British building owners can now make money by generating renewable heat

The first scheme in the world that will pay owners of domestic buildings for generating renewable heat has been launched in the UK by Energy Minister Greg Barker (seen right with MP Chloe Smith opening a 'Mr Renewables showroom' at the beginning of April).

Like feed-in tariffs for generating renewable electricity from technologies such as photovoltaic solar panels, the financial incentive scheme offers householders a fixed amount per kilowatt-hour generated from various technologies, even though the heat is only consumed in the home and not made available for others (as with home-generated electricity that is fed into the electric grid).

Called the Renewable Heat Incentive, it is based on a similar scheme for business, the public sector and non-profit organisations, that has been in operation for some time in the UK, as well as a smaller domestic scheme aimed at solid-walled, hard-to-heat homes, called the Renewable Heat Premium Payment.

Property owners apply to all schemes through the Energy Saving Trust, a government-sponsored body which promotes energy efficiency and renewable energy at the domestic scale.

The purpose of the RHI is to stimulate the renewable heat industry in the same way that feed-in tariffs have done for the solar PV industry. This has seen remarkable growth in the last four years with the cost of a typical PV system installation dropping by more than half.

The UK Government and industry body the Solar Trade Association (STA) have a target of covering over one million roofs with solar thermal and solar PV panels by the end of 2015. Over 200,000 solar thermal systems are already installed in the UK.

Global capacity for solar thermal is over 200GW - around double global installed capacity of solar power. The technology is proven and well established across Europe and elsewhere, and back in the days of previous support systems when grants were offered for installation of many types of renewable energy technologies, solar thermal was by far the most popular technology of choice for householders.

Stuart Elmes, Chair of the Solar Thermal Working Group at the STA, welcomed the launch of the RHI, saying: “Solar heating is popular with householders and quick to install, integrating easily with existing heating systems. We calculate that the returns from solar water heating are similar to those from solar power when you take into account the high price inflation for gas and heating oil.”

Paul Barwell, Chief Executive of the STA said: “With the launch of the Domestic Renewable Heat Incentive the final piece of support for household solar technologies slots into place. Together with the Green Deal for insulation improvements and the Feed-in Tariff for solar power, householders now have a great choice of Government-backed financial incentives to choose from to best suit their clean energy needs.”

Launching the scheme, the Government Minister for Energy Greg Barker (pictured right) said: "Not only will people have warmer homes and cheaper fuel bills, they will reduce their carbon emissions, and get cash payments for installing these new technologies. It opens up a market for the supply chain, engineers and installers – generating growth and supporting jobs as part of our long-term economic plan."

Technologies and payments

The technologies currently covered by the scheme are:

• Biomass heating systems, which burn fuel such as wood pellets, chips or logs to provide central heating and hot water in a home. Biomass-only boilers are designed to provide heating using a ‘wet system’ (eg through radiators) and provide hot water. Pellet stoves with integrated boilers are designed to burn only wood pellets and can heat the room they are in directly, as well as provide heat to the rest of the home using a ‘wet system’ (eg through radiators) and provide hot water.
• Ground or water source heat pumps, which extract heat from the ground or water. This heat can then be used to provide heating and/or hot water in a home.
• Air to water heat pumps, which absorb heat from the outside air. This heat can then be used to provide heating and/or hot water in a home.
• Solar thermal panels, which collect heat from the sun and use it to heat up water which is stored in a hot water cylinder. The two types of panels that are eligible are evacuated tube panels and liquid-filled flat plate panels.

Technology	Tariff
Air-source heat pumps	7.3p/kWh
Ground and water-source heat pumps	18.8p/kWh
Biomass-only boilers and biomass pellet stoves with integrated boilers	12.2p/kWh
Solar thermal panels (flat plate and evacuated tube for hot water only)	19.2 p/kWh

Only one space heating system is allowed per property but homeowners can apply for solar thermal for hot water and a space heating system.

The guaranteed payments are made quarterly over seven years for households in England, Wales and Scotland. (Northern Ireland has its own RHI scheme). The scheme is designed to bridge the gap between the cost of fossil fuel heat sources and renewable heat alternatives.
According to renewable energy expert Richard Hiblen, who has more than 14 years’ experience in this field, the RHI tariffs are ‘good for some and better for others’, but even the worst figures make the technologies more attractive than installing oil or LPG heating.

Phil Hurley, managing director, NIBE Energy Systems Ltd., a renewable heating manufacturer, called the RHI "a game changer for the renewable heating industry". He continued: “The introduction of the domestic RHI gives the industry the security and confidence it needs to realise its growth potential".

But Neil Schofield, Head of External and Governmental Affairs at boiler (furnace) manufacturer Worcester, Bosch Group, cautioned that: “the funding is weighted heavily in favour of biomass, which is one of the most expensive systems to install and one requiring the largest amount of user intervention. Questions have already been raised over whether DECC has backed the right horse in this respect."

UK Solar Strategy

Earlier this week, the UK Government also launched its Solar Strategy, which contains plans to turn the Government estate as well as factories, supermarkets and car parks in cities around the UK into “solar hubs”.

Energy Minister Greg Barker  said he believes that “there is massive potential to turn our large buildings into power stations and we must seize the opportunity this offers to boost our economy as part of our long term economic plan. Solar not only benefits the environment, it will see British job creation and deliver the clean and reliable energy supplies that the country needs at the lowest possible cost to consumers.”

The UK has an estimated 250,000 hectares of south-facing commercial rooftops, and the government believes that solar increasingly offers efficient and cost effective onsite generation opportunities to both businesses and domestic consumers.

In a further initiative, the Department for Education is working on ways to improve energy efficiency across the 22,000 schools in England, to reduce their annual energy spend of £500 million, and to encourage the deployment of PV on schools alongside promoting energy efficiency. The British Education Secretary Michael Gove said: “Solar panels are a sensible choice for schools, particularly in terms of the financial benefits they can bring. It is also a great way for pupils to engage with environmental issues and think about where energy comes from.”

Renewable Heat Incentive launch set for next Spring

Solar thermal is one of the most affordable renewable technologies and the Solar Trade Association is looking forward to boom time.

Details of the domestic Renewable Heat Incentive (RHI) and related tariff levels have been announced by the Department of Energy and Climate Change (DECC), but anticipated news about the future of the non-domestic RHI has been postponed.

The domestic RHI will launch next Spring. As has always been promised, anyone who has installed a system since 15 July 2009 can claim retrospectively, as long as they meet the Microgeneration Certification Scheme (MCS) standards that applied at the time of installation.

DECC has confirmed the tariff levels for all four eligible technologies. These will be:

• Flat plate and evacuated tube solar thermal panels: at least 19.2p/kWh


• Ground (and water) source heat pumps: 18.8p/kWh


• Air to water heat pumps : 7.3p/kWh


• Biomass-only boilers and biomass pellet stoves with back boilers: 12.2p/kWh.

Payments will be made on a quarterly basis over a period of seven years. Householders who have already received vouchers under the Renewable Heat Premium Payment scheme will be transferred to the RHI and have their value deducted from their RHI payments.

Applicants will need to complete a Green Deal assessment to reduce their energy demand to a certain level in order to qualify for the payments.

Private landlords and providers of social housing will be able to apply for a property or properties that they own (provided they own the heating system). The landlord will receive the RHI payments.

For Local Authorities who use Arm’s Length Managed Organisations (ALMOs) to manage their properties, the application must come from the owner of the heating system.

New build properties will not be eligible for the scheme. The Renewable Energy Association said this "reinforces the need for the government to set demanding carbon compliance standards in the 2013 revision of the Building Regulations Part L, due for imminent release by DCLG".

People will not be able to claim for more than one space heating renewable heating system in the same property, with the exception of installations of solar thermal and another eligible technology.

Climate change minister, Greg Barker, said: “Investing for the long term in new renewable heat technologies will mean cleaner energy and cheaper bills. So this package of measures is a big step forward in our drive to get innovative renewable heating kit in our homes.

