Over-regulation is the Biggest Barrier to Renewable take-up

We all know the environmental arguments in favour of installing renewable technologies, and I won’t repeat them here.

What is less widely understood is the business dynamics that will underpin the enormous change of scale required for renewable technologies to make a measurable impact on the energy used in our homes.

The Renewable Heat Incentive, (RHI) and other grants designed to stimulate take up of renewable technologies (RTs) all have the same caveat – to qualify, the installation must be undertaken by an MCS accredited installer.

At first sight, that sounds a reasonable requirement. After all, we don’t want a load of cowboys running round bringing the industry into disrepute, do we?

A little more digging, however, puts the matter in a new light. MCS accreditation has three elements. Firstly, there are checks on technical competence. So far, so good. Then there is the enforced membership of a group insurance scheme. Finally, and this is the problem bit, there is the imposition of a mandatory business process quality management scheme (QMS), similar in nature to ISO 9000.

The total cost of MCS accreditation varies, but estimates range from £2,500 to upwards of £5000 once all charges and working hours lost are factored in.

Why is that a problem? The natural constituency from which a large base of RT installers should be recruited is the existing group of plumbing, heating and building contractors. The vast majority of these firms are small businesses – from “one man bands” to small employers with two or three staff. Usually the business owner (or often his wife) does the paperwork in the evenings or at weekends.

These businesses are put off becoming accredited, both by the total costs and by the weight of paperwork required. The burden is simply too much to bear for a small company which is likely undertake only a handful of installations per year. To make matters worse, there is a danger that they won’t simply sit silently on the sidelines – they are likely to actively discourage their householder customers from including RTs in their refurbishments and extensions, because they know that they will not be able to carry out a project which requires MCS accreditation.

So how can we correct this? The simple answer is to exempt smaller businesses (with less than 5 employees) from the QMS element, so that they can focus on technical competence and safety. That’s the minimum guarantee that regulation ought to offer to the public. This will reduce both the cost and the administrative overhead for smaller installers, thereby encouraging them to register. Once that is dealt with, it is a matter for consumers to choose between the larger company, which may provide peace of mind (at a price!) or a smaller, local tradesman.

Government already recognises that regulatory requirements should be less burdensome for small businesses. A number of exemptions are already in force in respect of employment and health and safety regulations, so it should be a simple matter to extend the same exemptions to the QMS elements of MCS registration.

We currently have about 120,000 registered gas engineers. We only have 2,274* MCS accredited installers (covering all renewal technologies).

With these numbers, we simply cannot achieve the scale of RT installations that we need, and instead of creating an incentive for installers to train up and register, we have created the perverse situation which encourages them to discourage householders from considering the investment in green technologies.

This government talks a lot about the green agenda, encouraging small business, and deregulation. Slimming down MCS to a competence/safety based system for small business will tick all those boxes, with zero downside risk.

*statistic taken from www.microgenerationcertification.org, 5^th May 2011

UPDATE - 14th July 2011

Following consultation with a wide range of stakeholders, some concerns have been expressed that exempting smaller companies from the QMS elements of MCS could weaken consumer protection, and risk bringing the industry into disrepute. Whilst these concerns are understandable, we think that they are misplaced.

It is important to remember that consumer protection is properly covered by membership of the REAL Assurance Scheme, not by QMS. The REAL requirements are much more clearly written than QMS, and can be easily understood by consumer and installer alike. They cover mis-selling, the provision of technical information, allow for protection of vulnerable consumers and describe general good practice. Critically, they also provide a mechanism for conciliation, rectification and dispute resolution.

QMS tells people how to run their business. BPEC, C&G and other related qualifications teach people how to install systems correctly. REAL sets standards for how customers should be treated. The latter two are far more important than the former, and no-one is arguing that they should be scrapped.

We have not been able to find any critical area in the QMS element which would not be adequately covered for businesses of less than 5 employees either in the REAL Consumer Code, or in the general requirements, or in the technology-specific MIS series of documents. Should other stakeholders identify such a critical omission then it may be necessary to make a minor addition to one of the latter documents.