Richard Lowes, Dr Bridget Woodman, Jessica Britton

Transcription

1 GEOGRAPHY COLLEGE OF LIFE & ENVIRONMENTAL SCIENCES University of Exeter Penryn Campus Peter Lanyon Building Penryn Cornwall TR10 9FE 26 April (0) University of Exeter Energy Policy Group response to the DECC Consultation: The Renewable Heat Incentive A reformed and refocussed scheme Richard Lowes, Dr Bridget Woodman, Jessica Britton Sir/Madam, The University of Exeter Energy Policy Group welcomes the opportunity to DECC s consultation into the RHI. The Energy Policy Group is the UK's leading academic hub for the interdisciplinary study of energy policy. We place sustainability and progress at the heart of debates about energy policy, economics and governance. Our high impact, collaborative research challenges old assumptions and offers new thinking about the transition to an equitable, 100% renewable energy system. Our current Heat, Incumbency and Transformations project (HIT) is investigating the current heat system players and how the roles of the companies and organisations would change in a world of zero carbon heating, a requirement of meeting the UK s 2050 carbon targets. This is an innovative 2 year research project in the field of heat and is funded by the UK Energy Research Centre (UKERC). In our research group we also have two PhD researchers working in the field of heat, one on UK policy development and the other on district heating governance. The most important goal of heat policy should to be to reduce the demand for heat because this directly reduces greenhouse gas emissions and increases the suitability of buildings for low-carbon heat sources. However, this Government and the previous Government has reduced support for energy efficiency through the reduction of spend on ECO, the destruction of the zero carbon homes policy, the removal of regulations for consequential improvements and the disastrous development and closure of the green deal. Without a major, sustained and holistic approach to energy efficiency, the Government s 2050 target for carbon reduction and the Government s aim a cost effective energy policy will not be realised. Nonetheless, even with significant reductions in energy demand, the current situation where a significant proportion of heat is generated using fossil fuels must change and we are supportive of the RHI in general. We, like the Government recognise that significant changes to the RHI are required and while our responses to the specific questions are below, we would like to outline our key comments and suggestions: We are generally supportive of DECC s aim of rebalancing the scheme away from biomass, a whole host of technologies will be needed to decarbonise the heat sector and as such support for renewable heat technologies should be more balanced 1

2 Whilst we appreciate why tariff triggers have been introduced, we are generally concerned about the ability of Government to pick winners within the RHI and would support measures to ensure innovation in the sector can flourish We also believe the scheme must drive rapid uptake among non-biomass technologies and support poorer households and as such we suggest the following changes to the scheme may be beneficial 1. Government should consider the introduction of capital grants for fuel poor households off the gas grid to install heat pumps in the short term to rapidly develop this market, reduce costs and prepare the market for the potential longer term rollout 2. Government should develop an RHI innovation fund which would support currently unproven heat technologies 3. Government should introduce new incentives within the RHI to encourage the most efficient and lowest carbon projects and drive innovation in technologies. The lowestcarbon projects could be incentivised through for example carbon saving awards. This could be the first step in developing a long term market for low-carbon heat in the UK Please do get in contact if you believe we may be able to provide any further information that may assist your policy development. We would also be more than happy to discuss our policy proposals in person. Yours faithfully, Richard Lowes, Dr Bridget Woodman, Jessica Britton 2

