Domestic Renewables Industry

Andrea Leadsom Excerpts

Tuesday 14th July 2015 Westminster Hall

[The Minister of State, Department of Energy and Climate Change (Andrea Leadsom)]

It is a great pleasure to serve under your chairmanship, Mr Evans. I am extremely sorry to hear about the experiences of Mrs Leslie and Mrs Hosie, and I hope that the hon. Member for Angus (Mike Weir) will pass on to them an assurance that we will look into their cases with the regulatory bodies that he has mentioned. I will write to him about that. He is absolutely right to raise those cases; it is incumbent on us as MPs to raise specific cases whenever things go wrong. I hope that in talking about the subject and how the system works, I will be able to give him some reassurance that such cases are not the norm and that we will look into them. To have any problems is not good enough, but I believe that we have a robust system that is working.

I am grateful for the opportunity to take part in this debate with the hon. Gentleman. He has raised some interesting points about domestic renewable energy in the UK, particularly about the importance of ensuring that the right measures are in place to strengthen consumer protection. I hope that as I set out the steps that industry and other key stakeholders are taking to strengthen consumer protection, I will be able to reassure him, Mrs Leslie and Mrs Hosie.

We want to see more consumers choosing to heat their homes and generate their own electricity through renewable sources of energy. The development of a sustainable market for those technologies is possible only if consumers are confident that the market can deliver high-performing installations and provide for redress when things, unfortunately, go wrong.

We have demonstrated our commitment to small-scale renewable energy through the feed-in tariff and the renewable heat incentive scheme. The feed-in tariff has been a success since its introduction in April 2010. Some 700,000 installations, totalling 3.5 GW, registered for the scheme during its first five years up to April 2015. The domestic renewable heat incentive has had 37,000 installations register since April 2014.

The Government’s financial incentive schemes require installations of up to 45 kW for heat and 50 kW for electricity to be carried out by certified installers, as the hon. Gentleman points out, under the microgeneration certification scheme or an equivalent scheme. The Government do not regulate the market but rely on self-regulation through the MCS and compliance with building regulations, which is similar to the approach in the oil and gas industry.

The MCS is an industry-led scheme that covers product and installation company certification. The scheme works within the parameters of third-party certification according to established European and international requirements. The certification bodies that operate in the scheme are assessed and accredited by the United Kingdom Accreditation Service, or by equivalent national bodies if based in other countries. The scheme covers the whole United Kingdom. I am informed that 327 MCS installation companies are registered in Scotland, but many of those that are based in other parts of the UK offer services in Scotland.

MCS installers must also be members of a consumer code that is approved under the Chartered Trading Standards Institute consumer codes approval scheme. The only such approved code at present for the small-scale renewable energy sector is the Renewable Energy Consumer Code, which the hon. Gentleman mentioned. I am told that RECC carries out strenuous due diligence on all businesses that apply to join the code. In particular, it is designed to ensure that bogus companies and other businesses with directors or senior staff who have a questionable trading history are not admitted to the sector. An independent applications panel reviews the evidence and takes those important decisions.

In 2014, of more than 1,184 membership applications, 30 businesses were referred to the applications panel and 20 were refused membership on the grounds of the risk that they posed to the sector. RECC monitors all members closely, and any that appear to be breaching the code are subject to a disciplinary procedure. If a complaint cannot be resolved within a reasonable timeframe, the consumer may refer it to the independent arbitration service. An arbitration award is binding and enforceable. In 2014, 50 cases were referred to the independent arbitration service for resolution.

The Department of Energy and Climate Change takes any mis-selling, fraud or poor-performing systems in our support schemes extremely seriously. For example, last year, we introduced a service to enable consumers to obtain reliable estimates of potential renewable heat incentive payments to help them to verify quotes from installers.

We must recognise that, considering the hundreds of thousands of systems installed under the financial incentive schemes, the number of complaints that have been raised is relatively small. By way of example, RECC has estimated that 0.7% of all domestic solar PV installations in 2014 resulted in a complaint being registered with them. In other words, there were 754 complaints out of 110,120 installations. I am absolutely not complacent, because that is 754 complaints too many, and the hon. Gentleman has raised two such cases that we will look into. Nevertheless, the system appears to be working to a reasonable standard.

In addition to RECC’s internal complaints handling and independent arbitration service, there are other established dispute resolution processes for domestic heat and electricity generation. Those processes are regularly reviewed by a range of key stakeholders from industry, consumer organisations and the administrators for the financial support schemes. The MCS reports that the total number of installations across the full range of technologies since August 2012 was approximately 395,596. MCS received 1,348 complaints during the same period, which represents 0.34% of the installations registered since August 2012. The majority of consumers are content with their installation, although we recognise that the statistics do not cover complaints that may have been registered with other organisations such as a citizens advice bureau or trading standards.

As a result of its desire to reduce the complaint rate still further, MCS will introduce an alternative dispute resolution scheme in September. The scheme will be mandatory for certified installers should a consumer wish to go down that route, and it will give consumers an additional mechanism for resolving disputes that builds on the current RECC provision. Additionally, MCS is looking to strengthen the insurance-backed warranty schemes, building on what is currently required by the RECC code, which will give consumers further protection where companies leave the scheme and are no longer trading. Mrs Leslie’s case, which the hon. Gentleman mentioned, will potentially be covered by that new provision.

The issue of installation companies flitting between certification bodies to avoid discharging their responsibilities to consumers has been raised with my office. Both MCS and RECC enforce the safeguards that are in place to prevent that practice. However, MCS is considering tightening those safeguards through the introduction of additional requirements for certification bodies. Those changes aim to ensure consistency in the operation and enforcement of the certification requirements while improving the visibility of companies that may be acting unscrupulously.

I make it clear that we are absolutely not complacent, but it is important to recognise the many companies that are doing the right thing in meeting their obligations under the MCS and RECC schemes. The additional measures that are being developed, together with better co-operation across the sector, should help to weed out companies that are not interested in meeting industry standards.

I am grateful to the hon. Gentleman for securing this debate. I will write back to him specifically on the cases that he raises, and I hope to see the domestic renewables sector fulfilling its potential across the UK, with consumers having the confidence to play their part.

Question put and agreed to.