Feed-in tariff/renewable heat incentive – generate your own energy and heat and get paid for it

1. The ‘new’ - micro renewable energy and
refurbishment incentive schemes
Green Deal
Renewable Heat Incentive
Feed in Tariff
Nick Tune, Director BRE Wales

2. It’s not easy being green!

3. Introduction
• The UK Government have developed 3
schemes for micro renewable energy
and low energy refurbishment
– The Feed in Tariff – finance scheme
for electricity generating renewable
energy
– The Renewable Heat Incentive –
finance scheme for heat generating
renewable energy
– The Green Deal – ‘pay as you save’
scheme for building refurbishment

4. Feed in Tariff
• Started April 1st 2010 Tariff is RPI linked and guaranteed for 25 yrs
• Highest generation rate available until 2012, then decreases for new entrants
• Tariffs paid by a utility company, administered by Ofgem
• Electricity not used can be exported
• You do not need to be the building owner to claim the generation tariff
• Significant alterations in market conditions since introduction

5. Installations to November 2010

6. Simple Payback Example
• Solar PV
• 10 kW on roof
• Installed price £35k
• Generation 8,500kWh/yr
• Generation tariff 36.1p/kWhr
• Simple payback 11 years
• Gross earnings £79,900

7. FITs in Practice – domestic example

8. Generation Tariffs - originally
Technology Scale Generation Tariff Tariff Lifetime
2010 (p/kWhr) (years)
PV ≤ 4kW (new build) 36.1 25
PV ≤ 4kW (retrofit) 41.3 25
PV > 4-10kW 36.1 25
PV > 10-100kW 31.4 25
PV > 100kW-5MW 29.3 25
PV Stand alone system 29.3 25
Wind ≤ 1.5kW 34.5 20
Wind > 1.5-15kW 26.7 20
Wind > 15kW-100kW 24.1 20
Wind > 100-500kW 18.8 20
Wind > 500kW-1.5MW 9.4 20
Wind > 1.5MW-5MW 4.5 20

9. Generation Tariffs following First Review
Technology Scale Generation Tariff Tariff Lifetime
2010 (p/kWhr) (years)
PV ≤ 4kW (new build) 36.1 25
PV ≤ 4kW (retrofit) 41.3 25
PV > 4- ≤ 10kW 36.1 25
PV > 10 - ≤ 50kW 31.4 25
PV > 50 - ≤150kW 19.0 25
PV > 150 - ≤ 250kW 15.0 25
PV >250kW - ≤ 5MW 8.5 25
Wind ≤ 1.5kW 34.5 20
Wind > 1.5-15kW 26.7 20
Wind > 15kW-100kW 24.1 20
Wind > 100-500kW 18.8 20
Wind > 500kW-1.5MW 9.4 20
Wind > 1.5MW-5MW 4.5 20

10. Some important issues to consider
• Site orientation and shading
• System specification
• Financial assumptions on technical performance
• Pre-payment meters and metering
• Replacement of components over time
• Output drop over time
• Fixing methods
• Resident engagement
• Financial Models and Insurance

11. Importance of solar data

12. Feed in Tariff for PV – Site and Shading
Site Selection:
• South facing
• Essential to consider over-shading to calculate generation yields
3D – Shading Analysis

13. Example: variation in output with pitch and orientation [CIBSE]

14. Shading Analysis
2D – Shading Analysis

15. Feed in Tariff for PV
Consultancy for PV
•Identifying the most suitable sites
•Accurate predictions of energy generation
•Modelling of shading
•Modelling Module/Inverter configurations
•Support tender evaluation
•Confirm specifications
• Support investment case

16. The Renewable Heat Incentive
• Payments for renewable heat generation similar to FIT for
electricity
• An incentive based mechanism with intention of creating a
bigger market for renewable heat
• RHI will be funded from general Government spending,
not through the previously proposed RHI levy
• Due to go live from ‘Summer 2011’
• Two phases of implementation