3 Responses to Consultation Questions 1. Do you agree with the proposed policy approach for degression and trigger setting? Yes / No. Please provide evidence to support your answer Yes and No. In the short term we believe that the extension of the current triggers makes sense in order to continue deployment despite our concerns around the dominance of biomass. However, in the longer term we believe the budget management system is overly prescriptive, limiting both opportunities for price discovery and innovation. We believe the allocation of per technology budgets also represents an unnecessary and unhelpful intervention in the market which is new and under-developed. We would support revisions to the approach to budget/capacity management which support more strategic outcomes such as, the use of some RHI funds for capital grants for domestic scale heat pumps for the fuel poor in off-gas-grid areas where the current scheme has offered limited benefits but where the market may be significant. We would also support the introduction of a general funding pot for technologies not currently supported by the scheme which can offer carbon and renewable energy benefits, this could also potentially be offered as capital grants with requirements for carbon savings as part of the funding agreement. 2. A budget cap introducing the ability to close the scheme to new deployment is necessary to ensure we can protect the budget. Do you agree that: a) The budget cap should be kept as a final backstop with minimal notice periods for the implementation of closure? Yes / No. Please expand. b) The budget cap should only be deemed likely to be hit, and closure only be deployed when we assess that it is likely RHI commitments from plants commissioned or plants in the immediate pipeline on the verge of commissioning would consume available budgets? Yes / No. Please expand. c) That a 21 day notice period will allow only those plants on the verge of commissioning to proceed? Yes / No. Please expand. We believe the introduction of a budget cap alongside the existing degression rules represents an unnecessary extra consideration and risk for developers and as such do not support its introduction in any form. DECC should make efforts with Treasury colleagues to ensure this is not introduced. We are also concerned about the potential level of political interference that this could introduce, particularly if it is at the discretion of the minister to close the scheme. The levy control framework and changes to ECO have shown the negative effects that short term political control can have on policies. 3. a) Do you agree with the proposal from 2017/18 onwards for discretion to close the Non-Domestic scheme only, noting that this would mean that that scheme could be closed before it was assessed that 100% of overall budget was committed? Yes / No. Please expand. b) Do you have any suggestions as to how best to manage any additional uncertainty from this proposal? As we explained in question 2, we do not support the introduction of a budget cap. 4. a) Are there any other features of the budget cap policy that could be improved? b) Do you have any suggestions of how these improvements could be delivered? The budget cap should not be introduced. 5. Can you provide any compelling evidence as to why RPI would be a more appropriate measure of inflation than CPI for all technologies across the RHI? 3

4 6. Do you agree simplifying the rules for additional capacity as proposed will help achieve better value for money? Yes / No. Please provide any evidence which demonstrates the possible impacts of making this change. If these changes increase the clarity of the operation of the scheme which we believe they will, we would support their introduction. 7. a) Are there any potential heat uses which the Government should consider not supporting for new applicants to the scheme? Yes / No. b) If yes, please describe these heat uses and provide any evidence in support of your answer. No. As we described in our response to question 1, we believe that the Government should ensure as varied a choice of heat options are supported as the current approach is too deterministic and there may be many other technology options for both the generation and use of low-carbon heat. The RHI offers a market pull for renewable heat but only for chosen technologies. We would support the introduction of a flexible fund which supports heat technologies and uses not currently supported which have renewable and carbon benefits. This is explained in more detail in our response to the final question. 8. a) Will the requirement to obtain and maintain appropriate permissions for new plant in order to be eligible for and continue to receive RHI support pose any barriers to deployment under the scheme? Yes / No. Please expand. b) Are there particular permissions which it may be difficult or impossible to obtain ahead of applying to the scheme? Yes / No. Please expand. 9. Do you think that an owner of a shared loop system should be able to apply to the Domestic RHI? Yes / No. Please provide evidence to support your response and how this would encourage greater deployment, drive down installation costs and improve performance of GSHP. We support this proposal. The highest capital costs associated with heat pumps is the installation of the ground loop or bore-hole. If sharing loops can reduce costs and increase deployment then this is a good change. 10. Do you think that an owner of a shared loop system should be able to apply to the Non-Domestic RHI with deemed heat demand? Yes / No. Please provide evidence to support your response and how this would encourage greater deployment, drive down installation costs and improve performance of GSHP. 11. Do you agree that: a) If shared loop systems become eligible on the Domestic RHI, they should receive the same tariff as individual GSHP systems under the Domestic RHI? Yes / No. b) If shared loop systems remain eligible on the Non-Domestic RHI but with deemed heat demand, they should receive the same tariff as individual GSHP systems under the Non-Domestic RHI? Yes / No. c) The heat demand limit proposed for individual GSHP systems on the Domestic RHI should be applied (25,000kWh/yr per household on the shared ground loop)? Yes/No. Please provide any evidence you may have as to typical differences in costs to support your position. Yes we believe the tariffs should be the same for shared loops in both domestic and non-domestic as shared loop systems deliver the same outcome, greater penetrations of renewable heat from ground source heat pumps. 12. a) Do you think that the proposals relating to shared ground loops result in an increased risk of overcompensation? Yes/No. b) How could we develop our policy to best mitigate these risks? c) Do you think that new-build properties should be treated differently to avoid overcompensation? Yes/No. d) Do you think the number of dwellings is one of the risk factors which may contribute 4

