Transcript Designing the feed-in tariffs - Q-Gen

Financing Renewable Energy: an
introduction to FITs and RHI
Andrej Miller
Renewable Financial Incentives
Office of Renewable Energy Deployment
[email protected]
Why new incentives?
• EU Renewables target
– Currently no incentive scheme for heat
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Carbon targets
Instrumental in changing behaviour
Need simple incentives - particularly at small scale
Associated benefits including:
– Security of energy supplies
– Economic benefits, new jobs
2
Costs of renewables
FITs - key features
• 5MW limit
• Support for:
– Solar photovoltaic
– Wind
– Hydro
– Anaerobic digestion
– Domestic scale micro CHP (2kW)
• Tariffs provide 5-8% returns, indexed to RPI for 20-25 years
• Degression: year-on-year reduction of tariffs for new
installations in line with cost reduction predictions
• MCS/RO accreditation
4
Tariffs structure
• A payment for every kWh generated
– Generation tariff
• An additional payment for every kWh exported /
spilled to the local electricity network
– Export tariff
• Additional benefit from usage of electricity “on-site”
– Avoided costs
5
FITs in practice
• Non-generation household
• Only imports electricity
• Billed by their supplier
based on meter readings
of kWh imported
U
4500kWh
I
4500kWh
6
FITs in practice
• Non-generation household
• Only imports electricity
• Billed by their supplier
based on meter readings
of kWh imported
U
4500kWh
I
4500kWh
Import tariff
7
FITs in practice
Avoided costs
8
FITs in practice
Avoided
costs costs
Avoided
Generation
tariff
Export tariff
Export tariff
Import tariff
(on fewer kWh)
9
FITs in practice
Avoided
costs costs
Avoided
Generation
tariff
Differs by
technology
and by scale
Export tariff
Export tariff
3p/kWh
Import tariff
(on fewer kWh)
10
FITs launched on 1 April
• ~6000 installations transferring from Renewables
Obligation
• ~2000 new installations so far, majority PV
• Seeing third party provision of solar panels –
company supplies PV panels and claims FITs,
homeowners get free electricity
• Some plans for large scale PV
11
Heat is half the battle
Heat, including electrical
heating, accounts for around:
•46% of primary energy
consumption
•47% of UK CO2 emissions, and
•42% of all greenhouse gas
emissions
54% of heat use is domestic;
30% industrial; and 16%
commercial/public sector
RHI consultation proposals
• All scales – domestic to industrial
• Wide range of technologies – must count towards
renewables target under Renewable Energy Directive:
– Ground and air source heat pumps
– Biomass boilers – heat only and heat from CHP
– Solar thermal
– Biogas combustion (anaerobic digestion of wastes)
– Biomethane injection into the gas grid
• Only installations completed post 15 July 2009
Tariff setting proposals
• Compensate for cost difference between renewable and
fossil fuel heating
• Rate of return of 12% (6% for solar thermal)
• Plus compensation for barrier costs and inflation
adjustment
• Tariff lifetime = expected equipment lifetime (10-23 years)
• No degression until first review
• Fixed tariffs (grandfathering)
• Deeming of heat load to prevent over-generation
Consultation feedback
• ~700 responses from a range of people,
organisations and business
• Broadly supportive of proposals
• Key issues raised included:
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Microgeneration Certification Scheme
Energy efficiency
Backup boilers
Inclusion/exclusion of certain technologies
Support levels/banding for certain technologies
Sustainable supplies of biomass
15
What now on RHI?
• Consultation closed on 26 April – proposals made
under previous Government
• New Government committed to renewables target
and renewable heat but also need to consider the
costs of all policies, including RHI
• Aware of renewable industry’s need for clarity
• Will be making further announcements in the
autumn
16
Scale of delivery
• Estimated numbers of RHI installations in 2020:
Additional renewable
resource in 2020
TWh
1,000 installations
Domestic
11
1,728
Non-domestic
62
144
Total
73
1,872
• Estimated numbers of FITs installations in 2020:
Additional renewable
resource in 2020
TWh
1,000 installations
Domestic
1.7
750
Non-domestic
4.3
30
Total
6
780