“Householders can now invest in a range of exciting heating technologies knowing how much the tariff will be for different renewable heat technologies and benefit from the clean green heat produced. We are also sending a clear signal to industry that the coalition is 110% committed to boosting and sustaining growth in this sector.”

DECC gives an example of what an installer might receive, in the case of a biomass boiler which might cost, say, £8,000 to install. In a year, the estimated heat use could be around 15,000kWh, which, at a 12.2p/kWh tariff, would result in a payment of £1,830. This would mean it might pay for itself in around five years.

New installations of biomass systems will need to meet air quality standards in relation to particulate matter (PM) and oxides of nitrogen (NOx).

Ofgem will be responsible for administering the scheme when it launches.

The RHI is funded directly from Government spending and has been given annual budgets. There are worries that, as with the payments for Feed-in Tarriff PV systems, they might unexpectedly decrease in the future. DECC will make an announcement on this around the time of the launch.

The news was welcomed by trade body the Heating & Hotwater Industry Council, whose director, Roger Webb, said: “it gives the industry confidence to invest in renewable heating products helping to protect and create jobs. We would of course like the tariffs to be higher but we understand the difficulty of introducing a government funded scheme in the current economic climate," he added.

"We will also be urging DECC to monitor uptake and if necessary to increase tariffs if they are not driving up product sales.”

Stuart Elmes, Chair of the Solar Trade Association's solar thermal working group, called the announcement “a massive boost for the solar thermal market. The value of this incentive is on a whole new level, there’s nothing like it anywhere in the world. From now on people can install solar heating with confidence that their system will be able to join the RHI scheme, and knowing what their payments will be worth.”

Solar thermal is one of the most affordable renewable technologies for homeowners, with a typical system costing around £4,500. This includes the replacement of an old hot water cylinder with a well-insulated solar cylinder.

Solar thermal systems are relatively small and appropriate for partially shaded roofs or those with limited space. A typical system will provide over half the hot water needs of the average home.

Paul Barwell, Chief Executive of the STA, said: “This announcement today is a major success for the STA. Our team has worked very closely with DECC over an extended period in an effort to ensure that the benefits of solar thermal are adequately recognised in the domestic RHI.

"In particular we have helped to drive a deeming calculation based on true occupancy that better reflects hot water usage in the home. The exceptional technical expertise of Stuart Elmes has been invaluable to our efforts.”

Ground source heat pump manufacturer Kensa's Managing Director, and Chairman of the Ground Source Heat Pump Association, Simon Lomax, said that the "Domestic RHI announcement made today, three and a half years after the initial consultation, is disappointingly short on detail."

Tim Minett, chief executive of CPL Industries, a supplier of biomass systems and wood pellet distributor, said he was “surprised the Government is offering more for other technologies but still expect biomass systems will be the most popular by far.

"They are the easiest to retrofit to properties, simple to use and work in all weather conditions – a big factor in the UK – while 12.2p/kWh will cover the cost of installation, lower people’s fuel bills and provide regular income for years to come. What’s not to like about that? “The domestic RHI should be hugely popular as a fifth of the UK’s housing stock is not connected to the gas grid," but he added, "the chief stumbling block is lack of awareness among the public so what we desperately need now is for the Government to step up and promote the scheme vigorously.”

Brian Smithers, European Director, Rexel, agreed, adding: "it is also in the industry’s interest to drive awareness by educating consumers".

Non-domestic RHI decision postponement

At the same time as making the announcement about the domestic RHI, the Government said it was delaying a decision on expanding the non-domestic RHI scheme, which has been operating for over two years, until the autumn, a full year after the proposals were originally released in September 2012.

Industry response was to express disappointment. The Combined Heat and Power Association said the continuing lack of clarity and certainty is "unhelpful for the hundreds of millions of pounds of renewable heat projects currently under development".

Last year the CHP industry welcomed the proposals to expand the RHI scheme to include tailored support for heat produced from biomass and bioliquid CHP. The proposals highlighted recognition within Government that biomass CHP is the most optimal use for limited biomass resources.

Dr Tim Rotheray, Head of Policy and Communications at the CHPA said: "It is absolutely crucial that the Government now provide clarity and certainty. The Government’s proposals for a CHP-specific rate under the RHI is driving renewable heat projects around the country, and a clear, quick decision will help lock in these investments, lock in the jobs these investments will provide, and lock in our ability to meet our renewable heat targets with highly efficient renewable CHP.”

He did, however, welcome the boost to investor confidence given by the Government's decision, also just announced, to grandfather existing renewable CHP schemes from changes to its quality assurance programme.

The biofuel-industry trade body, the Renewable Energy Association, called the delay "disappointing", but welcomed the announcement on the domestic RHI.

The same response came from the Anaerobic Digestion and Biogas Association's chief executive, Charlotte Morton, who called it "very disappointing for AD developers and operators. Making good use of heat from AD plants makes sense for operators, and will help the government deliver renewable energy targets," she added.

"The (non-domestic) RHI is currently well below its projected budget and another delay will simply make it harder for our members to deliver the projects government wants to see.

"DECC could help resolve this by giving developers clarity over the eligibility date, which would allow projects to start generating and using renewable heat if they have commissioned their plant within a set period," she concluded.

British coal plants are converting to biomass with no certain climate benefit

A British Government policy change is causing coal plants to convert to burning biomass, fueling a huge increase in wood pellet exports from North America. But a new review of biofuels' impact has cast doubt on their ability to tackle climate change.

Around one-third of the EU bioenergy share in 2020 is projected to come from wood biomass from forests and woods, according to EU states’ National Renewable Energy Action Plans.

But there is a significant time lag between the carbon debt created when trees are cut down to be burned for energy, and the carbon reductions that fully grown replacement trees will bring, according to a report from the Institute for European Environmental Policy (IEEP).

“It is not currently possible to define the emissions profile and savings associated with Europe’s expanding use of biomass for energy, nor is there any policy process currently in place to secure this,” the IEEP report says.

“As a consequence, at present there is only the certainty of commitment to bioenergy use up to 2020, but no associated guarantee of emission reduction.”

The IEEP paper cites several studies to show that boosting bioenergy supplies with increased forest management would only achieve around 20% of the anticipated greenhouse gas savings in a 50-year period.

American imports rise

The European policy is boosting exports of wood pellets from North America. American export volumes are forecast to increase from an estimated 1.5 million tons in 2012 to 5.7 million tons in 2015, according to the North American Wood Fiber Review.

Total Canadian exports to Europe in the second quarter of this year rose 14% from the first quarter, with reports of British Colombian pellet plants running at full capacity thanks to European demand.

Biomass-burning plants in the UK import most of their fuel, mostly from North America, which increases their carbon impact from transportation.

While in 2010-11, 13% of biomass burnt in British power stations was home-grown, this fell to 8.6% in the last financial year.

Meanwhile the amount imported grew, from 840,250 tonnes in 2010-11 to 1,086,880 in 2011-12, an increase of 23%.

Drax, based in Selby, North Yorkshire, is the main importer of biomass for this purpose, and is about to become a much bigger customer.

It has just raised £190 million to convert three of its six generating units exclusively to burning biomass instead of coal. The cost of this conversion is staggering: up to £700 million. It is being additionally financed by £230 million of cash, a £100 million loan and bank credit of £400 million.

Half of this money will not be spent in this country. It will be spent in upgrading port facilities and new wood pellet plants in North America.

Several new Canadian pellet facilities, such as Holbrook Forest Products in Roddickton, Newfoundland, have expressed their intentions to export pellets via these new port facilities.

Drax has used a financial technique called hedging to presell its power output to 2014. It issued an interim statement yesterday saying: "We have taken advantage of better dark green spreads since [2012] to strengthen our contracted position, including additional power sales of 3.5TWh and 2.9TWh for 2013 and 2014 respectively".