5 towards overcompensation? Yes/No. e) Do you think there should be a specific limit to the number of dwellings? Yes/No. Please provide any evidence to support each of your responses The risk of over-compensation in this situation is limited as the market is currently so small and the likely potential for shared systems also small. We would suggest monitoring rather than regulations to manage this risk. 13. ) Do you agree that these proposals should apply to social and private landlords only? Yes/No. b) Do you think private homeowners who are collaborating together should be able to apply? Yes/No. Please provide any evidence to support each of your responses, specifically considering how we could overcome challenges associated with multiple applicants owning the same ground loop if joint owners could apply. We believe the likelihood of large numbers of home-owners applying is extremely low but believe these applications should be supported if they come forward so believe homeowners collaborating should be able to apply. 14. Do you agree that if deeming is introduced to the Non-Domestic RHI scheme for this type of project, metering and monitoring service packages should be mandatory to allow performance data to be reviewed by Government/user/owner? Yes / No. Please provide evidence to support your response. If you do not support this proposal we seek recommendations of how to establish the performance of heat pumps supported. Domestic 15. Do you agree that the proposal to introduce heat demand limits will contribute to achieving the aims of the reform of the RHI? Yes / No. Please expand. Yes. We have been made aware of instances with biomass systems where RHI applicants have been heating homes and leaving the windows open to get greater RHI income as well as individuals heating chicken sheds with single boilers and make very high returns under the scheme. 16. a) What are your views on the limits of: 20,000kWh for AWHP; 25,000kWh for GSHP and biomass? b) What would be the merits of higher/lower limits? Please expand 17. In light of the issues raised in para 5.20, do you have any alternative proposals to heat demand limits which would achieve the same aims and which would be simple for potential applicants to understand, deliverable and applicable across the GB-wide scheme? Please expand 18. Do you have alternative proposals, beyond those summarised above, for further changes which may help increase deployment among those less able to pay? Please expand. Yes, we believe that for the domestic market a significant issue with the RHI is the high upfront costs required for renewable heating technologies. A focus of the scheme must be to support those who can t afford the upfront costs, particularly those living off the gas grid who are fuel poor. While more flexible funding arrangements i.e. third party finance may help, this adds an extra finance cost/profit motive to the scheme which does not support the scheme s aims. Instead, we believe a targeted capital grant based system would offer better support for heat pumps in fuel poor homes off-the-gas-grid and this could be administered on a case by case basis using current metrics or it could be offered as block grants to installers for a number of systems potentially through a tender process. 5

6 19. a) Do you agree with reviewing the tariffs available: i. Within the range of p/kWh for AWHP? Yes/No. ii. Up to a maximum of 19.51p/kWh for GSHP? Yes/No. b) How would an increase to current tariffs impact deployment? Please provide evidence to support your response. We do not have comments on the specific tariffs but understand that it is not just tariffs which have reduced the uptake of heat pumps. Other aspects include the suitability of buildings for GSHP s and the hassle factors associated with installation. 20. a) Do you agree further Government and industry action is required to drive up the performance of heat pumps and tackle underperforming installations on the RHI? Yes/No. b) How can the RHI best be developed to tackle this and drive up deployment? Yes. In light of limited uptake and the potential strategic importance of heat pumps, ongoing monitoring of systems is required. Incentives could also be designed to reward the best performing technologies and we explore this in more detail in our answer to question In your recent experience, what are the main financial barriers to the deployment of heat pumps in the domestic sector? In particular, what are the main reasons why the current tariffs have not achieved higher deployment levels? Please provide any supporting evidence. We have heard from installers that while many applicants request heat pumps, the final choice is often biomass boilers because of the suitability of the household in terms of its energy efficiency standards. We would support greater integration of the RHI with energy efficiency policy to increase the number of heat pumps installations. 22. In your recent experience, what are the main non-financial barriers to the deployment of heat pumps in the domestic sector and how can they best be overcome? Please consider how they compare to the financial barriers in terms of impact on uptake and provide any supporting evidence As above, the suitability of the household or building is one issue. Another also mentioned previously is the pull towards biomass because of its tariff. 23. Is there a way to link payments to actual performance which balances consumer confidence with incentives for higher performing systems? Yes/No. Please provide evidence to support your response Yes, though we believe this should be rewards for the best performing systems rather than disincentives for poorly performing systems which could damage consumer and installer confidence. We explore this idea further in our response to question a) Performance monitoring can play a key role in driving up heat pump performance. What can we do to make the RHI s metering and monitoring service package more attractive? Please provide evidence to support your response. b) Are there alternatives to incentivise the monitoring of heat pump performance? Please provide evidence to support your response We fully agree that monitoring of systems is important. We would support the introduction of potential rewards or incentives for the best performing systems. 25. Do you agree that we should withdraw support for new solar thermal systems in the Domestic RHI from 2017? Yes/No. Please provide evidence to support your response. No, we strongly disagree. We believe that solar thermal has excellent potential and it is too early to reduce it from the RHI. While we appreciate it is currently relatively expensive, the UK does not have a large or well developed market and there is still room for cost reductions. Strategically, solar thermal systems can also support the development of a low-carbon heat system, working well with heat pumps and other renewable technologies. 6

