Renewable Heat Incentive - Explained. 05 March 2014

Transcription

1 Renewable Heat Incentive - Explained 05 March 2014

2 Who we are... 5:00pm - Registration and coffee 5:30pm The domestic Renewable Heat Incentive 5:50pm How the RHI fits with Green Deal and MCS 6:20pm Guide to applying for RHI 6:50pm How SWEC can help 7:10pm Questions, networking Not 7:30pm for profit Close Independent Mission led Established 10 years Work with the sustainable energy industry and decision makers

3 Who we are... Independent Not for profit Centre of expertise Since

4 3 year, EU funded Completing late business assists 12 hours of support or equivalent 8m project ( 4m ERDF) Not for profit Independent Mission led Established 10 years Work with the sustainable energy industry and decision makers

5 Renewable energy in the south west has seen strong growth What is the programme? Source: South west renewable energy manifesto 2013

6 but we re currently not on track to meet our 2020 target. Potentially we could. Source: South west renewable energy manifesto 2013

7 So how is the UK doing with decarbonising? Here we are.. Source: The Future of heating DECC, March 2013

8 So how is the UK doing with decarbonising? So how is the UK doing with decarbonising? Source: National Renewables Statistics (DUKES) 2012 Infogram Source: Graham Scutt

9 Why does heat matter? Why does heat matter? Nearly half of final energy demand in UK goes on heating stuff This costs a lot. Some 20bn/yr is spent on heating stuff Last June the UK produced 2% of its heat renewably Must increase to 12% by 2020 Source: The Future of heating DECC, March 2013

10 Why does heat matter? Why does heat matter? Source: The Future of heating: a strategic framework DECC, March 2013

11 Why does heat matter? Why does heat matter? Source: The Future of heating: a strategic framework DECC, March 2013

12 Why does heat matter? Why does heat matter? RHI is primarily focused on space and water heating. Process heat has been slower to engage Source: The Future of heating: a strategic framework DECC, March 2013

13 Where is all this heat demand? Exactly Why does where heat is matter? this heat going? Source: The Future of heating DECC, March 2013

14 So heat is important for targets and bills. So Why What heat is does the is plan*? heat important matter? for targets and bills. What was the plan? RHI: Non Domestic RHPP RHI: Domestic PRM: EPC E or above Green Deal ECO Feed in Tariff Smart meters * As far as planning over 40 years is possible in the UK energy landscape

15 Financing the Renewable Heat Incentive

16 What the non-domestic RHI is intended to do for consumers What is the programme? 12% IRR 20 years of support* Taxable (in a business capacity) Source: Improving Support, increasing uptake DECC 2013

17 What the non-domestic RHI is intended to do for consumers -Tariffs It was fairly simple Now more complicated for some technologies, as the initial tariff will depend which side of 21 Jan 2013 the installation was commissioned: Straightforward for small and medium biomass though (p/kwh): Small biomass (0-199kW)* Tier one: 8.6 Tier two: 2.2 Med biomass ( kW)* Tier one: 5.0 Tier two: 2.1 * Tier break is at 1314 hours a typical heating season Source: Regen SW

18 What the non-domestic RHI is intended to do for consumers -Tariffs It was fairly simple Now more complicated for some technologies, as the initial tariff will depend which side of 21 Jan 2013 the installation was commissioned: More complex for GSHP, large biomass and solar thermal (p/kwh): Source: Improving Support, increasing uptake DECC 2013

19 What the non-domestic RHI is intended to do for consumers -Tariffs It was fairly simple Now more complicated for some technologies, as the initial tariff will depend which side of 21 Jan 2013 the installation was commissioned: Plus, some new technologies entering the scheme (p/kwh): Source: Improving Support, increasing uptake DECC 2013

20 How the RHI is intended to perform (1) What is the programme? 2011/ / / / /16 56 million 133 million 251 million 424 million 430 million These figures are the total budget released from treasury for the RHI. That s DOMESTIC, RHPP and Non DOMESTIC 1. This budget comes out of general taxation. It is not a green levy or part of the recent Green crap episode 2. Anything not spent in any one financial year goes back to treasury 3. DECCs intention was for RHI to be open until 2021, but no budget fixed yet after 2016 Source: REA analysis of 2013 spending review

21 How the RHI is intended to perform (2) What is the programme? 2011/ / / / /16 56 million 133 million 251 million 424 million 430 million Source: Ofgem