DECC's preference for conversion

Its incentive to make the conversion is the decision, announced in September in the banding review for the Renewables Obligation Certificates, that the more biomass is consumed in a given plant, the more support it is given. Electricity generated by a unit using 100% biomass will receive 1 ROC.

In addition, DECC's review came down on explicitly supporting co-firing and coal conversion to biomass, as opposed to new biomass plants, and a consultation on a cap on dedicated biomass ROCs.

It is also likely that dedicated biomass projects will be excluded from the new capacity mechanism in the Energy Bill.

This decision caused Centrica Energy, to announce on Wednesday that it will not be proceeding with planning applications to develop dedicated biomass power stations at Roosecote in Barrow-in-Furness and at Glanford Brigg in North Lincolnshire.

Centrica Energy had proposed to build a new 80MW biomass power station on the site of its existing Roosecote gas-fired power station, and a 137MW biomass power station adjacent to its existing gas-fired power station at Brigg.

Others are not deterred, however. MGT Power announced this week that it will build a new 300 MW biomass power station at Teespor, at an estimated cost of £500 million.

Eggborough Power aims to convert all four units at its 2GW coal-fired plant to biomass. These would consume over 15 million tonnes per year of wood pellets if all units underwent conversion. The vast majority of these will be imported.

One port through which biomass imports come from North America is Immingham. It said on 15 October that it expects to handle 8 million tonnes of biomass in 2020, up from 62,000 tonnes in 2011.

The port discharged a 46,000 tonne wood pellet cargo in August, which was delivered to a large Aire Valley coal station. It expects to see further deliveries this year.

Several developers are deciding whether to build biomass plants close to the port.

Attempts are being made to address the lag in the intended greenhouse gas emission-curbing benefit of burning trees for electricity.

In August, the American state of Massachusetts implemented a regulation that biomass can only now be sourced from residues and thinning trees, taking into account soil productivity and protection of biodiversity and natural habitats.

Biomass units must also show that they emit at least 50% less greenhouse gases than fossil fuels, while efficiency requirements, operating certificates, and verification procedures are also imposed.

A DECC spokesman said that it will be consulting soon on setting caps on the carbon impact of biomass plants.

Scandal of the unclaimed renewable heat grants

Only one solar thermal installation has so far been completed under the Renewable Heat Incentive.

Only half of the grants offered by Government to businesses and councils to install renewable heating schemes are being claimed.

One of the main reasons appears to be lack of publicity, but the grant conditions also are claimed to be too tight.

Under the Renewable Heat Incentive, businesses and public sector bodies can claim a subsidy for every unit of power generated from technologies such as solar water heating panels, biomass boilers and heat pumps, in the same way as can be claimed for renewable electricity under the feed-in tariff scheme.

The first tranche of the scheme, launched last year by the Department of Energy and Climate Change (DECC), was underspent by 50%: £5.5 million of the £10.8 million budget was unclaimed. According to Ofgem, just 176 schemes are receiving payment, a pitifully small number.

The second stage, worth £7 million was launched in March, and the latest figures show a total of only £817,250 claimed. The vast majority of these are for solid biomass boilers.

If this rate of uptake continues until the scheme closes in March 2013, just £3.9 million will be spent.

New figures, released yesterday, show that DECC's current estimated expenditure for 2012/13, based on the total number of RHI applications received to date, is £18 million. The cap on spending is £70 million. At this rate DECC estimates only £42 million will be spent.

As the figure is based on applications rather than fully accredited installations, the eventual figure is likely to be lower.

The Renewable Energy Association's head of policy, Paul Thompson, said the difficulty in giving away the grants is due to three factors, all decided by DECC: the time-limit, the lack of publicity, and the small amount of support on offer, which, he said was “not enough money to influence people's decisions".

He said: "You've got to have a bright idea that's pretty much developed to be in a position to be able to meet the deadlines".

He called upon DECC to use unspent funds to run a publicity campaign. The Department is currently deciding what to do with unspent funds from the social landlord's scheme.

DECC also launched an £8 million competition for community groups on 24 July, to install renewable heating. Grants up to £160,000 are available but applications must be in by 7 September, which is too early for some groups to manage. In addition, the completion schedule is tight: projects have to be completed by the end of the financial year.

EU targets dictate that 12% of the nation's heating needs to come from renewable sources by 2020, an increase of 2.2% on 2011 levels.

What is mystifying is the lack of installation of solar thermal. In the previous support system run by DECC, solar water heating was by far the most popular technology. It has proved to be very successful in this country, much more so than solar PV in terms of value for money.

In fact, renewable heat in general it is more cost-effective than renewable electricity, at a small scale.

Yet the Ofgem figures show that there has been just one solar thermal scheme supported under the RHI. The full figures are:

Technology Type	No of accredited installations / Registered biomethane producers	Installed Capacity (MW)
Biogas	1	0.113
Solid Biomass Boiler	162	6.02
Deep Geothermal	0	0.000
Ground Source Heat Pump (GSHP)	11	0.378
Municipal Solid Waste	0	0.000	Solar Thermal	1	0.008
Water Source Heat Pump (WSHP)	1	0.024
Bio-Methane	0	0.000

At the end of July DECC also published new regulations that introduce the stand-by mechanism for budget management to the RHI Scheme, part of the impact of which is to introduce an immediate change for biomethane producers who wish to register for the Scheme.

DECC's current consultation on the Renewable Heat Incentive long-term budget management has, as its preferred option, gradually reducing the tariff levels for new installations if deployment levels exceed forecasts.

On current trends, that is not likely to happen, and there could well be a third renewable heat underspend by the Department.

One would be forgiven for wondering if this is part of a deliberate pattern.

Davey buys £20m for onshore wind in exchange for £500m for gas

Subsidies for onshore wind farms will be reduced by 10%, not the 25% demanded by the Treasury, says Energy Secretary Ed Davey, but at a long-term cost to carbon emissions.

To win this agreement, the Department has had to concede that gas generation will continue "to play an important part in the energy mix well into and beyond 2030, while meeting our carbon budgets".

This "important part" is ensured with a grant of £500 million for gas field exploration. To put this in context, the dispute between the Treasury and DECC centred over a difference of around just £20 million in support for 1GW of onshore wind.

The effect on greenhouse gas emissions after 2030 is likely to be alarming. David Nussbaum, chief executive of WWF-UK, sent a letter to David Cameron yesterday, complaining of "a clear bias on the part of Mr Osborne towards investment in new gas-fired power stations" which would imperil the UK's climate targets and could raise bills for consumers.

“The proposal that emissions from gas plants built before 2015 will effectively never have to limit their emissions jeopardises our ability to meet UK carbon targets," he said. “The announcement on this, which was slipped out late on a Friday and which had the Chancellor’s fingerprints all over it, is another example of the Treasury’s malign influence on energy policy."

John Sauven, Greenpeace's executive director, also commented that: “The Treasury is fighting tooth and nail to oppose a 2030 decarbonisation target or support for future renewables targets. Mr Osborne has rebranded himself Mr Polluting Gas. It's up to Nick Clegg to stick what's left of Lib Dem principles back into this process."

£25 billion investment

However, marine energy developers will celebrate a 250% increase in their support from 2 ROCs (renewable obligation certificates) to 5 ROCs per MWh, subject to a 30MW limit per generating station.

"The case for investment in renewable energy is so strong and that is why, across government, we are backing it," said Energy Secretary Mr. Davey, making the announcement.

He said that representatives of industry and business support the subsidy cut of 10%, but not of 25%. “And that will bring forward investment between £20 and £25 billion between 2013 and 2017, and create hundreds of thousands of jobs," he promised.

"No one would want to over-subsidise an industry," he said.

He tried to reassure the wind industry by saying that there would not be a further change in the support levels or targets for carbon reductions in the autumn.

"The climate legislation says that if there has been a change in any of the generation costs for a renewable technology, whatever it is, we should have a review. So if it does change dramatically, then of course everyone agrees that we should have a review."