7 26. a) Do you agree that limiting the use of some feedstocks will deliver more cost effective carbon abatement? Yes/No. Please provide evidence to support your answer. b) Apart from wastes and residues, are there other feedstocks which should not be subject to payment restrictions? Yes/No. Please provide evidence to support your answer. Yes. We believe that the use of some feedstocks should be limited, particularly feedstocks which have a lowcarbon benefit and feedstocks which are either using or offsetting food. 27. Do you prefer option 1 or 2 as a method of limiting payments in respect of biogas / biomethane derived from crops? Option 1 / Option 2. Please provide your reasons and include any evidence. 28. Do you agree that from spring 2017 the tariffs for new biomethane installations are likely to require resetting to bring forward new deployment? Yes / No. Please provide evidence to support your answer. b) Do you agree this should not include resetting the tariffs for biogas? Yes / No. Please provide evidence to support your answer. 29. a) Do you agree that adding capacity to existing biogas and biomethane installations could result in payments which are not targeted towards the most cost effective biogas and biomethane production? Yes/No. Please provide evidence to support your answer. b) If yes, how can the risks be mitigated? 30. a) Do you agree with proposals to increase auditing requirements? Yes / No. Please expand. b) Do you think there are any wastes which should not be subject to unlimited payments? Yes/No c) Is there additional evidence that could be used to demonstrate that a generator intends to use waste? Yes / No. Please expand. 31. Do you agree with the proposal to remove support for heat used to dry digestate for new installations? Yes / No. Please provide evidence to support your answer. 32. Are there other uses of biogas heat which you do not consider a good use of the RHI payment? Yes / No. Please provide evidence to support your answer. 33. a) Do you agree that the current tariff levels for heat pumps in the non-domestic sector strike the right balance between value for money for the tax payer and providing sufficient returns to drive deployment? Yes / No. b) If no, how could they be adjusted to strike this balance appropriately? Please provide evidence in support of your answer. 34. In your recent experience, what are the main financial barriers to the deployment of heat pumps in the non-domestic sector? In particular, what are the main reasons why the current tariffs have not achieved higher deployment levels? Please provide any supporting evidence. We believe these are similar as for domestic and relate to the relative ease of installation of biomass boilers and more suitable building stock for biomass which requires higher temperature heat. 35. In your recent experience, what are the main non-financial barriers to the deployment of heat pumps in the non-domestic sector and how can they best be overcome? Please consider how they 7

8 compare to the financial barriers in terms of impact on uptake and provide any supporting evidence. 36. a) Do you agree we should amend the scheme rules to allow heating and cooling AWHPs (paying on the renewable heat generated only)? Yes / No. Please expand. b) What other scheme rules could be eased which would drive deployment? Please provide supporting information. 37. a) Do you agree further Government and industry action is required to drive up the performance of heat pumps and tackle underperforming installations on the RHI? Yes / No. b) How can the RHI best be developed to tackle this issue and drive deployment? 38. a) Do you agree the proposals set out in this document will be sufficient to drive an increase in deployment of efficient heat pump systems in the non-domestic sector in this Parliament? Yes / No. b) If no, what else do you believe Government should be doing consistent with its overarching objectives for RHI reform and energy policy? 39. a) Do you agree that the proposed single biomass boiler tariff should be tiered? Yes / No. b) What is the appropriate tiering threshold at which participants should move from the Tier 1 to Tier 2 tariff? Please express your answer as a percentage, where 100% equals a system running constantly at full capacity. Please provide any available evidence in support of your response. We agree with the proposal for a tiered tariff as if designed correctly this will be able to generate much more even returns for investors across the different scales of systems. 40. a) Do you agree that the appropriate tariff level for Tier 1 support for biomass boilers is in the range of p/kWh? Yes / No. b) Within the range p/kWh what is the appropriate Tier 1 level of support for biomass boilers? Please provide any available evidence in support of your responses. 41. a) Do you agree that the appropriate tariff level for Tier 2 support for biomass boilers is in the range p/kWh? Yes / No. b) What is the appropriate level of Tier 2 support for biomass boilers, within the range p/kwh? Please provide any available evidence in support of your response. 42. a) Do you agree we should maintain a 4.17/kwh CHP biomass tariff (please consider the below question on tiering when providing your responses)? Yes / No. b) Are there any types of plants (e.g. heat-led, power-led plants, plants of certain capacities) that may be overcompensated through the receipt of the 4.17p/kWh tariff? Yes / No. Please provide any evidence you may have to support your answer. 43. a) Do you agree with the introduction of tiering for all new biomass CHP participants? Yes / No. b) Do you agree with the proposed tier threshold of a 35% load factor? Yes / No. c) What is the appropriate level of the tier 2 tariff, within the range p/kWh? Please provide any available evidence in support of your responses. In particular, this should indicate why the arrangements for CHP should be set differently to those proposed for biomass heating-only 8