22 01/11/ /01/ /03/ /05/ /07/ /09/ /11/ /01/ /03/ /05/ /07/ /09/ /11/2013 How the RHI is intended to perform (2) What is the programme? RHI Applications: as of Jan Accredited installed capacity (MW) Number of full applications Number of accreditations Source: Data from DECC

23 How the RHI is intended to perform (3) What is the programme? 2011/ / / / /16 56 million 133 million 251 million 424 million 430 million So there is currently a huge underspend with RHI. But within the RHI there far more biomass being installed than anything else Source: Ofgem

24 Expected spend vs actual spend What is the programme? Source: Improving Support, increasing uptake DECC 2013

25 Expected spend vs actual spend What is the programme? Source: Improving Support, increasing uptake DECC 2013

26 Expected spend vs actual spend What is the programme? Degressions + Tariff review 2014 Source: Improving Support, increasing uptake DECC 2013

27 Degressions: automatic brake What is the programme? Source: Improving Support, increasing uptake DECC 2013 Indispensable guide to degression 1.Reviewed every 3 months 2. Possible degression only if deployment is >50% of forecast 3. If this 50% trigger is hit, then technologies deploying at 150% (120% for <1MW biomass) of forecast receive a 5% tariff degression 4. Reductions apply for new applications from 1 month later Source: Improving Support, increasing uptake DECC 2013

28 Degressions: activity to date What is the programme? The point of degressions is twofold: 1. To protect the budget overall 2. To be transparent and help inspire confidence to investors More detail: DECC release monthly statistics about deployment here Degression assessments happen every 3 months If there is a degression, there is 1 month s notice They are NOT retrospective The date of accreditation will dictate the tariff Domestic RHI has degressions too, but it s own triggers Source: Improving Support, increasing uptake DECC 2013

29 Degressions: activity to date What is the programme? New trigger levels and budgets are proposed to be adopted for the next degression gateway in April Degression dates for non-domestic RHI 01 June 2013 (01 July activation there was no degression) 01 Sept 2013 (01 October activation there was a 5% degression for med biomass) 01 December 2013 (01 January activation there was no degression) 01 March 2014 (01 April activation??????) Click here to see the proposed trigger budgets, but they are subject to change. Changes to the degression regime are subject to parliamentary approval, spring 2014 but many triggers are lower than in the current regulations Source: Improving Support, increasing uptake DECC 2013

30 Degressions: activity to date What is the programme? Source: Improving Support, increasing uptake DECC 2013

31 Degressions: activity to date What is the programme? Source: Improving Support, increasing uptake DECC 2013

32 Degressions: activity to date What is the programme? Source: Improving Support, increasing uptake DECC 2013

33 The domestic Renewable Heat Incentive

34 What it is Financial support to help domestic systems be a similar price to fossil fuel Planned to open in Spring 2014 (likely April 1 st ) Limited to Microgeneration Certification Scheme (Under 45kWth 70kW system) MUST have had a Green Deal Assessment of the property Budgeted until 2016, but planned for until 2021 (new applications that is) Phased applications from RHPP supported installations (RHPP DEDUCTED) Has its own system of quarterly degressions Like the non-domestic RHI, it is index linked There are minimum energy efficiency standards to examine Installations that have been fully funded by a public sector grant are ineligible Not for profit Independent Mission led Established 10 years Work with the sustainable energy industry and decision makers Open to legacy installations, commissioned after 15 July 2009 (and eligible) Tariff is for 7 years It is a scheme aimed at homes. So somewhere that pays council tax (or is exempted for some reason)

35 But first, who can benefit from support? Owner Occupier Self-builder Private landlord Registered Provider Third party owner of the heating system Buildings with RH installed from new Legacy installations (installed between 15 July 2009 and when the scheme launches) can still apply to the scheme exempt from the air quality requirements Source: Energy Saving Trust

36 So d-rhi or nd-rhi? Non- Dom! Non It depends! Dom!

37 What it is Financial support to help domestic systems be a similar price to fossil fuel ASHP Biomass GSHP Solar thermal Tariff (p/kwh renewable heat) Biomass boilers (Solid, non-ff biomass only) Biomass pellet stoves with a back boiler Over the 7 years, these tariffs are designed to bring investing in renewables to the same level as fossil fuel heat generators. It is, in effect, a boiler replacement scheme. Source: Energy Saving Trust

