the minimum necessary to comply with local building requirements. We would strongly support the FHS requiring sufficient solar be deployed to at least provide for the potential electricity needs of the home's occupants.
Regulation proved effective in Scotland; changes were made to building standards in 2015 that incentivised solar on new build properties, and EPC data in 2020 showed that 60% of new build homes had solar. Anecdotal evidence from our members suggests this may be closer to 80%.
Availability of labour
The solar industry could support at least 60,000 jobs by 2035. In Scotland, a 4-6GW ambition of solar could deliver between 5,500 and 8,500 good green jobs in Scotland, across the supply chain and in a variety of industries.
It cannot be stressed enough that UK solar is a major economic success story. Record residential rooftop deployment is helping to cut bills for homeowners and decarbonise the British economy, and increase our energy security.
The solar industry has been pro-active in seeking to address the skills challenge, and, for example, is running a pilot skills training project, Solar Skills London supported by MCS, in the capital. This includes a training grant scheme for employers and the development of a 120-hour pre-apprenticeship bootcamp programme, that launched in November 2022. The bootcamp will enable young people from underprivileged backgrounds in the capital to learn about careers in solar, with some progressing to guaranteed interviews with solar employers for apprenticeships and early-career roles in 2023.
MCS continues to see rapid growth in certified contractors – rising from just over 1300 at the end of 2021 to over 1800 at the beginning of December. It is worth noting that this will include a range of company sizes from SMEs to much larger organisations, so the actual number of installlers will be much higher. This growth shows the confidence the sector has in rooftop solar, however is still well short of what will be required to meet net zero targets.
We must ensure as a nation that, as the UK transitions to net zero by 2050, those from fossil fuel based industrial backgrounds are supported. For example, we note and support the fact that the Government’s Net Zero strategy acknowledges the need to support and retrain workers to build low carbon industries. However more can be done to secure strong UK supply chains. The Government must increase efforts to provide appropriate skills, training and vocational support. This could see those in the oil and gas sector retrained and contributing to the delivery of a low carbon future. The solar industry warmly welcomes those with technical and other experience from different generation technology backgrounds. These can be used by the solar sector to support the transition to net zero.
Access to finance
Grants, zero loan interest rates and other financing mechanisms have been readily accepted by solar and storage technologies, stimulating investment in renewables. To date, access to finance for consumers to support the delivery of home upgrades has been turbulent. Over the past few years there have been several short-term grants promising home upgrade opportunities, most notably the Green Homes Grant (GHG). However, whilst the GHG had significant potential to contribute to the decarbonisation of the UK’s housing stock, the lack of clarity, short running time and premature funding cut off, resulted in thousands of frustrated customers and businesses.
The Government must work with industry to develop new methods of financing the decarbonisation of buildings that reflect real world project installation time frames. There is enormous potential for zero carbon home upgrades, and the solar and storage industry is willing to supply it, but previous short-term cycles of financial support for households have tempered consumer confidence.
We encourage the EAC to work with industry as part of this consultation and others subsequent, to design a long-term scheme for retrofitting homes and businesses in line with the delivery of net zero by 2050. This should integrate incentives for green mortgages, rolling out smart metering, EV charging and network upgrades.
A further consideration could be the rollout of green mortgages or a solar mortgage could facilitate greater rooftop solar installations. At present some mortgage providers offer additional lending which could be used for home upgrades such as solar PV however this is often shorter term with higher interest than their mortgage loans. A solar mortgage could differ with the term and interest rate the same as the agreed main mortgage. This aligns well, as average mortgage term and operational lifespan of a solar panel being approximately 25 years. Rooftop solar provides a host of benefits; driving down the cost of energy bills for consumers, reducing carbon emissions and increasing the property’s value by up to £2000.
The Scottish Government’s Home Energy Scotland may offer an example for the EAC. Each programme offers interest free loans to homeowners and SMEs to invest in energy efficiency or renewables.
Other innovative finance options such as Property Linked Finance – a low-interest loan that stays with the property, not the person – are under development to aid the uptake of solar, as well as de-risking investment in whole-house retrofit.