9 systems (where we are proposing that Tier 1 could be set at a level equivalent to a 35% load factor and Tier 2 would be set between p/kWh). 44. Do you agree with our proposal to retain the existing tariff level for deep geothermal plant? Yes / No. Please provide evidence to support your response. 45. Do you agree that we should withdraw support for new solar thermal systems in the Non- Domestic RHI from 2017? Yes/No. Please provide evidence to support your response. No, as with the domestic scheme, we believe that even though this may currently be a very small portion of the RHI there is still room for cost reductions in this area and solar thermal should continue to be supported. 46. Our policy on tariff guarantees is that they should only be available to projects with long-lead times and which involve high capital expenditure. Do you agree installed capacity is a reasonable proxy measure for these criteria? Yes / No. b) If No, what alternative proxy would you suggest? c) Do you agree with the suggested capacity limits for eligibility for tariff guarantees as set out in paragraph 11.15? Yes / No. d) If No, what capacity limits would you suggest? Please provide evidence in support of your answer. We support the proposal for tariff guarantees in general but have no comments on the detail. 47. a) Please provide your views on the application process outlined in paragraphs , specifically: i. Can this process work for industry (i.e. does it fit with business planning and management of projects)? ii. What modifications could be made to improve it? b) We propose to award the tariff guarantee at stage two of the application process, as described in paragraphs , but are interested in stakeholder views and evidence which may support the awarding of a tariff guarantee at stage one instead. 48. It will be critical to the success of the tariff guarantee scheme that plant owners are able to provide accurate maximum plant capacities and reliable expected annual eligible heat output or injection rates. a) We therefore invite stakeholder views on the approach described at paragraphs which proposes limiting the level of RHI payment based on the declared maximum capacity of plants. b) We also invite views on the proposals to require applicants to provide separate evidence that substantiates heat loads; as well as alternative approaches to this issue. 49. We require a high degree of certainty that a tariff guarantee for large Ground and Water Source Heat Pumps can operate within the proposed framework. a) We welcome evidence of whether the requirement to reach financial close as it is currently proposed can work for Ground and Water Source Heat Pumps. b) Please suggest any alternative approaches to financial close, or minor modifications to the application process to improve its operation with regard to large heat pumps. Any approach would need to provide DECC with sufficient assurance that large Ground and Water Source Heat Pump projects will go ahead and commission. 50. a) Do you agree with the suggested capacity limits for Air to Water Heat Pumps and to Ground and Water Source Heat Pumps who wish to apply for preliminary accreditation? Yes / No. b) If No, what capacity limits would you suggest? Please provide evidence in support of your answer. c) Please provide any evidence and reasoning to support the extension of tariff guarantees to Air to Water heat pumps, and suggest what capacity limit should apply, if any. 9