38 What it is Financial support to help domestic systems be a similar price to fossil fuel ASHP Biomass GSHP Solar thermal Tariff (p/kwh renewable heat) Source:

39 What it is Financial support to help domestic systems be a similar price to fossil fuel ASHP Biomass GSHP Solar thermal Tariff (p/kwh renewable heat) Example: kwh annual heating demand benefit from loft top up cavity fill kwh potential heating demand Source:

40 What it is Financial support to help domestic systems be a similar price to fossil fuel ASHP Biomass GSHP Solar thermal Tariff (p/kwh renewable heat) Example: p/kWh = [Minus fuel costs, maintenance] Cost for domestic boiler installed? Source:

41 How is Renewable Heat Premium Payment getting on? Nearly 24,000 vouchers issued RHPP Vouchers issued since ,841 7,737 3,392 8,685 Ground or Water Source Heat Pump Biomass Boiler Air Source Heat Pump Solar Thermal Source: DECC RHI Statistics

42 How is Renewable Heat Premium Payment getting on? Nearly 24,000 vouchers issued Redeemed RHPP vouchers by location South West South East East of England West Midlands North West Yorkshire and the Humber East Midlands North East London Scotland Wales Source: DECC RHI Statistics

43 What it is Financial support to help domestic systems be a similar price to fossil fuel Planned to open in Spring 2014 (likely April 1 st ) Limited to Microgeneration Certification Scheme (Under 45kWth 70kW system) Some domestic properties are big. Can they have >45kWth systems supported by domestic RHI? Yes. Up to 70kW OK. So can I perhaps have 2 x 45kWth boilers and apply twice? Can I use a third party to pay for my plant? No. But could have 2x35kW Hmm. Can I put a technology in a second home? Yes, but must have a meter. Yes. No. Errr Source:Draft d-rhi legislation:

44 What it is Financial support to help domestic systems be a similar price to fossil fuel Planned to open in Spring 2014 (likely April 1 st ) Limited to Microgeneration Certification Scheme (Under 45kWth up to 70kW system) Not all pieces of equipment on the MCS database are eligible for the RHI. There is going to be definitive list of eligible kit, but it doesn t exist yet. Source:DECC Domestic RHI: The first step

45 What it is Financial support to help domestic systems be a similar price to fossil fuel Planned to open in Spring 2014 (likely April 1 st ) Limited to Microgeneration Certification Scheme (Under 45kWth) MUST have had a Green Deal Assessment of the property The Green Deal Assessment is there for two reasons, and must be completed before making the application: 1. To check the energy efficiency of the property 2. Produces the EPC which deems the payments received In reality, each property will need its loft and cavity insulated where it is possible to do so. Points for RH installers: 1. Understand the loft and cavity market timescales are key 2. Good network of GDA s to conduct the assessments 3. R4R can help identify your supply chain

46 What it is Financial support to help domestic systems be a similar price to fossil fuel Planned to open in Spring 2014 (likely April 1 st ) Limited to Microgeneration Certification Scheme (Under 45kWth) MUST have had a Green Deal Assessment of the property (and loft insulation to 250mm/cavity wall fill where applicable)

47 So how does the EPC/GDA thing work? Green Deal Assessment done Identifies loft and Cavity work that is Green Tick? Y N Green Deal? EPC is lodged Y N Apply Get work done GDP notifies assessor Get work done Get updated EPC GDA lodges new EPC Apply Source: Clarification note Apply

48 What about energy efficiency? Green Deal 1. Open to any business, homeowner or tenant 2. a loan secured against the electricity meter measures eligible 4. Must satisfy the golden rule 5. Repaid from energy savings through the electricity bill ECO 1. Three Streams 2. Carbon Emissions reduction obligation hard to treat homes 3. Carbon Saving Community obligation domestic users in areas of low income 4. Home heating cost reduction obligation affordable Warmth low income and vulnerable households Clear that since planned changes to ECO where announced in December, there will be a refocusing of effort on loft and cavity wall (cheaper measures)

49 Degressions?

50 Developments with the non domestic Renewable Heat Incentive

51 The RHI overall is underperforming DECC and Ofgem looking to encourage growth: Just 7% growth in renewable heat in 2012 Series of fairly significant changes brought in since Sept 2013 and throughout 2014

52 Despite strong south west performance! Dec 2013 RHI accreditations by location South West West Midlands Yorkshire and the Humber North West South East East Midlands East of England North East London Scotland Wales Source: DECC RHI Statistics