When pressed by James Naughtie on the Today programme this morning, Ed Davey said that meeting emission reduction targets depended on carbon capture and storage and nuclear power coming on stream by 2030, as well as major investment in renewables. He did not mention demand reduction.

"We don't have a target for the amount of energy to be generated from renewable sources at the moment," he said. Mr Davey said that there was cross-party agreement on the legally-binding targets to reduce carbon emissions. "What we're discussing is whether there should be an intermediate target for decarbonising the power sector. There is a debate to be had about that, around the Energy Bill," he said. That is expected in the Autumn.

The announcement of the results of the Banding Review consultation for the Renewables Obligation was delayed last week, following intervention from the Treasury, but was finally announced today.

The Department for Energy and Climate Change (DECC) quantified the impact on consumer bills between 2013 and 2015, as a reduction of £6 off household energy bills next year and £5 the year after.

By 2017, DECC hopes that this will deliver as much as 79 TWh of renewable electricity per annum in the UK, 11 TWh more than at present, which still not enough, just 74%, of the 108TWh of electricity needed to meet the UK’s 2020 renewable energy target.

The Renewables Obligation is the Government’s main mechanism for supporting large-scale renewables, and the review covers the final period of support, 2013-17 (2014-17 for offshore wind), before the scheme ends.

The announcement comes ahead of the Government's Global Investment Conference and series of 17 business summits taking place at the British Business Embassy at Lancaster House during the upcoming Games, which aim to secure further investment into the UK.

John Cridland, CBI Director-General, welcomed the announcement, saying it “will help to encourage investment into our energy sector, creating jobs and supporting growth". He also thought that "the Government is right that gas should play a crucial role in any future energy mix. We have argued that there is no need for a false choice between renewables, nuclear, gas, and carbon capture and storage. It’s clear from the evidence that we need a diverse supply.”

Support for onshore wind from 2013-17 will be reduced by 10% to 0.9 ROCs, guaranteed until at least 2014 but could change after then if there is a significant change in generation costs.

If there is evidence of significant reduction of generation costs in early 2013, then subsidies will again reduce in April 2014. The Government will also consider how local communities can have more of a say over, and receive greater economic benefit from, hosting onshore wind farms.

Biomass and solar

There will be a new band to support existing coal plant converting to sustainable biomass fuels. This will increase the amount of renewable energy produced at less cost to consumers.

The new enhanced co-firing band will be split into two new bands: mid-range at 0.6 ROCs/MWh, and high-range co-firing at 0.7 ROCs/MWh in 2013/14, rising to 0.9 ROCs/MWh from 2014/15.

This was welcomed by Dorothy Thompson, Chief Executive of Drax, the country's largest coal burning plant, which is in the process of conversion to be able to burn more and more biomass. She said that she is now “confident that we can transform Drax into a predominantly biomass fuelled generator".

Generators will need to burn at least 50% biomass in a unit to be eligible for support. Bioliquids are excluded from this.

There will be a consultation on lowering the support level for standard co-firing to 0.3 ROCs/MWh in 2013/14 and 2014/15, increasing to 0.5 ROCs/MWh from 2015/16.

Support for generation using 100% biomass is to be set at 1.5 ROCs/MWh, degressing to 1.4 ROCs/MWh for new accreditations and additional capacity added after 31 March 2016.

There will be no immediate reduction in support for large-scale solar, but, as with onshore wind, the level will be kept under review. Installations under 5 MW will only be eligible for feed-in tariff support.

New landfill gas generating capacity will not receive any support from 1 April 2013, but new generators using gas wholly from closed landfill sites will be eligible for support at 0.2 ROCs/MWh and electricity generated using new waste heat to power generating capacity will be eligible for 0.1 ROCs/MWh at both existing stations as well as new stations using gas from any landfill site.

The gas bill

In return for this extra 11 TW hours, DECC has given its commitment to a new dash for gas, provided that gas remains cheap.

It will have “a key role in ensuring that we have sufficient capacity both to meet everyday demand and complementing an increasing amount of relatively intermittent and inflexible generation", the DECC statement says. "We do not expect the role of gas to be restricted to providing back up to renewables, and in the longer term we see an important role for gas with CCS."

£500m of grants are being made available for large shallow water gas fields in the UK Continental Shelf, and more information on the Government's strategy will be set out in the Autumn.

The full bill impacts of current bandings and 2013-17 bandings:

Absolute contribution to average household electricity bills of RO support costs under current bands and the revised bands

£2011 prices	2013/14	2014/15	2015/16	2016/17
Current bands	44	47	49	50
Revised bands	38	42	50	53
Difference between revised and current bands	-6	-5	1	3

(Using household electricity demand before the impact of other policies)

Bandings for all technologies:

Table 1 - Bandings under the Renewables Obligation

Renewable electricity technologies	Current support (2012-2013) ROCs per MWh	Post-consultation decisions
		Level of support (ROCs per MWh)	Comment and other changes
Advanced gasification	2	2 in 2013/14 and 2014/15; 1.9 in 2015/16 and 1.8 in 2016/17	One ACT band supporting ‘standard’ and ‘advanced’ ACTs at the same ROC level
Advanced pyrolysis
Anaerobic digestion	2	2 in 2013.14 and 2014/15; 1.9 in 2015/16 and 1.8 in 2016/17	Closure of band to new projects at or below 5 MW from 1 April 2013, subject to consultation
Biomass conversion	No current band but 1.5 ROCs under current banding arrangements	1	New band. Unit by unit approach. No energy crops uplift. Change to definition of relevant fossil fuel generating station.
Biomass conversion with CHP	No current band but 2 ROCs under current banding arrangements	1.5 in 2013/14 and 2014/15	New band. Unit by unit approach. No energy crops uplift. Change to the definition of relevant fossil fuel generating station. Close band to new accreditations from 1 April 2015.
Co-firing of biomass (standard)	0.5	Solid and gaseous biomass (less than 50% biomass co-fired in a unit): 0.3 (proposed) in 2013/14 and 2014/15; 0.5 from 2015/16.	Unit by unit approach. ROC levels in 2013/14 and 2014/15 subject to further consultation.
		Bioliquids (less than 100% biomass co-fired in a unit): 0.3 (proposed) in 2013/14 and 2014/15; 0.5 from 2015/16.
Co-firing of biomass (enhanced)	No current band but 0.5 ROCs under current banding arrangements	Mid-range co-firing (50-less than 85%): 0.6	New band. Unit by unit approach. Excludes bioliquids (other than energy crops). Cost control mechanism to be introduced, subject to consultation
		High-range co-firing (85-less than 100%): 0.7 in 2013/14; 0.9 from 2014/15
Co-firing of biomass with CHP (standard)	1	0.5 ROC uplift in addition to prevailing ROC support available to new accredit-ations until 31 March 2015	Unit by unit approach. Close band to new accreditations from 1 April 2015.
Co-firing of biomass with CHP (enhanced)	No current band but 1 ROC/MWh under current banding arrangements	0.5 ROC uplift in addition to prevailing ROC support available to new accredit-ations until 31 March 2015	New band. Unit by unit approach. Close band to new accreditations from 1 April 2015.
Co-firing of energy crops (standard)	1	0.5 ROC uplift in addition to prevailing ROC support for co-firing of biomass (standard). No uplift available for mid-range or high-range co-firing.	Band to be closed, subject to consult-ation. Unit by unit approach. Changes to definition of energy crops.
Co-firing of energy crops with CHP (standard)	1.5	0.5 ROC uplift in addition to prevailing ROC support for co-firing of energy crops (standard). Band not available for mid-range or high-range co-firing.	Band to be closed, subject to consultation Unit by unit approach. Changes to the definition of energy crops. Close band to new accreditations from 1 April 2015.
Dedicated biomass	1.5	1.5 until 31 March 2016; 1.4 from 1 April 2016	Introduction of a supplier cap, subject to consultation
Dedicated biomass with CHP	2	2 in 2013/14 and 2014/15	Changes proposed to add fossil derived bioliquids, to exclude biomass conversion and to close this band to new accreditations from 1 April 2015
Dedicated energy crops	2	2 in 2013/14 and 2014/15; 1.9 in 2015/16 and 1.8 in 2016/17	Changes to the definition of energy crops
Dedicated energy crops with CHP	2	2 in 2013/14 and 2014/15; 1.9 in 2015/16 and 1.8 in 2016/17	Changes to the definition of energy crops.
Energy from waste with CHP	1	1	Decision to retain support at current level following consultation
Geothermal	2	2 in 2013/14 and 2014/15; 1.9 in 2015/16 and 1.8 in 2016/17
Geopressure	1	1
Hydro-electricity	1	0.7	Closure of band to new projects at or below 5 MW, from 1 April 2013, subject to consultation.
Landfill gas	0.25	0 for open landfill sites	New bands for closed landfill sites and Waste Heat to Power.
		0.2 for closed sites
		0.1 for new Waste Heat to Power band at open and closed sites.
Microgeneration	2	2 in 2013/14 and 2014/15; 1.9 in 2015/16 and 1.8 in 2016/17
Offshore wind	2 in 2013/14; 1.5 from 2014/15 onwards	2 in 2013/14 and 2014/15; 1.9 in 2015/16 and 1.8 in 2016/17
Onshore wind	1	0.9	Closure of band to new projects at or below 5 MW, from 1 April 2013, subject to consultation
Sewage gas	0.5	0.5
Solar photovoltaic	2	Banding proposals subject to re-consultation. Closure of band to new projects at or below 5 MW, from 1 April 2013, subject to consultation.
Tidal impoundment (range) – tidal barrage (<1GW)	2	2 in 2013/14 and 2014/15; 1.9 in 2015/16 and 1.8 in 2016/17
Tidal impoundment (range) – tidal lagoon (<1GW)
Tidal stream	2	5  up to a 30 MW project cap. 2 above the cap.
Wave
Standard gasification	1	2 in 2013/14 and 2014/15; 1.9 in 2015/16 and 1.8 in 2016/17	One ACT band supporting ‘standard’ and ‘advanced’ ACTs at the same ROC level
Standard pyrolysis