10 51. Tariff Guarantees would provide larger plant with certainty of the tariff they will receive ahead of their commissioning, provided they meet eligibility criteria including demonstration that financial close has been reached on the project. Do you agree that a plant granted a tariff guarantee should be protected from any scheme closure if the budget cap (described in Chapter 3) is subsequently assessed as likely to be hit, meaning that it will still be able to commission and be accredited or registered onto the scheme? Yes / No. When considering your response it is important to recognise that a plant granted a tariff guarantee (but not yet accredited/registered) will be counted towards our assessment of estimated spend and whether budget management trigger levels have been met and/or the budget cap is likely to be hit; and that this approach to counting tariff guarantee plant will therefore affect when budget management triggers are met and any scheme closure is triggered. Unless the guarantee is fully committed to by DECC, we believe that its financial benefits are limited. As such we believe that tariff guarantees should be protected from scheme closure. 52. Do you have any thoughts as to how to minimise the above risk of counting committed spend from plant awarded a tariff guarantee and the potential this has to result in premature scheme closure? The budget management of the scheme requires a fundamental rethink and we would support further discussions between DECC and Treasury to ensure that there is increased flexibility in the scheme. 53. Does your interest in the RHI relate to the operation of the scheme in a particular geographical area? a) England b) Wales c) Scotland d) GB-wide GB Wide 54. We are interested in stakeholders experience of our regular RHI deployment statistics publications. a) Do you use these statistics? Yes / No. b) If yes, for what purpose? c) Is there any information within the statistics that you find especially useful? Yes / No. Please expand. d) Is there any information not provided in the statistics that you would find useful? Yes / No. Please expand. We find these statistics useful for our own independent analysis and use both the deployment statistics and the budget management statistics. 55. Do you have any further comments or suggestions on the proposals included in this consultation, or on the RHI in general? Rebalancing the RHI and Supporting Fuel Poor Households In general we are very supportive of the promotion of renewable heat sources. This is an area which has historically received limited policy support. We are also very pleased that the RHI has been funded throughout this parliament and that DECC is consulting on the operation of the scheme. The scheme has unintentionally been skewed in favour of biomass heat and biomethane which have a number of issues including availability of resources, sustainability of biomass resources and best use of that resource. It is excellent that DECC is aware of and looking to remedy this issue. While the renewable energy target is an EU legal requirement, the sources of renewable energy supported in the UK so far under the RHI do not appear to be aligned with the current long-term aspirations for decarbonising heating which have been outlined by various energy system models and used by Government to develop the heat strategy documents (Strategic Framework 2012 and Meeting the Challenge 2013). 10

11 It would not be advisable to place full trust in these energy system models as forecasts as the models are often wrong because the assumptions underpinning them are incorrect and technological changes cannot be predicted. However, it seems logical to provide more balanced support across the RHI to ensure that those technologies which the energy system models suggest may play a greater role are supported. That is not to say support for biomass shouldn t be continued, it is simply that the development of many different technologies should be supported because we currently do not know how technologies and associated economics will develop. One option we support would be the introduction of capital payments as opposed to tariffs for domestic heat pumps for fuel-poor customers off the gas-grid for a short period of time. This would drive rapid adoption and create cost reductions for this potentially strategically important technology. This would also mitigate the high up-front cost associated with the heat pump purchase and installation and so would offer support to poorer households who cannot fund these systems themselves. This could be a short term measure to drive rapid growth while the longer term low carbon heat market develops. Supporting Innovation in Carbon Saving The nature of the RHI means that only technologies currently included in the scheme are rewarded and while technologies can be added, this takes time and does not support innovative projects in the shorter term. We strongly support new measures to support unproven or under-developed renewable heat technologies and one way of supporting these technologies could be to use a portion of the RHI budget as an innovation fund which provides support to novel projects which are renewable and save a significant level of carbon. This would provide industry with funds to prove technologies which may be significant over the longer term but are not currently supported under the RHI. We would also propose strengthening the carbon saving criteria of the scheme and potentially linking this to payments so that projects which save the most carbon receive the highest rewards, effectively a carbon price within the RHI. The current system means that for example a biomass or biomethane project which saves 90% of emissions compared to the comparator (EU greenhouse gas average) receives the same tariff as one that saves only 60%. This does not seem fair or appropriate. It is clear that over the longer term, the carbon savings associated with heat projects will need to increase and this mechanism could be part of driving that change. This carbon reward could also be applied to other technologies and could be applied to heat pumps systems using the system coefficient of performance (COP) as a proxy for carbon savings. A higher COP could be a higher reward. As such, a carbon linked system of payments alongside generic technology based support could increase levels of innovation within projects. Extra rewards could be available for technologies which innovate and can show that their sustainability and levels of carbon savings go well beyond what is standard among other similar projects. In the short term this performance linked award could drive innovation and these changes could then go on to be incorporated across the scheme more widely to ensure the scheme delivers cost effective carbon savings and innovation over the longer term. 11