53 Changes to the non-domestic RHI Change #1 New technologies are eligible from Spring 2014: NOT biomass direct air heating Air-water heat pumps CHP (gets its own tariff) Biogas (wider tariff bands) Deep Geothermal (gets its own tariff) Updated Ofgem guidelines Vol.1 Eligibility requirements Vol.2 Ongoing obligations (changes to the installations, meter readings etc

54 Changes to the non-domestic RHI Change #2 No minimum energy efficiency criteria are being introduced to non-domestic RHI at this time Updated Ofgem guidelines Vol.1 Eligibility requirements Vol.2 Ongoing obligations (changes to the installations, meter readings etc

55 Changes to the non-domestic RHI Change #3 Some tariffs are being increased to encourage uptake: Large biomass Solar thermal Other tariffs are being changed to make them more reflective of the market: GSHP changes to a tiered system Updated Ofgem guidelines Vol.1 Eligibility requirements Vol.2 Ongoing obligations (changes to the installations, meter readings etc

56 Changes to the non-domestic RHI Change #4 Covered earlier but may make degressions more likely in popular technologies Updated Ofgem guidelines Vol.1 Eligibility requirements Vol.2 Ongoing obligations (changes to the installations, meter readings etc

57 Changes to the non-domestic RHI Change #5 We ll cover this in more depth later Updated Ofgem guidelines Vol.1 Eligibility requirements Vol.2 Ongoing obligations (changes to the installations, meter readings etc

58 Changes to the non-domestic RHI Change #6 Plant receiving RHI support can now be relocated and then sold, retaining existing tariff and duration Updated Ofgem guidelines Vol.1 Eligibility requirements Vol.2 Ongoing obligations (changes to the installations, meter readings etc

59 Changes to the non-domestic RHI Change #7 Now you can get RHI support for carrying out a commercial drying/cleaning process outside of a fully enclosed building. Updated Ofgem guidelines Vol.1 Eligibility requirements Vol.2 Ongoing obligations (changes to the installations, meter readings etc

60 Changes to the non-domestic RHI Change #8 already implemented Take a deep breath Metering placement guidance

61 New metering regime since 24 Sept 2013 Needing lots of meters identified as a key barrier to growth Old requirements: Generation to be metered and demand to be metered. No losses included in RHI m m m

62 New metering regime since 24 Sept 2013 Needing lots of meters identified as a key barrier to growth NEW requirements: Only generation needs to be metered if there are no ineligible demands m

63 So what happens with the pipe losses? NEW requirements: Only generation needs to be metered if there are no ineligible demands Losses in inter-building pipework still need to be assessed Any system with external pipework needs to fill out a heat loss spreadsheet m

64 So what happens with the pipe losses? NEW requirements: So filling out the heat loss spreadsheet is now the first step. It gets uploaded as part of the application Download it here. It s relatively painful. The outcome will be a %losses of heat to outside.

65 So what happens with the pipe losses? NEW requirements: So filling out the heat loss spreadsheet is now the first step. It gets uploaded as part of the application Download it here. It s relatively painful. The outcome will be a %losses of heat to outside. If the losses as identified by the heat loss spreadsheet are less than 3% they can be ignored. That s right, ignored. 3% losses or less are within the accuracy range of the approved heat meters. Losses from piperuns of less than 10m* should be disregarded anyway

66 So what happens with the pipe losses? NEW requirements: So filling out the heat loss spreadsheet is now the first step. It gets uploaded as part of the application Download it here. It s relatively painful. The outcome will be a %losses of heat to outside. If the losses as identified by the heat loss spreadsheet are less than 3% they can be ignored. *Properly insulated. That s right, ignored. For purposes of disregarding losses, all pipework must be classed as properly insulated. Currently, due to the regulations used 3% buried losses pipework less are cannot within be the classed as properly accuracy insulated range of the approved heat meters. Ofgem and DECC are looking at this means that any underground pipework (<10m or not) needs the full heat loss spreadsheet filled in. Losses from piperuns of less than 10m* should be disregarded anyway

67 Biomass sustainability requirements & the application process rom

68 Biomass boilers require a fuel more checks Ofgem needs to be clear that biomass used in RHI supported boilers is sourced sustainably From Autumn 2014, all biomass will have to be sourced from an approved list DECC out to tender currently for an organisation to run this Businesses can evidence their supply chain and join the list? List due to be up and running by the spring Still unsure about the role of reselling pellets Those supplying from their own estate are automatically considered sustainable