Alongside publication of the banding review results, DECC has also published an assessment of how incineration of waste to produce energy and heat can be made more efficient.

DECC has not yet published its impact assessment.

Exposed: The Renewable Energy Foundation is a front for biofuel and energy-intensive industries, and anti-wind campaigners

The Renewable Energy Foundation sounds like a nice green charity that serves the cause of green energy. But it is in fact a front for the interests of biofuels companies, energy-intensive industries and even oil and gas companies.

It put out a scare story last week, claiming that Britain would lose 10,000 jobs due to the Government's current green policies and 30,000 jobs if those policies are accelerated.

Together with Civitas, the right wing think tank, REF's policy director John Constable argued that "the more green technologies are subsidised by the EU, the greater the predicted net loss for British workers".

But not just any green jobs. It found figures which led it to compare the average cost of a wind power job with the wage of a public worker (not the same thing at all) as £54,000 versus £29,000. What this fails to do is show the comparable cost of that public sector job.

But what of the financial benefit of the wind power job? The report is unable to say, instead admitting "it is not yet possible to estimate the net employment impacts of such costs" but insinuating "they seem unlikely to be positive".

There have been many criticisms of the REF over the years, particularly from the rest of the renewable energy sector, such as Renewable UK and Good Energy.

Juliet Davenport, CEO of Good Energy, has said, "The problem with the Renewable Energy Foundation is that their name is misleading. It suggests they are in favour of renewables when actually the opposite is true."

The Charity Commission even investigated and cautioned them on the grounds that they were engaging in political lobbying.

The REF doesn't see it like that; they claim that they are merely providing educational data sets. Nevertheless these sets are almost exclusively biased against wind power and in favour of biofuels.

Who are the REF?

The REF is registered as a charity at the Charity Commission, which means it can claim charitable tax status. Its website lists a chairman and three trustees, all of whom have strong links to either the biofuels and/or oil and gas industries.

Links to biofuel industries

Mike Starkie

REF's secretary is Mike Starkie, formerly Group Vice President and Chief Accounting Officer of oil company BP Plc, but now he is a Non-Executive Chairman of biofuel company Clenergy.

Clenergy, its website says, has been set up to build plants to generate "500MW/h" (sic) of electricity from imported, cultivated biofuels.

It envisages importing the fuels from countries where there are serious questions about the sustainability of the forests.

It announced this month that it aims to become nothing less than the worldwide supplier of biomass feedstock through licensing agreements and joint ventures through the cultivation of energy crop plantations throughout the developing world.

These will produce not just timber but pyrolysis oil and wood pellets.

The European Union is now under severe pressure to change its policy on biofuels and biomass after evidence has emerged that their use can actually increase carbon emissions.

ActionAid, Birdlife, ClientEarth, European Environmental Bureau, Oxfam, Transport and Environment and Wetlands International all signed a letter last week addressed to the European Commission President, José Manuel Barroso, asking for the policy to be reviewed in the light of five scientific studies on the topic including one on land use by the EU's own scientific advisors.

The Renewable Energy Foundation has published no comment on this news.

If this evidence is accepted and policy changed, then support for biomass in the Renewables Obligation Order will undoubtedly have to be removed.

This is the policy shift for which Biofuelwatch, the campaign organisation that challenges the sustainability and carbon-neutral value of biofuels, is actively campaigning: for Renewable Obligation Certificates (ROCs) to be withdrawn for both biofuels and biomass.

Yet another REF trustee, Colin Davies told the House of Lords in May this year that he does not want support for renewables but instead wants a change in the Renewable Obligation banding so that biomass, not wind power is favoured.

Under present ROC support, palm oil, imported timber and other biomass energy crops used as a source of electricity earns two ROCS per megawatt-hour (MWh) - currently worth around £90.

This has led to a large number of planning applications, many of which are approved already, for biofuel and biomass (mainly wood) power stations across the UK.

One was recently approved at Anglesey. Other companies wanting to build such plants include MGT Power, Prenergy, Helius Energy and Forth Energy.

Almost all plan to import the wood fuel from industrial plantations at the expense of tropical forests, grasslands and communities in countries such as Brazil, the Republic of Congo or Ghana, according to Biofuelwatch.

With the REF lobbying for an increase in support for biomass in the RO, and scientific evidence pulling in the other direction, there is speculation that this dilemma may be a factor in the delay in publication of the Government's review of Renewables Obligation Certificate banding.

Cambell Dunford

There is a further link to biofuels companies. REF's company address, 21 John Adam Street in London, is alongside Charing Cross Station. Also registered at the address is a limited company called REF Ventures Ltd., which sounds like it could be the trading arm of the charity.

However, this is listed as 'dormant' or 'ceasing to trade' at Companies House, where the name was registered in 2006.

REF Ventures has three listed officers. One of these is Cambell Dunford.

Dunford is a director of W4B, a company with two projects that involve burning imported palm oil to generate electricity; one in Portland, Dorset, and another in Avonmouth, Bristol - despite strong local and national opposition which questioned the sustainability of the source of the oil.

One of these plants alone, when or if operational, would double the amount of imported palm oil into this country.

Palm oil is strongly implicated in the destruction of natural rainforests in countries like Indonesia, and thus actually increasing climate change and flooding, and decreasing biodiversity.

Greenpeace Canada senior campaigner Stephanie Goodwin says four percent of global greenhouse gas emissions are estimated to come from the destruction of the Indonesian rainforests alone.

Links to energy-intensive industries

REF's chairman, Guy de Selliers, has little to do with renewable energy and much to do with energy-intensive industry.

He is listed by Forbes as a Director of a Russian Food company, Wimm Bill Dann Foods, which is a leader in dairy products and children’s food of which Pepsico recently bought a 66% controlling interest.

