An Introduction to the Renewable Heat Incentive

Transcription

1 An Introduction to the Renewable Heat Incentive Tim Saunders Energy Saving Trust March 2011

2 Renewable Heat Incentive Starting July 2011 Designed to provide financial support that encourages individuals, communities and businesses to switch from using fossil fuel for heating, to renewables. 860million made available from central Government funding to support the RHI over the period Renewable Definition - RHI Only support heat from renewable sources which is defined as renewable in the Renewable Energy Directive (RED). 2

3 Key principles 1. Provide continuous income stream for 20 years = commercially attractive than fossil fuel alternatives. 2. Increase the level of renewable heat in the UK, which is key to the UK meeting its renewable energy targets, reducing carbon emissions, ensuring energy security and helping to build a low carbon economy. 3. The RHI will help accelerate deployment by providing a financial incentive to install renewable heating in place of fossil fuels 3

4 Why? 50% of the UK s carbon emissions come from the energy used to produce heat more than from generating electricity. 95%+ of heat in the UK is currently produced by burning fossil fuel. low carbon alternatives are needed. binding targets to generate 15% of our energy from renewable sources by By 2020, 12 per cent of heating from renewable sources. We estimate that the RHI could save up to 44 million tonnes of carbon (MtCO2) by 2020 (36 MtCO2 outside the EU(ETS) and 8 MtCO2 inside the EU(ETS). 12% all heat generated from renewable sources by 2020 saving 44Mt CO2 By

5 RHI Anticipated by ,000 installations - industry 110,000 installations - commercial and public sector, supplying 25% of the heat demand in these sectors Generating around 57TWh of renewable heat.( x7 anticipated installations in 2014) Supporting the existing 150,000 jobs in the heating industry. RHI stimulating 4.5 billion of capital investment 5

6 RHI - 2 Phases Non Domestic From July 2011 Domestic October

7 Domestic Support 1 st Phase Households will be eligible for support under the Premium Payments until the second phase of the RHI is launched in October The RHI Premium Payment will be worth around 15m and will support up to 25,000 installations from July. A key focus will be for people living off the gas grid. 7

8 Domestic RHI Premium Payments Solar Thermal - 300/unit Air Source Heat Pumps - 850/unit Biomass boilers - 950/unit Ground Source Heat Pumps /unit These are one of payments, DECC to publish details in May 2011 Recipients of this payment will need to ensure that: They have a well-insulated home based on its energy performance certificate (EPC) They agree to give feedback on how the equipment performs Existing installations will be supported for those installed 15 th July 2009 onwards (MCS Installer and Product) No State aids issue for domestic grant beneficiaries 8

9 Technology Details Phase 1 Non Domestic Tariffs 9

10 Technologies included Biomass boilers (Including CHP biomass boilers) Solar Thermal Ground Source Heat Pumps Water Source Heat Pumps On-Site Biogas combustion Deep Geothermal Energy from Municipal Solid Waste Injection of biomethane into the grid District Heating (using an rhi heat source) 10

11 Heat Pumps Ground Source HP Water Source HP Deep Geothermal 20 years, Metered, COP (as per MCS) 11 Wikipedia

12 Biomass Support will be broken down into size class: Small biomass (<200 kwth) Medium biomass (>200 kwth - 1 MWth) Large biomass (>1 MWth). For small and medium scale biomass there will be a tariff breakpoint at 1314 peak load hours p.a. Below this small biomass will receive 7.6p/kWh, and medium biomass will receive 4.7p/kWh, while above this both will receive 1.9p/kWh. Large biomass receives a flat rate of 2.6p/kWh 12

13 Biomass Tariffs Renewable Heat Incentive Payments Calculator eid=77,363178&_dad=portal&_schema=portal 13

14 Biomethane / Biogas Biomethane Injection (all scales) Biogas combustion (less than 200 kwth) 6.5p kwh, for 20 years (metered) 14

15 Solar Thermal Up to 200kWth (up to 300m2) Potential ROI 3-5% (STA). Potential for larger than larger than 200kWth from

16 Payment Terms Payments will be made quarterly and the tariff duration is 20 years. Inflation adjusted as per FITS Eligible renewable heat equipment installed since 15th July 2009 will qualify for support under RHI. Payment being made for each kwh of renewable heat which is produced. Once in the scheme the level of support an installation will receive is fixed and adjusted annually with inflation. However, as with feed in tariffs, we expect the levels of support available for new entrants to the RHI scheme will decrease over time as the costs of the equipment and installation reduce through economies of scale. 16

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18 Potential Inclusion 2 nd Phase Air Source Heat Pumps Air source heat pumps will not be supported from the outset, as more work is needed to better understand the costs associated with the technology and, for air to air heat pumps, as described below (Direct air heating), we have not yet developed a means of measuring direct air heating, as we have for water and steam. Subject to the successful conclusion of the work and affordability, we will look to extend eligibility for air to water source heat pumps from pply/energy%20mix/renewable%20energy/policy/renewableheat/1421- air-source-heat-pumps-rhi.pdf 18

19 Dec 10 Capacity MCS Companies (March 2011 note - East Midlands 176 are MCS certified (1996 Nationally)) Technology No of MCs Installers offering Percentage of installers offering Common sub categories Total out of 136 Percentage of installers Solar Photovoltaics 92 67% Solar Thermal & Solar Photovoltaics 21 15% Solar Thermal Heat Pumps Biomass Micro CHP % 25% 2% 0.75% Heat Pumps & Solar Thermal Solar Photovoltaics & Wind Turbines % 4% Wind Turbines Hydro Total MCS certified % 0.75% Companies offering 3 or more technologies All Biomass installers are specialists 8 3 6% 19

20 Microgeneration Certification Industry lead Scheme - MCS All MCS certified kit and installers (solar keymark) if less than 45 kwth OFGEM will administer the scheme. Detailed guidance to follow MCS companies Nationally. 175 Regionally. 515 ASHP, 458 GSHP,114 Biomass, 738 Solar Thermal 20

21 Finding an Installer &y= &z=4&add=1 21

22 Enhanced Capital Allowances (ECAs) Enhanced Capital Allowances (ECAs) enable a business to claim 100% first-year capital allowances on their spending on qualifying plant and machinery. There are three schemes for ECAs: Energy-saving plant and machinery Low carbon dioxide emission cars and natural gas and hydrogen refuelling infrastructure Water conservation plant and machinery Businesses can write off the whole of the capital cost of their investment in these technologies against their taxable profits of the period during which they make the investment.this can deliver a helpful cash flow boost and a shortened payback period. 22

23 Tim Saunders Microgeneration Co-ordinator Energy Saving Trust advice centre East Midlands