69 Fuels produce emissions more checks Ofgem are increasingly looking to enforce emissions standards on applications. This has raised an issue on how fuels are tested and evidenced Related to MCS: not all MCS equipment satisfies the emissions limits set for RHI Boilers that could use fuels with moisture content above what they were tested with risk being rejected by Ofgem Boiler that could use fossil fuels (and still operate adequately) are ineligible. This includes dual fuel boilers Stoves with back boilers are eligible, but water loop must be metered

70 Understanding Emissions All Non domestic biomass boilers applications since 24 th Sept 2013 must comply with the emission limits Domestic installation applications made between 15 July 2009 and nd-rhi launch do NOT have to comply with the emission limits Domestic installation applications made from launch date must comply with the emission limits For RHI emission certificates, the maximum permitted emissions are 30 grams per gigajoule (g/gj) net heat input for PM and 150 g/gj for NO x (expressed as NO 2 )

71 Application process Applications are managed and accredited by Ofgem. 100% online. Application process is nominally aimed at the installation owner to complete, with support and evidence from installer All evidence to be in.pdf format (excepting the heat loss questionnaire) Evidence needed as part of the application includes:

72 Application process - evidence Schematic, showing building boundaries (A3 or less PDF of course) MCS/Commissioning certificate Emissions certificate (if biomass boiler) Letter of authority (authorised to apply to the scheme from the business) Heat generator manual/warranty Fuel specification (if biomass boiler) Photographs. Lots of photographs: site, heat meters (showing MID accuracy), nameplates, heat demand Heat loss spreadsheet (if outdoor pipework) Ideally the pipework insulation specification Evidence of property type (council tax, business rates) not always necessary, but you need to know the detail and be prepared to evidence. Independent metering report (over 1MW or classed as multiple ) ID and bank details form

73 ND-RHI Application process - requirements Buildings must be fully enclosed (process heat can be delivered outside but must still be within a fully enclosed structure ) Genuine non-domestic demand All heat losses accounted for (including external pipework) Under 45kWth must be MCS Backup permitted but must be declared and accounted for (this refers only to physically connected plant)

74 ND-RHI Application process System is commissioned Application submitted to Ofgem Level 1 Checks Level 2 Checks Basic location and eligibility checks Application accredited Level 3 Checks

75 ND-RHI Application process System is commissioned Application submitted to Ofgem Level 1 Checks Level 2 Checks Most detailed checks concerning technical appraisal and assessment of the supplied evidence Application accredited Level 3 Checks

76 ND-RHI Application process System is commissioned Application submitted to Ofgem Level 1 Checks Level 2 Checks Final checks normally no more questions for the applicant by this stage Application accredited Level 3 Checks

77 ND-RHI Application process System is commissioned Application submitted to Ofgem Level 1 Checks Level 2 Checks Can be as little as 6 weeks more often it is Application accredited Level 3 Checks

78 ND-RHI Application process System is commissioned Application submitted to Ofgem Level 1 Checks Level 2 Checks Accreditation date is the Date Application accredited Level 3 Checks

79 Application process Can t overstate the importance of getting these right

80 Application process Can t overstate the importance of getting these right

81 Application process Details, details details. Photographs, schematics and descriptive text MUST match. Particularly important with the IRMA over 10% were found to have errors

82 Application process

83 Application process

84 Application process things to consider Which parts of the building are eligible?

85 Application process things to consider What s wrong with this?

86 Application process

87 Application process - tips Application has descriptive elements ensure all building labels and distances etc match with the schematic Schematic should have all main pieces of equipment present and the building boundaries not every valve and pipe bend Have all evidence converted to PDF before you start. Photos need to be converted to PDF too ideally with associated descriptive text Ofgem read through entire application and check basic elements are present and match do the same Getting all evidence in the format Ofgem require and agreeing can save weeks in the application process

88 Application process - tips Quite a basic interface. Will time you out fairly quickly Always click next after filling out the blanks Use the guide to applying on the page. Clicking previous will lose your If three months changes elapses with now activity on the application, it will be removed Domestic RHI is likely to be a similar process possibly slightly more straightforward

89 Where to find out more Application has descriptive elements ensure all building DECC will be on-hand to answer questions on RHI at Renewable Energy Marketplace, 8 April, Westpoint Arena Regen SW webpages on Renewable Heat

90 Thank you for your time