He is a member of the board of directors of Solvay S.A., a global group of pharmaceutical and chemical companies that makes, amongst other things, plastics and cellulose acetate fibre as used in cigarette filters. It has a new energy arm, founded last year - which is involved, at least partly, in biofuels – specifically, sugar cane operations in Brazil.

He's also been a director of an energy-intensive nickel processing company.

Colin Davies

REF Trustee Colin Davies is also the President of the Aluminium Foundation. He recently complained to the House of Lords about the "the huge costs facing energy-intensive industries" like his from the "introduction of Carbon Price Support and Phase 3 of the European Union's Emissions Trading scheme".

Davies is also director of aluminium company Alcoa and in both roles frequently can be heard complaining about the risk to his company and the aluminium industry, especially the upstream, energy-intensive side of the business, of ‘carbon leakage’, and asking for Government support, and appropriate compensation, i.e., against the burden of the Emissions Trading Scheme.

Links to the oil and gas industry

Besides REF's secretary, Mike Starkie, having been Group Vice President and Chief Accounting Officer of BP, another Trustee, Dr Carol Bell, is heavily involved in the oil and gas industry.

She is a board member of Petroleum Geo-Services (PGS), which helps oil companies find oil and gas reserves offshore worldwide.

Her company profile says she has over 25 years' experience in the oil and gas sector, particularly its investment and finance and also acts as Senior Advisor on Oil & Gas to Europa Partners, a corporate finance advisory firm; non-executive director of Hardy Oil and Gas plc.; a member of the Investment Advisory Committee of Gemini Oil and Gas (a private investment fund).

None of this has anything to do with renewable energy.

Anti-windfarm activity

REF's anti-wind stance is well known. The author of the report on renewable energy and jobs, John Constable, is frequently quoted by the likes of anti-windfarm group The Countryside Alliance.

Also well known is the involvement of the DJ and TV personality Noel Edmonds. The celebrity was a founder of the REF and is listed as an officer of REF Ventures.

Edmonds is also a director of motor, helicopter and aviation companies - all of no merit in terms of sustainability, let alone renewable energy - and 38 others, none of which are anything to do with renewable energy either.

Although he resigned from the REF itself a year ago, Noel Edmonds' involvement is explained by the fact that he is a vociferous opponent of windfarms. He told the Guardian in 2004 that he helped found he REF "because of the threat near his home in Devon".

In 2008 he told Daily Mirror readers that "Politicians are promoting the wind industry as a green icon, but they are misleading the public into believing the propaganda of the wind industry. The reality is that wind power is too costly and can never meet our energy needs; but it will destroy the countryside."

Edmonds is also on record (News of the World, 14th Sept 2008) as believing that there should be a total ban on migrants coming into Britain because its energy resources are stretched.

Other donors to the charity are known anti-windfarm campaigners, including Sigrid Rausing, heiress to the Tetrapak fortune (the family is among the richest in the country and owns an estate in Sussex and another in Scotland).

The REF doesn't disclose the identities of all of its donors, but of those it does, many are clearly influential and wealthy, For the rest, we can only speculate on the interests they have in trying to discredit windpower and lobby for biofuels and the oil and gas industry.

Conclusion

All of the above represents clear evidence that the Renewable Energy Foundation has an industrial agenda aimed at skewing Government policy in favour of the industries for which it is a front.

Its pronouncements on renewable energy, jobs, and especially windpower, must therefore be taken with several pinches of salt.

899MW of newly approved biomass plants could increase carbon emissions

Last week DECC approved construction of a new 299MW biomass-burning plant owned by Anglesey Aluminium Metal Renewables. But new opinion from the Scientific Committee of the European Environment Agency (EEA) says plants like this will not be carbon-neutral and may even result in increased carbon emissions.

The proposed plant will employ up to 600 people during construction and around 100 full-time personnel when operational, and the company says its feedstock will be sourced from both imported and local sources - perhaps forests in Wales - with imports coming in through the Port of Holyhead.

This approach for sourcing fuel is identical to that being followed by Drax, which was given consent for 580MW of biomass-fuelled plant in the north-east six weeks ago.

Both are awaiting final go-ahead for construction when the results of the Government's review of the Renewable Obligation Certification (ROC) incentive scheme are announced, expected next month.

The EEA's report, however, says that biomass - fuels of plant origin like trees - should not be considered carbon neutral because this "fails to recognize that if bioenergy were not produced, land would typically grow plants anyway, and those plants would continue to absorb carbon and help to reduce carbon in the air".

The report calls it "double-counting to credit bioenergy for reducing carbon in the atmosphere through plant growth" because "plants would grow and absorb that carbon anyway".

The opinion derives from peer-reviewed articles published in Science magazine by a Princeton University researcher, Tim Searchinger.

The explanation for the opinion is given by a thought experiment: "imagine a hectare of cropland just abandoned and allowed to reforest. These growing plants would absorb carbon from the atmosphere into plant biomass." Some of that would be consumed and the carbon released by organisms into the atmosphere.

"Other carbon would be stored in vegetation and soils as the forest grows, and that ... would have the effect of offsetting some of the emissions of carbon by burning fossil fuels."

"However, if, instead of allowing the forest to grow, the land were used to grow energy crops which were burned in an electric power plant, their use would displace fossil fuel emissions, but the actual CO2 emitted by the power plant chimneys would not be reduced.

"Per unit of energy, the CO2 emissions would typically even be higher than those of a fossil fuel-burning power plant because biomass contains less energy per unit of carbon than petroleum products or natural gas and because biomass is usually burned with a lower efficiency than fossil fuels," the paper concludes.

In other words, using land to grow bioenergy crops sacrifices the use of the land to absorb and sequester carbon.

The CO2 released from the plant could only be counted as carbon-neutral if or when the carbon absorbed by the energy crops and burned in the power plant exceeded that which would otherwise be absorbed and sequestered by the growing forest.

This opinion has been questioned by Marlene Holzner, spokeswoman for EU Energy Commissioner Günther Oettinger, who cited another report compiled by Econometrica which says Searchinger did not compare CO2 emissions from biofuels to those from petrol.

The scientist himself has disagreed, saying,"The whole point of the analysis was to make that comparison – detail for detail. Biofuels will not reduce emissions, and may increase them."

Recent reports by the EU's Joint Research Centre JRC and the International Food Policy Research Institute (IFPRI) have also concluded that the burning of biofuels can increase CO2 output.

The EEA's opinion document does give examples of three scenarios where biofuels may reduce carbon emissions and not displace food crops:

1. when bioenergy crops are planted on lands once covered with tropical forests that have been overrun by invasive grasses that frequently burn


2. wastes that would otherwise be disposed of and allowed to decompose, emitting methane


3. crop residues that would otherwise be burned. However, care must be taken to ensure that this loss of residues does not lead to reduced productivity and therefore reduced plant growth or reduced carbon sequestration in soils.

Furthermore, the document says that accounting must reflect any increases in GHG emission from fertiliser production required to replace the nutrients from the residues.

How does this affect the approved new UK biomass burning stations?

DECC's consenting letter says the plant may burn “biomass fuel feedstocks” that are defined as "fuel, excluding material which is, or is derived directly or indirectly from animal matter, which qualifies as 'biomass' under Article 4 of the Renewables Obligation Order 2009 (S.I. 2009 No. 785)".

This Article only defines biomass as material of which "at least 90 per cent of its energy content is derived...directly or indirectly from plant matter, animal matter, fungi or algae)".

This definition is incredibly broad. Therefore, in the absence of any other conditions, it is likely that timber from managed forests will be used as one of very few feedstocks that can be reliably and consistently sourced at the volume required by such large plants.

In this case, if Searchinger is right, overall carbon emissions resulting from the plants could well actually increase.