17. Two-Phase Approach
• Phase 1: Non-Domestic Sector
» Targeting large energy users
» Businesses, industrial, public sector
» Communal systems included, e.g. sheltered
housing
• Phase 2: Domestic
» Long-term support aligned with Green Deal
(i.e. will support ‘whole house approach’)
» October 2012 for implementation

18. Confirmed original proposals
• Installations between 15 July 2009 & introduction of
scheme eligible for tariffs
• Long term support (adjusted for inflation) to compensate
for:
– Capex and opex of renewable heating compared to a gas fossil fuel
alternative
– Additional barrier and financial cost (assuming a 12% rate of return for a
reference installation, apart from solar thermal);
• Support for technologies classed as renewable
• MCS for installations <45kW
• Ofgem E-Serve will administer the scheme

19. New policy
• Value for money is key
• Two phase approach –second phase of the scheme from 2012
• Domestic included from 2012 –initial support through Renewable Heat
Premium Payments
• Fewer technologies supported in phase 1 to allow further evidence
gathering
• Two-tier tariff for biomass <1MW
• Funded from Government spending
Natural temperature at >1 metre below surface is a constant +10 C.
Plenty of heat energy – but at too low a temperature
low grade heat useful heat
Heat
Pump

20. Resource costs per MWh of key renewable
energy technologies
Source: (DECC Impact Assessment March 2011)

21. Phase 1 – Eligible technologies
• Ground and water source heat pumps (one tariff)
• Biomass
• Biogas combustion <200kW (incl gasification & pyrolysis)
• Biomethane injection
• Solar thermal <200kW
• Geothermal (GSHP tariff)
• Energy from municipal solid waste (adjusted biomass tariff)
• CHP (support on the basis of heat only technology)

22. Tariff levels
Eligible technology Eligible size Tariff Tariff Support
(p/kWh) duration calculation
(years)
Metering
7.6 (Tier 1) Tier 1 applies annually to the
< 200kWth 20
1.9 (Tier 2) tier break,
Tier 2 above tier break
Solid biomass; municipal solid
4.7 (Tier 1)
waste (inc CHP) 200-1,000 kWth 20
1.9 (Tier 2)
Tier break is
Metering
> 1,000kWth 2.6 20 installed capacity x
1,314 peak load
Metering
Ground source heat pumps; < 100kWth 4.3 20 hours, i.e.
water sourced heat pumps; kWth x 1,314
deep geothermal Metering
> 100kWth 3 20
Metering
Solar thermal < 200kWth 8.5 20
Biomethane all scales
Biomethane injection and
Metering
biogas combustion, except from 6.5 20
Biogas combustion
landfill gas
< 200kWth

23. RHI Biomass Example
• A 30kW biomass installation (e.g. a pellet boiler in a small school)
generates 45 MWh (or 45,000 kWh) of heat in a particular year.
• Approximate capex = £15,000
– Its "Tier Break" can be determined by multiplying 30kW x 1,314h =
39,420 kWh. It will receive:
• The Tier 1 tariff for first 39,420kWh,
i.e. 39,420kWh x 7.6p/kWh = £2,995.92
• The Tier 2 tariff for the remaining 5,580kWh,
i.e. 5,580kWh x 1.9p/kWh = £106.02
Total RHI payment = £3102 /yr

24. Administration
• Ofgem E-Serve
– Manage applications
– Assess whether applications meet eligibility criteria
– Make incentive payments
– Ensure compliance with rules of scheme (may require inspection)
– Will produce guidance on the scheme
• DECC
• MCS Certifying bodies

25. Phase 1 – Eligible requirements
• All non-domestic or
single installations
heating multiple domestic
premises
• Metering of all
installations –heat has to
be delivered through
water or steam
• Useful heat in buildings
(space, water or process)
• Sustainability reporting
for biomass above 1MW
• MCS products and
installers where
applicable up to 45kW

