Transcript The UK Renewable Heat Incentive and Renewable

EUROPEAN REGIONAL
DEVELOPMENT FUND
The UK
Renewable Heat Incentive and
Renewable Heat Premium Payment
Schemes
Reading Borough Council
Gabriel Berry
1 > GEO.POWER 1st D-LAB
Ferrara (IT), 29 September 2011
Agenda
1. Context
2. The Renewable Heat Premium Payments Scheme &
the Renewable Heat Incentive
How the schemes work
Tariff and grant rates
Eligibility & standards
3. Impact predictions
4. Criticism & issues
5. RHI case study
6. Summary
2 > GEO.POWER 1st D-LAB
Summary
Renewable Heat Incentive + Premium Payments
WHAT?
2 schemes providing financial support to domestic
and non-domestic renewable heat generators
WHERE?
England, Scotland and Wales (RHI: off gas network)
WHEN?
RHI launched tomorrow; RHPP since 1st August 2011
WHO?
Owners of eligible heaters recently/soon installed:
ground & water source heat pumps, biomass, solar thermal, RHI:
deep geothermal, biogas, municipal waste, biomethane injection
HOW?
955m€ central Government funding, paid per unit of
metered eligible heat for 20 years (RHI), plus capital grants (RHPP)
WHY?
UK RES target is 15% of energy - currently 1.5% (11%
of heat - currently 1%). + Avoid carbon emissions up to 44 MtCO2
3 > GEO.POWER 1st D-LAB
Context – 15% Target
UK Renewables Strategy & Roadmap
Renewable heat:
2010
1%, or 7 TWhth

2020
11% or 57-72 TWhth
“Heat pumps could also play a more important role than previously estimated”
of which GSHPs to provide 14 TWhth
“...requires an annual growth rate of up to 41%”
4 > GEO.POWER 1st D-LAB
UK vs EU - Ground energy
Heat pumps
709 GWhth, 2010
135 MWth, 2008 (11th in EU)
10,350* no., 2008 (9th in EU)
Deep geothermal
9 GWhth, 2010
1 MWth, 2010
1 no., 2010
*2010: 12-22,000 no.
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Context - GSHPs in UK RE Strategy
6 > GEO.POWER 1st D-LAB
Context – Government’s strategy
• How?
“Use incentives, address barriers”
Renewables Roadmap priority areas
Technology costs
RHI heat payments
RHPP grants
Planning and licensing
processes
Availability of quality
installers/ engineers
Demands on the electricity
grid
Performance and technical
issues
7 > GEO.POWER 1st D-LAB
RHPP standards
(RHI in future?)
RHI CoP standards
RHPP borehole standards
Context - Existing incentives
Domestic
• Reduced VAT rate (5%) on small-scale RE
• Revenue from govt incentives exempt from tax
• New zero-carbon homes get relief on duty
Business
• Annual investment allowance
• Enhanced Capital Allowance
for Energy Technology List
products incl. GSHPs (plant only)
Industry
• £5m Deep Geothermal Challenge Fund 2009-11
= grants for major projects (>2 MWe or >5 MWth)
8 > GEO.POWER 1st D-LAB
Context – Energy prices
UK commercial
fossil prices
Natural gas
Heating oil
Electricity
9 > GEO.POWER 1st D-LAB
€c/kWh
2.3
5.4
10.1
RHI & RHPP – Timeline
• Mar 2009 – UK RE Strategy & Targets
• Feb 2010 – Public consultation
• May 2010 – Change of govt
• Oct 2010 – Spending review
confirmed RHI & set budget
• Mar 2011 – Details published
• Aug 2011 – RHPP launch
• Oct 2011 – RHI scheme launch
• Aug 2011 – RHPP ends
• Oct 2012 – RHI domestic launch
10 > GEO.POWER 1st D-LAB
Intro 1 - Renewable Heat Premium Payments
• Government domestic renewable heat grant
• Selected EU RES (e.g. not stoves/cooling)
• Phase 1, August 2011 – March 2012
Grants for eligible heat generators…
• Phase 2, from October 2012
…+ RHI payments for metered heat
11 > GEO.POWER 1st D-LAB
RHPP – How it works
The householder:
• Applies to EST* for grant ‘voucher’
• Installs biomass boiler/solar collector/heat pump
• Registers heater via the installer
• Redeems voucher & receives grant
• (probably) Joins RHI in Oct 2012
Owner must agree to heat metering &
attitude surveys if randomly selected
* Energy Saving Trust = government’s
consumer energy advisory agency
12 > GEO.POWER 1st D-LAB
RHPP – Grant amounts
330 €
950 €
1,390 €
1,060 €
13 > GEO.POWER 1st D-LAB
RHPP – Eligibility & standards
• Domestic (social housing – special conditions)
• Must be owner’s main home
• Off gas network
(except solar)
• Must be main heating
(except solar)
• Cavity wall insulation + 250mm loft insulation
• Product & installer registered with MCS
• Hence capacity below 45 kWth
• Installed by end Mar 2012 or voucher expiry date
“We will continue to monitor and review the
performance of heat pumps in situ.”