Anglesey Aluminium Metal Renewables is owned by Anglesey Aluminium Metal Ltd, which itself is jointly owned by Rio Tinto (51%) and Kaiser Aluminum & Chemical Corporation (49%).

No one from Anglesey Aluminium Metal Ltd was able to comment at this stage over the exact sources for the fuel for the proposed plants.

Anglesey Aluminium Metal used to run an aluminium smelting operation. This obtained its energy needs from the neighbouring old Wylfa Magnox nuclear power plants - two 490 MW reactors - Wales' only nuclear power plants, which are due for closure next near.

The smelting plant closed down itself on 30 September 2009 with the loss of many jobs.

But Wylfa is one of eight sites the Government considers suitable for future nuclear power stations. Horizon Nuclear Power, an E.ON and RWE joint venture, has said it intends to build about 3,000 MWe of new nuclear plant next to the old plants.

£15m renewable heat trial scheme gives grants to off-gas-grid householders

A ‘Renewable Heat Premium Payment’ scheme has been announced by DECC that makes available £15m of support for up to 25,000 renewable heat installations in homes, with a review to take place as the £10m limit is approached.

It will target the 4 million or so households in Great Britain not heated by mains gas, who have to rely on heating such as coal, oil and electric fires, which tend to be more expensive and emit more carbon emissions.

It is open to householders in England, Scotland and Wales, who will be able to apply for grants of up to £1,250 to install systems such as biomass boilers, air and ground source heat pumps and solar thermal panels from 1st August 2011. It will operate on a first-come-first-served basis, and will close on 31st March 2012.

Part of the purpose of the scheme is to obtain further information on the behaviour of the technologies prior to the full commencement of the Renewable Heat Initiative (RHI). Therefore installations will be monitored and any metering equipment will be provided free of charge.

Participants will be required to complete surveys and provide feedback on their experiences.

“Today starts a new era in home heating," announced Climate Change Minister Greg Barker, “because we’re making it more economical for people to go green by providing discounts off the cost of eco heaters. This should be great news for people who are reliant on expensive oil or electric heating as the Premium Payment scheme is really aimed at them.

“Getting money off an eco heater will not just cut carbon emissions, it will also help create a market in developing, selling and installing kit like solar thermal panels or heat pumps.”

The Premium Payment scheme is to be administered by the Energy Saving Trust, which has set up an information line, 0800 512 012 and a website.

Dwellings will have to have in place basic energy efficiency measures before householders can apply. The following technologies are eligible:

• Ground Source Heat Pumps - £1250 grant (for homes without mains gas heating)
• Biomass boilers - £950 grant (for homes without mains gas heating)
• Air source heat pumps - £850 grant (for homes without mains gas heating)
• Solar thermal hot water panels - £300 grant (available to all households regardless of the type of heating system used).

£3m of the £15m will be set aside for registered social landlords to improve their housing stock.

DECC will announce details of how to apply for these funds at a later date.

The Renewable Heat Incentive

The Renewable Heat Incentive is split into two tranches. The first, for industry, business and communities will be open for applications on 30th September, subject to State Aids Approval. The tariffs will be paid for 20 years to eligible technologies that have been installed since 15th July 2009 with payments made for each kWh of renewable heat produced.

Households will be able to apply a year later. The Government has confirmed that renewable heat installations installed in homes since 15th July 2009 could receive the Renewable Heat Incentive once it comes in, provided they meet the eligibility criteria.

They have also confirmed that this could include those who receive support under the RHPP scheme. The Government has not yet published its proposals for how the RHI will work in the domestic sector, including eligibility criteria.

Renewable heat incentive rewards solar water heating but will increase air pollution

Chris Huhne has finally announced much-awaited details of the Renewable Heat Incentive (RHI) scheme.

It covers such technologies as solar water heating, using wood, wood pellets and woodchips, air and ground source heat pumps, energy from waste, on-site biogas, deep geothermal and injection of biomethane into the grid.

36% of the UK’s overall energy is used for heat, creating 175 million tonnes of carbon emissions a year.

The industry had originally hoped that the scheme would start at the same time as the Feed-In Tariffs for renewable electricity a year ago, then it was expected this April, but now payments won't be be available to households until October 2012.

The scheme has become a victim of government cuts and will be smaller in size than originally thought and introduced in phases.

Importantly, because of criticism of the potential impact on fuel bills, the RHI will not be funded by an RHI levy but from general Government spending.

As a result, it will be introduced in two phases. In phase 1, more than a quarter of the first year's budget, around £15 million, is to be guaranteed up to 25,000 household installations through a premium payment scheme.

Phase 1 will focus on people living off the gas grid, who typically spend more on their heating and whose fuels, like coal, have a higher carbon content.

Participants will then provide feedback on how the scheme works to help design the second phase.

In this phase, coinciding with the introduction of the Green Deal, the scheme will expand so that by 2020 there will be an estimated 13,000 installations in industry, 110,000 in the commercial and public sector supply 25% of this sector is demand, and creating 150,000 jobs.

Carbon savings and air pollution

It is hoped that the scheme will help deliver 44 million tonnes of carbon dioxide savings by 2020, though 8 million of these are already accounted for by the European Emissions Trading Scheme. Those emissions within the emissions trading scheme will cost £35/tCO2 and those outside the scheme a further £12 per tonne.

However, there are concerns about the impact on air quality of a lot of new biomass combustion, particularly from particulates such as PM10. The final RHI proposals could lead to 28TWh of biomass burned. and assessment by Defra of the proposals shows that this could lead to up to £2.6 billion of potential lifetime social cost.

This is a staggering amount.

The Tariffs

The highest tariffs will be paid to solar thermal water heating (8.5p/kWh) small biomass schemes (7.6p/kWh or 1.9p/kWh - see below why), and biomethane (6.5p/kWh). Small ground source heat pump schemes will receive 4.3p/kWh, and large schemes 3p/kWh.

Municipal solid waste schemes including Combined Heat and Power (CHP) will receive 4.7p/kWh or 1.9p/kWh, depending on which tier they are in, and large biomass schemes 2.6p/kWh.

Solar water heating was by far the most popular renewable energy technology under the previous renewable energy subsidy schemes like Clear Skies. It works very well in the UK and can supply between 40 and 50% of domestic hot water requirements, so it is good that it receives the most support.

Because of doubts about their efficiency air source heat pumps will not be eligible at the start of the RHI. Nor will heat pumps that deliver the heat to air as opposed to water. Some will consider this unfair, but it is to do with the difficulty of metering this kind of heat.

Heat meters will need to be installed at the point of generation and, where appropriate, at the point of usage in order to claim payments.

Bioliquids also will not be eligible from the start because of the complexity of the market and their uses in transport etc. They can also have a high energy density.

RHI support will only be available if the installation in question has not received (and will not receive) any other public funding.

The tariffs will be paid for 20 years to the eligible technologies that have been installed since July 15, 2009 with payments for each kilowatt of renewable heat produced.

Payments, which will be administered by Ofgem, are to be claimed by, and paid to, the owner of the heat installation or the producer.

These payments will be fixed for the lifetime of the scheme, once a measure is installed, adjusted in line with inflation. But the levels of support available for new entrants as time goes on may decrease.

Rewards linked to energy conservation

Following criticism that there might be no requirement that the building in question has an efficient fabric, by being introduced with the Green Deal, homes must be insulated to reduce demand, as with earlier schemes, such as the Low Carbon Building Programme, because everyone knows is more cost efficient to save energy than to generate it.

There has been a worry about what happens when some smart meters enter into the market. When buildings are metered on a half hourly basis energy the incentive will be to run your equipment as much as possible because the more your meter ticks over, the more money you make.

This has to some extent been met by introducing a two-tier tariff system for biomass boilers to reduce incentive to over-generate. Upon reaching a prescribed level of heat generation, the tariff drops to a lower tier 2 tariff. For solar thermal, once the equipment is installed, the amount of heat generated is not controlled by the owner.

