GSHPs and the Renewable Heat Incentive

Market Context

Long term strategic role for heat pumps

 The 4 th carbon budget ascribes a prominent long-term role for heat pumps in achieving binding domestic emissions reductions

www.kensaheatpumps.com

Market Context

  UK Heat Strategy - “The Future of Heating, Meeting the Challenge” DECC, 2013 Indicates a clear and strategic role for heat pump technology

www.kensaheatpumps.com

Market Context

www.kensaheatpumps.com

   22m homes in the UK >4m homes off the gas grid Those heated by oil, lpg and electricity are the “low hanging fruit”

GSHP’s & the Domestic RHI

Domestic RHI

  Aimed at domestic installations Rewards generation of renewable heat, deemed   RHI pays on Renewable Heat contribution  GSHP will always provide more renewable kWh/yr than an ASHP due to higher efficiency Higher efficiency also yields larger fuel cost savings

www.kensaheatpumps.com

GSHP’s & the Domestic RHI

Target market

 RHI will drive opportunities for larger, off gas grid properties  Private domestic retro fit  Oil or lpg heated  High fuel bills, bulk fuel purchases  Higher heat loads  >16kW, single phase electricity supplies  Existing heat distribution systems  Higher flow temperatures

www.kensaheatpumps.com

www.kensaheatpumps.com

GSHP’s & the Domestic RHI

  Benefit 1: Benefit 2:  Benefit 3: Attractive GSHP Tariff /kWh: 18.8p RHI paid on Renewable Heat contribution. Higher intrinsic SPF for ground source means higher Star Rating and therefore

more renewable kWh/yr

Flat tariff rate structure means Domestic RHI will benefit larger properties By definition likely to have more land area

KENSA HAS SINGLE PHASE OUTPUT UNITS UP TO 24kW!!

3 bed semi: 8kW RHI: £11k / 7yrs  Benefit 4: 4 bed det: 12kW RHI: £17k / 7yrs 5 bed det: 15kW RHI: £20k / 7yrs No planning or noise (MCS022) issues to deal with!

8 bed mansion: 24kW RHI: 37k / 7yrs

GSHP RHI Example

5 bedroom house Domestic RHI example for Ground Source Heat Pumps

 5 bed property   4-5 occupants 180m2 floor area       Circa 1960’s build Basic insulation measures – cavity wall, loft, glazing 15kW heat load Heating via radiators (50 ° C – 3 Stars) EPC: 21,000kWh/yr Land area required (slinkies): 720m2

www.kensaheatpumps.com

GSHP RHI Example

5 bedroom house Domestic RHI example for Ground Source Heat Pumps

 £1082 per year fuel cost saving vs oil  £2845 first year RHI income 

£27,492 combined benefit over 7 years

 Before index linked tariff increases and fuel price inflation    Typical installation cost: £18,000  Based on slinkies

Payback: 5 years

Rate of return: 11.5%

www.kensaheatpumps.com

Kensa On Line RHI Calculator

• • • • • Website based tool Calculates expected RHI and fuel saving benefit under domestic RHI Varies results based on geographical location Suggests likely land area required for slinkies Aimed at helping driving enquiries for installers

Non Domestic RHI

       Launched 2011 Includes support for residential district

heating systems

Recently uplifted tariffs for ground source heat pumps  Increased from 4.3p/kWh to 8.7p/kWh Payments made over 20 years, based on metering Includes support for new build District residential schemes can be combined with ECO funding

More attractive long term rate of return than domestic scheme www.kensaheatpumps.com

Kensa micro-district solution

 Individual heat pump at each dwelling  Linked to a communal ground array  New build or retro fit  Capital subsidy provided by Energy Company Obligation (retro fit)  Supported by 20 year income stream through the Non Domestic Renewable Heat Incentive  Technically robust solution  Myriad of operational and tenant fuel cost benefits over other solutions

www.kensaheatpumps.com

Traditional district scheme problems

www.kensaheatpumps.com

      Traditional schemes featuring a central boiler plant are not popular Difficult to implement as a retro fit solution Inefficient  Heat losses as hot water circulated through the “district” Burdensome  HA has to manage billing Bulky  Requires considerable space Expensive  Requires back up system to eliminate risk of catastrophic district-wide failure

Ground source heat pump

Kensa high temperature units, installed externally

Micro district heating

Individual gshp per property linked to a shared ground array serving 2+ properties

Technically robust

Smaller number of deeper boreholes Flexibilty over borehole location No plant room or central pump

www.kensaheatpumps.com

Kensa micro-district solution

Energy saving

Low cost, low carbon heating and hot water reducing energy bills

Scaleable solution

Can be applied to apartment blocks or clusters of terraced or semi detached houses/bungalows, sheltered accommodation, holiday lets and more…

Renewable Heat Incentive

20 year income stream for district schemes under the non domestic RHI

Energy Company Obligation (Retro fit)

Attractive capital subsidy, especially when displacing electric heating

New Build

New build developments are eligible for the non-domestic RHI

Simple billing

No centralised billing – each tenant has control over own heating system and energy bill

Micro-district costed example

Micro District Ground Source Heat Pump System

Based on 2 bedroom End of Terrace Lifetime CO2 savings 87 tonnes Typical annual running cost saving vs NSH £450 Total capital cost Heat pump, ancillaries and installation Boreholes and ground collector system New radiator system and DHW cylinder Design (EPC, borehole design) £15,000 £3900 £6600 £4100 £400 Existing system replacement costs ECO funding contribution Total Net Cost Total RHI contribution Overall rate of return (IRR) £2500 £3500 £9000 £16,000 6%

Air Source HP

67 tonnes £350 £7850 £3500 0 £4100 £250 £2500 £0 £5350 £2900 0%

New Builld - Kensa Shoebox

Heat source for Shoebox heat pumps Multiple boreholes 100 150m deep

www.kensaheatpumps.com

3kW capacity Small & extremely quiet Provides heating & hot water 

System architecture

 Individual ground source heat pump and hot water cylinder in each apartment   Low temperature primary circuit Communal Ground array Eligible for RHI payments – considered as district heating

District Htg New Build Example

Abbeydale Hall - Luxury new build apartments

 4 blocks of 3 apartments    Each shares a communal borehole field of 3 x 130m boreholes 3kW Shoebox heat pump installed in each flat Developer retains the non domestic RHI

www.kensaheatpumps.com

www.kensaheatpumps.com

Reasons why GSHP’s win!

Domestic RHI

 Very attractive domestic RHI tariff rates and high renewable heat content  Compelling rates of return / payback, especially in larger properties  Kensa range >16kW single phase models – ideal for larger domestic properties

District and Non Domestic RHI

 District residential heating solutions possible using the Non Domestic RHI  “Decentralised” district systems possible by linking ground loops – not possible with any other technology   Opportunity to apply in new build Opportunity to tap in to ECO funding (district retro fit)

PLUS OF COURSE…

   Planning exempt (permitted development rights) No noise nuisance Lowest possible running costs and long life expectancy