VAT on Domestic Batteries
Other key measures would include, for example, ensuring that VAT on domestic batteries is zero-rated when these are installed as a standalone product. As part of the Spring Statement 2022, the Chancellor made the welcome announcement that from 1 April 2022 until 31 March 2027 VAT on installing energy-saving materials (ESMs) in residential properties in Great Britain, including solar panels, would be 0%. This represents a cut from the previous rate of 5%, and a pro-growth policy change that will incentivise the take-up of residential solar in line with the government’s net zero objectives.
However, the 0% rate of VAT only applies to batteries where these are installed as part of a solar system – in other words, not when retrofitted to a property which already has a solar system. This unfairly penalises homeowners and occupants who do not have the money available to install a solar system and battery at once, and we strongly encourage the Environmental Audit Committee to recommend to the Government, as it has in the past, that all relevant green measures – including batteries when installed as a standalone measure – benefit from the reduced rate of VAT. This would significantly increase the capacity of the UK’s residential building stock to benefit from onsite solar generation.
5. Are government support schemes sufficient to encourage small-scale solar technology deployment by consumers? What role does the pricing of energy under these schemes play in the uptake of solar technology by domestic and commercial properties?
Historic government support schemes like the feed-in-tariff have been a major success in encouraging small-scale solar technology deployment, driving installation numbers up and installation costs down over the past decade[1], with MCS data showing that there has been a 60 percent fall in the cost of the average 4kWp system from £13,000-plus in 2010 to £5,000-plus in 2022. There are now 1.2 million MCS registered residential solar systems. However, more can be done to support residential solar uptake.
As noted in our response to Q4, the government must ensure that the full Future Homes Standard (the building regulations which will govern how new homes in England are built from 2025), is designed in such a way that solar comes as standard on all new homes.
The economic benefits are huge. Doing so would increase what is already a thriving new-build solar installation market and would deliver major reductions on consumer bills. Solar Energy UK research published in October 2022 shows, for example, that combining solar power and a heat pump can save as much as £3,000 a year on home energy bills[2]. The report also describes the benefits of solar thermal systems, such as using the sun’s heat directly for space heating and hot water, alongside battery storage.
This work builds on previous SEUK modelling – carried out with Cambridge University and based on nearly six million property transactions – which shows that installing solar on a home can increase its value by more than £2,000[3]. Solar is a proven way to increase the quality, and hence value, of a home, while reducing bills for occupants.
Lastly, we note that price volatility matters. Consumers are now being faced with increasingly high energy bills; disproportionately impacting low-income households. Government should recognise the opportunities that solar technologies present to reduce volatility of pricing for consumers. This could be achieved by extending successful schemes for both new and retrofit properties. Programmes such as Home Energy Scotland, Warmer Homes Scotland, and Nest in Wales have all been successful in reducing consumer bills through retrofit, and may offer valuable lessons for a similar programme in England.
Nearly 120,000 solar PV installations have been registered with MCS in 2022, nearly double the solar PV deployment in 2021. If the current growth rate in solar PV installations is maintained, it is likely that close to 3GW of new rooftop solar will be deployed by 2025 – equivalent to the generating capacity of Sizewell C. Rooftop solar clearly has a vital role to play in managing energy demand and controlling energy costs for households.
The introduction of half-hour pricing, and with it the development of more products to compete with Octopus Agile Export that pays a variable rate per kilowatt hour exported to the grid dependent on demand, should make solar and domestic batteries an even more viable option than it already is.
6. Does Government policy and current planning guidance adequately address the issues raised by proposals to install solar farms on land with high agricultural or ecological value?
Outside MCS remit
7. How sustainable is the supply chain for solar panel manufacture? Do levels of sustainability differ between mature and emergent technologies?
Outside MCS remit
8. Does the concentrated global distribution of solar panel supply chains (80% manufacture in China) pose a risk to solar technology expansion in the UK? If so, how could this be mitigated?
Outside MCS remit
9. What needs to be done to facilitate solar farm access to grid connection, to enable wider distributed energy generation from solar installations?
Outside MCS remit
10. Are emerging proposals to utilise solar energy overseas capable of supplying additional sustainable grid capacity via interconnectors to the UK?
Outside MCS remit
- Ends -
December 2022
[1] See p31 of MCS report ‘Renewing Britain’ at https://renewingbritain.com/ for a comprehensive case study of solar PV deployment figures over the period 2009-2020
[2] https://solarenergyuk.org/resource/the-value-of-solar-heat/
[3] https://solarenergyuk.org/resource/the-value-of-solar-property-report/