The RHI has been a long time coming. There are many in the industry raring to get installing, and there is a huge potential market. But most will have to wait a good while yet before they can take advantage of the scheme.

Biomass-fired CHP - one third the price of the next cheapest power source

Councils or businesses would be well advised to construct biomass-fired combined heat and power (CHP) plants to satisfy their energy needs as the cheapest possible option - one that might even make a profit - of all possible energy solutions.

This is one conclusion of a set of figures published by DECC and highlighted this week in a parliamentary answer by Charles Hendry.

The tables below are taken from Mott Macdonald (2010) and give levelised cost estimates (average lifetime generation cost per megawatt-hour) for new build plants in the main large-scale electricity generation technologies in the UK, at current engineering, procurement and construction (EPC) contract prices.

Mott MacDonald comment that the CHP options reveal the lowest cost power by far, at only £24.9/MWh, one third the cost of a gas powered plant, once the steam revenues are factored in.

Assumptions include that the projects are able to secure a 100% use for their steam over the whole plant life, which may not always be possible, unless companies/councils are using the heat for their own premises. Another assumption is that carbon prices will continue to increase.

The biomass-fired schemes, which have much higher heat-to-power ratios, have the lowest net costs, even seeing negative costs in the medium to long term - i.e., they could make money for the developer.

Even if the biomass CHP schemes can capture only half of the projected steam credit, the costs would still be less than £70/MWh in 2020.

The table reveals other interesting aspects the cost of some renewables, nuclear, and carbon capture and storage:

• offshore wind power is the most expensive form of power at £190/MWh for Round 3 of the bids

• integrating CCS (carbon capture and storage) into coal or gas fired plant would substantially raise capital and operating costs.

• the leading 3rd generation nuclear designs, although projected to incur a significant first build premium, have a lower levelised cost at £99/MWh than an Advanced Super Critical (ASC) coal plant without CCS, but still significantly higher than Combined Cycle Gas Turbine (CCGT).

• anaerobic digestion is not as cost effective as normally assumed

• landfill gas and sewage gas are much more cost-effective than energy from waste.

Under DECC’s central carbon price projection, the premium for CCS versus un-scrubbed plants is £32-38/MWh, although the carbon costs on the un-scrubbed coal and gas plants is £40/MWh and £15/MWh, respectively.

In the longer term, as these technologies bring costs down from experience, the levelised costs of CCS equipped plant will undercut those for the un-scrubbed plant.

Even then, the CCS equipped plants still see levelised costs of £105-115/MWh with gas at the lower end, and coal at the upper end of the range. Adopting DECC’s low carbon price projection would see the CCS equipped plant continuing to be more expensive than a non-equipped plant through the 2020s.

The tables

It should be noted that for the purposes of presentation, the table only gives either 'FOAK' (first-of-a-kind) prices or 'NOAK' (nth-of-a-kind) prices for each technology. On offshore wind, for example, it shows offshore wind 'FOAK' prices, whereas the round 2 technology may be considered to have progressed towards 'NOAK' prices. Mott Macdonald estimate 'NOAK' offshore wind costs at £125/MWh (10% discount rate, 2009 project start at today's EPC prices).

Case 1: 10% discount rate, 2009 project start at today's EPC prices, with mixed FOAK/NOAK
Levelised cost	Gas CC GT	Gas CCGT with CCS FOAK	ASC coal	ASC c oal with CCS FOAK	Coal IGCC FOAK	Coal IGCC with CCS FOAK	Onshore wind	Offshore wind FOAK	Offshore wind R3 FOAK	Nuclear PWR. FOAK
Capital Costs	12.4	29.8	33.4	74.1	61.7	82.0	79.2	124.1	144.6	77.3
Fixed operating Coals	3.7	7.7	8.6	18.6	9.7	17.7	14.6	36.7	45.8	12.25
Variable Operating Costs	2.3	3.6	2.2	4.7	3.4	4.6	__	__	__	2.1
Fuel Costs	46.9	65.0.	19.9	28.7	20.3	28.3	__	__	__	5.3
Carbon Costs	15.1	2.1	40.3	6.5	39.6	5.5	__	__	__	__
Decomm and waste fund	__	__	__	__	__	__	__	__	__	2.1
CO2 transport and storage	__	4.3	__	9.6	__	9.5	__	__	__	__
Steam Revenue	__	__	__	__	__	__	__	__	__	__
Total levelised cost	80.3	112.5	104.5	142.1	134.6	147.6	93.9	160.9	190.5.	99.0

Case 1: 10% discount rate, 2009 project start at today's EPC prices, with mixed FOAK/NOAK
Levelised Cost	Small business power only. FOAK	Large biomass power only. FOAK	OCGT	AD on waste	Landfill gas	Sewage gas	Small biomass CHP. FOAK
Capital Costs	55.8	46.1	7.1	63.8	25.8	42.0	91.3
Fixed operating Coals	21.0	13.4	3.0	21.0	13.1	8.9	23.9
Variable Operating Costs	2.5	2.5	1.5	18.6	21.1	2.1	2.8
Fuel Costs	36.7	31.2	60.6	__	__	__	54.9
Carbon Costs	__	__	18.2	__	__	__	__
Decomm and waste fund	__	__	__	__	__	__	__
CO2 transport and storage	__	__	__	__	__	__	__
Steam Revenue	__	__	__	__	__	__	148.5
Total levelised cost	116.0	93.2	90.5	103.3	60.0	54.0	172.9
Net levelised cost	__	__	__	__	__	__	24.4

Levelised Cost	Large biomass CHP. FOAK	10MW gas. CHP	Small GT based CHP	CCGT. CHP	Energy from waste	Hydro reservoir
Capital Costs	86.8	17.2	15.1	14.3	94.9	74.2
Fixed operating Coals	22.0	4.8	4.3	5.0	15.2	9.0
Variable Operating Costs	2.4	2.4	2.4	1.9	56.7	-
Fuel Costs	48.7	83.4	76.8	57.1	-	-
Carbon Costs	-	25.5	23.5	18.5	-	-
Decomm and waste fund	-	-	-	-	-	-
CO2 transport and storage	-	-	-	-	-	-
Steam Revenue	135.0	56.6	45.2	27.2	-	-
Total levelised cost	160.0	133.4	122.1	96.7	166.8	83.2
Net levelised cost	24.9	76.8	76.8	69.4	-	-

New grants for renewable energy

The Government has announced £12 million in funding for industry, businesses and community groups investing in biomass-fuelled heating and combined heat and power systems, including anaerobic digesters, in England.

It's a pittance, a drop in the ocean, but it's better than a kick in the gonads.

Round 5 of the Bio-energy Capital Grants Scheme is now open for applications until at least 30 April 2009.

It will pay 40% of the difference in cost of a biomass boiler and the fossil fuel alternative up to £500,000. “Nearly half of the UK’s carbon emissions come from heating, so it’s essential to change how we heat businesses, hospitals, schools and community buildings,” says Sustainable Development and Energy Innovation Minister, Lord Hunt of Kings Heath.

Since the scheme was launched in 2002, £55 million has been used to set up biomass power stations, biomass-fuelled heat and power plants and biomass heating systems.

Schools, hospitals, charities and local authorities can also apply for a slice of £7 million from the Low Carbon Buildings Programme for microgeneration technologies.

Oil from algae

OK, so perhaps we have here a biofuel that isn't problematic.

Judge for yourselves.

Algae represent a feedstock for oil and fuel - biodiesel and ethanol production.

Many of the problems present with the traditional oilseeds such as palm & soy, and with ethanol feedstock such as corn and molasses/sugarcane are not present in algae.

Algae can grow fast, practically anywhere in the world, do not contribute to deforestation and do not interfere with the existing food crop value chains.

Add to this the fact that the fossil oil we use today was formed primarily from algae.

All these may be reasons enough to explore algae as a potentially important feedstock for our future oil and energy needs.

Check out the Oilgae link on the right for more info and let me know what you think.