14 > GEO.POWER 1st D-LAB
RHPP – eligibility
ELECTRICITY
HEAT
Solar PV
Small wind
Wood boiler heat
Biogas
Hydro power
Solar thermal hot water
Air to water source
heat pumps
Ground / water
source heat pumps
15 > GEO.POWER 1st D-LAB
COOLING AND
UNMETERABLE HEAT
Wood boiler+chiller COOLING
Wood stove heating
Biogas heat
District heating
Air to air source heat pum
Deep geothermal
Intro 2 - Renewable Heat Incentive
• Government payments for metered heat
• Non-domestic until Oct 2012
• EU RES but not ASHP, stoves, cooling
• Paid over 20 years
• Rate of return vs fossil fuel 12% (6%)
• World first? Starts October 2011
16 > GEO.POWER 1st D-LAB
Renewable Heat Incentive – How it works
1. Install eligible heater & heat meters
2. Register with Ofgem for RHI
3. Read & report heat production
4. Receive quarterly payments (owner)
5. Continues for 20 years
17 > GEO.POWER 1st D-LAB
RHI – How it works
Tariff rates calculated to:
• compensate for cost of RE plant over fossil
• cover both installation & running costs
• provide return on additional capital invested
• be incentive to overcome non-financial barriers
After the start of the scheme, tariff levels will
be adjusted automatically each year in line
with the Retail Price Index (RPI). This
adjustment will be applied both for new and
existing projects.
18 > GEO.POWER 1st D-LAB
RHI – Tariff rates
8.4 €c /kWh
Small
biomass
< 200 kW
2.1 €c /kWh
Medium
biomass
200 kW 1 MW
5.2 €c /kWh
2.1 €c /kWh
Large
biomass
> 1 MW
Small ground
source
< 100 kW
Large ground
source
> 100 kW
Solar thermal
< 200 kW
Biomethane
19 > GEO.POWER 1st D-LAB
1.4 €c /kWh
4.8 €c /kWh
3.3 €c /kWh
9.4 €c /kWh
7.2 €c /kWh
RHI – eligibility
ELECTRICITY
HEAT
Solar PV
Small wind
Wood boiler heat
Biogas
Hydro power
COOLING AND
UNMETERABLE HEAT
Wood boiler+chiller cooling
Solar thermal
Biogas heat
District heating (RE)
Air source heat
pumps: domestic
Ground / water
source heat pumps
& deep geothermal
20 > GEO.POWER 1st D-LAB
Wood stove heating
Air source heat pumps:
non-domestic
Ground / air source
cooling
RHI – Standards
All heat pumps
• Required: CoP 2.9 or above (heat pump only)
• May change when EC issues guidance
Heat pumps ≤ 45 kWth
• Must conform to UK Microgeneration Certification Scheme
• MCS covers installer, product, design & installation standards
Heat pumps > 45 kWth
• Ofgem will verify eligibility
• No standards other than CoP (above)
“We will continue to monitor and review the performance of heat pumps in situ.”
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RHI – High temperature geothermal
• Same tariff as ground source heat pumps
“We intend to consider whether specific tariffs for deep geothermal
heat can be introduced from 2012”
“There are no MCS or equivalent standards so, for the RHI, Ofgem will
verify eligibility based on the documentation required”
• … i.e. no technical standards for deep geothermal
NB Cogeneration under the RHI
• Heat element only is eligible for payments
• No additional support for CHP - RHI deemed sufficient
22 > GEO.POWER 1st D-LAB
RHI & RHPP – Impact predictions
• 110,000 public/commercial installations
• 13,000 industrial installations
• ?? domestic installations
• contribute to 100,000 new RES jobs
• directly stimulate 5.0 billion €
capital investment
• generate 57 TWhth by 2020
23 > GEO.POWER 1st D-LAB
RHI & RHPP – Criticisms & issues
• Lack of installer/product/design standards >45kW
• July 2009 cut-off – unfair, or practical?
• Exclusion of log/pellet stoves & bio-liquid fuels
• Exclusion of cooling and ‘waste heat’
• No additional support for extra costs of district heat
• Air source heat pumps – always sustainable?
• Biomass fuels/emissions – always sustainable?
• Some wanted payments assignable to 3rd parties
• Some wanted fossil fuel suppliers to pay RHI
24 > GEO.POWER 1st D-LAB
RHI – Opportunity for ground energy
Reading Borough Council
GEO.POWER team (UK)
Tel. +44 118 937 2159
Email [email protected]
25 > GEO.POWER 1st D-LAB
RHI - GSHP case study
The Avenue Centre
Owner: Reading
Borough Council
Function: New-build
school + offices
• 2× 80 kWth grd loop HPs to underfloor heat
• Generates 420 MWhth pa, uses 140 MWhe
• Installed by Geothermal International
26 > GEO.POWER 1st D-LAB
RHI - GSHP case study
• GSHP: capital cost 142 k€
+ electricity costs 14 k€ pa
• Gas boiler: capital saving 14 k€
+ fuel saving 12 k€ pa
PAYBACK no RHI= never…180 k€ loss*
• RHI 20 k€ pa for 20 yrs
 PAYBACK RHI= 8 yrs…120 k€ income*
*assuming static fossil energy prices!
27 > GEO.POWER 1st D-LAB