The UK Renewable Heat Incentive and Renewable
EUROPEAN REGIONAL
DEVELOPMENT FUND
The UK
Renewable Heat Incentive and
Renewable Heat Premium Payment
Schemes
Reading Borough Council
Gabriel Berry
Ferrara (IT), 29 September 2011
Agenda
1. Context
2. The Renewable Heat Premium Payments Scheme & the Renewable Heat Incentive
How the schemes work
Tariff and grant rates
Eligibility & standards
3. Impact predictions
4. Criticism & issues
5. RHI case study
6. Summary
Summary
Renewable Heat Incentive + Premium Payments
WHAT?
2 schemes providing financial support to domestic and non-domestic renewable heat generators
WHERE?
England, Scotland and Wales (RHI: off gas network)
WHEN?
RHI launched tomorrow; RHPP since 1 st August 2011
WHO?
Owners of eligible heaters recently/soon installed: ground & water source heat pumps, biomass, solar thermal, RHI: deep geothermal, biogas, municipal waste, biomethane injection
HOW?
955m € central Government funding, paid per unit of metered eligible heat for 20 years (RHI), plus capital grants (RHPP)
WHY?
UK RES target is 15% of energy - currently 1.5% (11% of heat - currently 1%). + Avoid carbon emissions up to 44 MtCO
2
Context – 15% Target
UK Renewables Strategy & Roadmap
2010
1
%, or
7 TWh th
Renewable heat:
2020
11% or
57-72 TWh th
“ Heat pumps could also play a more important role than previously estimated ” of which GSHPs to provide 14 TWh th
“...requires an annual growth rate of up to 41%”
UK vs EU - Ground energy
Heat pumps
709 GWh th
, 2010
135 MW th
, 2008
(11 th in EU)
10,350 * no., 2008
(9 th in EU)
Deep geothermal
9 GWh th
, 2010
1 MW th
, 2010
1 no., 2010
* 2010: 12-22,000 no.
Context - GSHPs in UK RE Strategy
Context – Government’s strategy
•
How? “Use incentives, address barriers”
Renewables Roadmap priority areas
Technology costs RHI heat payments
RHPP grants
Planning and licensing processes
Availability of quality installers/ engineers
RHPP standards
(RHI in future?)
Demands on the electricity grid
Performance and technical issues
RHI CoP standards
RHPP borehole standards
Context - Existing incentives
Domestic
• Reduced VAT rate (5%) on small-scale RE
• Revenue from govt incentives exempt from tax
• New zero-carbon homes get relief on duty
Business
• Annual investment allowance
• Enhanced Capital Allowance for Energy Technology List products incl. GSHPs (plant only)
Industry
• £5m Deep Geothermal Challenge Fund 2009-11
= grants for major projects (>2 MWe or >5 MWth)
Context – Energy prices
UK commercial fossil prices
Natural gas
Heating oil
Electricity
€ c/kWh
2.3
5.4
10.1
RHI & RHPP – Timeline
• Mar 2009 – UK RE Strategy & Targets
• Feb 2010 – Public consultation
• May 2010 – Change of govt
• Oct 2010 – Spending review confirmed RHI & set budget
• Mar 2011 – Details published
• Aug 2011 – RHPP launch
• Oct 2011 – RHI scheme launch
• Aug 2011 – RHPP ends
• Oct 2012 – RHI domestic launch
Intro 1 - Renewable Heat Premium Payments
• Government domestic renewable heat grant
• Selected EU RES (e.g. not stoves/cooling)
• Phase 1 , August 2011 – March 2012
Grants for eligible heat generators…
• Phase 2 , from October 2012
…+ RHI payments for metered heat
RHPP – How it works
The householder:
• Applies to EST * for grant ‘voucher’
• Installs biomass boiler/solar collector/heat pump
• Registers heater via the installer
• Redeems voucher & receives grant
• (probably) Joins RHI in Oct 2012
Owner must agree to heat metering & attitude surveys if randomly selected
* Energy Saving Trust = government’s consumer energy advisory agency
RHPP – Grant amounts
330 €
950 €
1,390 €
1,060 €
RHPP – Eligibility & standards
•
•
Domestic (social housing – special conditions)
Must be owner’s main home
• Off gas network
• Must be main heating
(except solar)
(except solar)
• Cavity wall insulation + 250mm loft insulation
• Product & installer registered with MCS
• Hence capacity below 45 kW th
• Installed by end Mar 2012 or voucher expiry date
“We will continue to monitor and review the performance of heat pumps in situ.”