26. Phase 2
• Inclusion of domestic
• Automatic degression to control cost
• Consideration of further technologies
– Direct air heating (furnaces, kilns,
ovens etc)
– Air source heat pumps –key
technology
– Bioliquids
• Possible dedicated tariffs for
– CHP
– Geothermal
– Solar thermal and biogas
combustion >200kW
• Emissions limits for biomass boilers

27. Measuring the Heat
• Support paid on basis of multiplying the kWhth of metered
renewable heat by the relevant tariff
• Heat meter must meet the Class 2 requirements of EU
Measuring Instruments Directive (MID) 2004
• Heat Pumps: Must ensure metering does not count any
cooling element
• More details to follow from DECC

28. What to look out for
• Check for RHI eligibility
• Make sure project management team
is in place
• Carry out options appraisal
• Select technology / ies
• Get quotes – from MCS installers for
45kW and below
• Identify other eligible funding
• Check project can be delivered within
RHI review timetable (Apr ‘15)
• Complete Ofgem accreditation
all of the above takes time!!!

29. Renewable Heat Incentive
Consultancy Offering:
• Identification of suitable buildings
• Assessment of revenues and running costs
• System specification
• Accurate predictions of energy generation and income
• Modelling of supply and demand profiles
• Support tender evaluation
• Technical support for investment cases
• Impact on building users

30. Green Deal
• Pay as you save scheme
• Whole House Approach
• Companies e.g. British Gas, B&Q, M&S,
Tesco etc will pay for and install energy saving
measures
• No upfront cost
• A percent e.g. 80% of energy savings made
by the measures will be used to pay off the
cost of the measures (must within 25 years)
• Measures must provide greater energy
savings than the repayments over the 25 yr
period

31. What measures will be funded?
• Phase 1 - energy saving measures
– Solid Wall insulation,
– Double glazing
– Cavity wall
– Loft
• 2ND Phase - Micro renewables
– PV
– SHW

32. Who will implement Green Deal?
• Licensed Assessors – energy model the house (similar to
the EPC certificate) suggest measures
• Home owner signs up to scheme and pay back period
• Registered companies install measures to set standards
e.g. MCS etc
• The loan is against the house not the individual i.e. the
repayment is passed onto the new home owner

33. Green Deal – Seamless Customer Journey
Marketing Pre-Assessment Delivery Post -Assessment Monitoring
Technical feedback loop – uploads results into refurbishment portal
BRE
5) Accredited Green 13) Accredited Green 16) BRE to develop
Deal Advisors drawn Deal Advisors drawn Operational Rating
2) BRE markets from DEAs NDEAs 6) Product 7) Installation from DEAs NDEAs software tool to
Green Deal to DECs & EHS DECs & EHS monitor future
consumers surveyors Standard - PAS MCS installers surveyors performance –
through extensive Product Green Book Live service could be
assessor network Software: SAP, Certification Red Book Software: SAP, provided by web-
RdSAP, BREEAM in MCS Voluntary training for RdSAP, BREEAM in based tool
Use, Refurb Portal Green Book Live, installers & specifiers Use, Refurb Portal
Training by BRE Redbook Training by BRE
SAP Appendix Q
Green Deal Process
1) Marketing of 4) Initial Survey 8) Green Deal 11) Green Deal 12) Post installation 15) Maintain
Green Deal Finance Retro-fit survey relationship with
Assessment of Installation customer
Via: web tool property to determine Finance Plan to be Following installation a
(e.g.T-Zero), Asset Rating (EPC). generated for Installation of second survey (EPC) Monitoring of future
network of This could include consumer (must products is undertaken to energy consumption
installers (SMEs) Operational Rating. meet “golden rule”) recommended in produce post through a web-based
initial assessment / installation Asset tool providing
Generation of “Green survey Rating feedback to Green
Deal Report” Deal provider
Green Deal Provider
3) Opportunity for 14) Results of post 17) Operational Rating
provider and BRE 9) Product 10) Installation
installation assessment software feeds back
to work together Customer Finance
used to enable energy performance
on dual branded Plan options for Installation of
activation of finance data to BRE and
marketing products through products through
plan. Green Deal Provider
campaign web-tool network of
Assessment should via Smart Meter
Supply of products installers (SMEs)
include an Operational system
(such as insulation
Rating
etc)
Loyalty feedback loop - driving repeat business through rewards system