RHPP – eligibility
ELECTRICITY
Solar PV
Small wind
Biogas
Hydro power
HEAT
Wood boiler heat
Solar thermal hot water
Air to water source heat pumps
Ground / water source heat pumps
COOLING AND
UNMETERABLE HEAT
Wood boiler+chiller COOLING
Wood stove heating
Biogas heat
District heating
Air to air source heat pumps
Deep geothermal
Intro 2 - Renewable Heat Incentive
•
• Government payments for metered heat
• Non-domestic until Oct 2012
EU RES but not ASHP, stoves, cooling
• Paid over 20 years
• Rate of return vs fossil fuel 12% (6%)
• World first?
Starts October 2011
Renewable Heat Incentive – How it works
1. Install eligible heater & heat meters
2. Register with Ofgem for RHI
3. Read & report heat production
4. Receive quarterly payments (owner)
5. Continues for 20 years
RHI – How it works
Tariff rates calculated to:
• compensate for cost of RE plant over fossil
• cover both installation & running costs
• provide return on additional capital invested
• be incentive to overcome non-financial barriers
After the start of the scheme, tariff levels will be adjusted automatically each year in line with the Retail Price Index (RPI). This adjustment will be applied both for new and existing projects.
RHI – Tariff rates
Small biomass
Medium biomass
Large biomass
Small ground source
Large ground source
Solar thermal
Biomethane
< 200 kW
200 kW -
1 MW
> 1 MW
< 100 kW
> 100 kW
< 200 kW
8.4 €c /kWh
2.1 €c /kWh
5.2 €c /kWh
2.1 €c /kWh
1.4 €c /kWh
4.8 €c /kWh
3.3 €c /kWh
9.4 €c /kWh
7.2 €c /kWh
RHI – eligibility
ELECTRICITY
Solar PV
Small wind
Biogas
Hydro power
HEAT
Wood boiler heat
Solar thermal
Biogas heat
District heating (RE)
Air source heat pumps: domestic
Ground / water source heat pumps
& deep geothermal
COOLING AND
UNMETERABLE HEAT
Wood boiler+chiller cooling
Wood stove heating
Air source heat pumps: non-domestic
Ground / air source cooling
RHI – Standards
All heat pumps
• Required: CoP 2.9 or above ( heat pump only )
• May change when EC issues guidance
Heat pumps ≤ 45 kW th
• Must conform to UK Microgeneration Certification Scheme
• MCS covers installer, product, design & installation standards
Heat pumps > 45 kW th
• Ofgem will verify eligibility
• No standards other than CoP (above)
“We will continue to monitor and review the performance of heat pumps in situ.”
RHI – High temperature geothermal
• Same tariff as ground source heat pumps
“We intend to consider whether specific tariffs for deep geothermal heat can be introduced from 2012 ”
“There are no MCS or equivalent standards so, for the RHI, Ofgem will verify eligibility based on the documentation required”
• … i.e. no technical standards for deep geothermal
NB Cogeneration under the RHI
• Heat element only is eligible for payments
• No additional support for CHP - RHI deemed sufficient
RHI & RHPP – Impact predictions
• 110,000 public/commercial installations
• 13,000 industrial installations
• ?? domestic installations
•
contribute to 100,000 new RES jobs
• directly stimulate 5.0 billion € capital investment
• generate 57 TWh th by 2020
RHI & RHPP – Criticisms & issues
• Lack of installer/product/design standards >45kW
• July 2009 cut-off – unfair, or practical?
• Exclusion of log/pellet stoves & bio-liquid fuels
• Exclusion of cooling and ‘waste heat’
• No additional support for extra costs of district heat
• Air source heat pumps – always sustainable?
• Biomass fuels/emissions – always sustainable?
• Some wanted payments assignable to 3 rd parties
• Some wanted fossil fuel suppliers to pay RHI
RHI – Opportunity for ground energy
Reading Borough Council
GEO.POWER team (UK)
Tel. +44 118 937 2159
Email climate.change@reading.gov.uk
RHI - GSHP case study
The Avenue Centre
Owner: Reading
Borough Council
Function: New-build school + offices
• 2× 80 kW th grd loop HPs to underfloor heat
• Generates 420 MWhth pa, uses 140 MWhe
• Installed by Geothermal International
RHI - GSHP case study
• GSHP: capital cost 142 k€
+ electricity costs 14 k € pa
• Gas boiler: capital saving 14 k €
+ fuel saving 12 k € pa
PAYBACK no RHI= never…180 k€ loss*
• RHI 20 k€ pa for 20 yrs
PAYBACK RHI= 8 yrs…120 k€ income *
* assuming static fossil energy prices!