34. Green Deal – a seamless Customer Journey
Assessment: Green Deal will require initial EPC for property in
order to initiate Process:
• Customer tracking through initial EPC report reference number
(RRN) enables customer to track progress of their Green Deal
throughout the process
EPC – report
reference
number

35. EHS Data Collection Pre 2008

36. Developing Scenarios for Future
Energy Use and Carbon Emissions
Market penetration of home energy efficiency measures
100%
90% Hot water tank insulation
Double glazing
80% Draught proofing
70%
Central heating
Percentage of potential
60%
Cavity wall insulation
50%
40%
Condensing boilers
30%
20% Loft
insulation
(any)
10%
0%
1950 1960 1970 1980 1990 2000 2010 2020 2030 2040 2050
Year

37. Step 1. Carbon Map
identify regional CO2 hotspots
Key points
• We will visually map dwelling
CO2 by Census Output Area
• This provides a clear
indication where poorly-
performing stock is located
• Allows effort to be targeted
towards the most effective
locations
• Provides visually compelling
material aiding communication
with stakeholders

38. PV survey through data

39. Green Deal – a seamless Customer Journey
Installation: Second element of delivery phase is installation
of products supplied under Green Deal framework:
• Technical: Development of installation standard / code of
practice
• Training: Opportunity for BRE Training to provide
voluntary installer training – providing confidence to
consumer
• Certification: BRE Global operate an approved MCS
installer scheme, all MCS installers are listed on the
www.greenbooklive.com. This could be extended to cover
Green Deal Registered Installers
• Commercial opportunities: BRE Training - provision of
installer training, opportunities for Green Deal Provider –
revenue through installation service (partnership with
SMEs)

40. Green Deal – a seamless Customer Journey
Finance: Green Deal Framework will include need for finance package to
be extended to home/building owner to enable recommendations to be
implemented:
• Technical: BRE developed T-Zero which enables home owners to
review options for improvements, this could be extended to cover
Green Deal – indicating options for product selection. Capability on
cost-benefit and Green Deal finance modelling
• Commercial opportunities: Further development of web-based tool
for consumers to model finance options – analysis of payback

41. Green Deal – a seamless Customer Journey
Post-Installation Assessment: Green Deal process will require
post installation EPC for property in order to confirm that
recommendations have been implemented:
• Technical: BRE developed software such as: SAP, RdSAP,
SBEM, BREEAM in Use and BREEAM Domestic
Refurbishment. Where issues occur BRE could help resolve
with advice.
• Training: BRE Training is able to provide top-up training for
DEAs and NDEAs enabling them to deliver Green Deal Advisor
services
• Certification: BRE Global well placed with 1,609 Accredited
Assessors who have lodged 762,822 EPCs, DECs and Home
Condition Reports
• Commercial opportunities: Training of Green Deal Advisors,
delivery of accreditation scheme (increased volume of EPCs)

42. Green Deal – a seamless Customer Journey
Maintaining the relationship with the customer – Monitoring:
• Green Deal process provides invaluable access to customers, which if
maintained could help to drive repeat business – monitoring energy
consumption will be key to developing future repeat business
• BRE to develop web based operational rating software which helps
the customer monitor post Green Deal energy consumption
• Energy data fed directly back to BRE and Green Deal Provider via
smart meter system installed during retro fit. Data used to inform and
refine software tools used for Green Deal Advice

43. Green Deal – a seamless Customer Journey
Maintaining the relationship with the customer – Feedback:
• Generate case study from pre and post assessment together with
monitored performance into NRC Refurbishment Portal
• Provide expanded database to be used by future customers
EPC – report
reference
number