Should you consider the one technology whose feed-in tariff rate is increasing?

A micro-CHP unit installed in a kitchen: it generates electricity from gas and heats your water and building.

The Government will be hoping that Friday's announcement about Feed-in Tariffs will finally assuage the micro-renewables industry and provide some certainty for the future.

The Phase 2B Government Response to the consultation outlines the degression rate of different technologies, and the good news is that most technologies do not lose much support. One even gets enhanced support.

This technology is micro-CHP, which represents an opportunity for some householders and businesses to purchase a new boiler that not only heats the building but also generates electricity.

These gadgets run on gas and are fridge-sized. However, like their big brother, conventional CHP plants, they have high upfront costs which has deterred people from buying them. A unit can set you back anything from £6,500-£10,000.

It's in Japan that this technology began and has become relatively big-time, because many manufacturers are Japanese. The global micro-CHP market expanded by more than a third last year and was worth €466 million in 2011, but is set to expand to €1 billion this year, though mostly in Germany and Japan.

Baxi Ecogen's model (pictured above), for example, has a heat output of 24 kW (enough for three average homes) and a maximum electrical output of 1 kW, enough to maintain back-up power in the event of a power cut, or boil a kettle.

The rate of FIT payback is 12.5p for 1kWh. Suppose you had it going all year without stopping you would earn almost £1100. Simple arithmetic shows it would then take at least six years to pay off (though you would make further savings on electricity). But you probably wouldn’t have it on all the time.

Hang on a minute, you say, if it runs on gas, it's not renewable. So why is it being supported by the FIT? And if it is being supported, then when the Renewable Heat Incentive kicks in, surely owners will also get reimbursed for the heat they generate, too?

Besides the FITs announcement, the Energy and Climate Change Department has also just published for consultation its proposals on the non-domestic side of this scheme, which show what renewable heat technologies are supported and how much support they will get, so we can answer this question.

Up for support are biomass boilers and stoves, ground source heat pumps, and solar collectors for hot water and space heating.

But not micro-CHP.

So, the reason why it's being supported is purely because it makes more efficient use of the gas, making the boiler 90% efficient instead of, say, 55%. Not because it is truly sustainable.

This is interesting, because further down the line are different types of micro-CHP boilers which run on fuel cells, which can therefore, at least in theory, run on renewable energy.

As a result of this support, micro-CHP will see some increase in installations in the UK, but to really achieve this it will need far more public education.

In practice, the technology is very specific in application. The current crop of models are based on the Stirling engine, Organic Rankine Cycle (ORC) or internal combustion engine. The first two have high thermal efficiency and output but low electrical efficiency (10%), and this is a sticking point.

A 2007 trial by the UK’s Carbon Trust concluded that micro-CHP can cut electricity bills and overall CO2 emissions by 15–20% when they’re the lead boiler in larger contexts like care homes, district schemes, apartment blocks and leisure centres.

The best individual building for them therefore is a medium-to-large, moderately well-insulated one, maybe with solid walls, solid floors and no loft space, that is hard to insulate well and has a relatively large heat demand. Or they could be used in a cluster of buildings.

This is why there is, sensibly, no condition attached in the feed-in tariffs scheme for micro-CHP, announced last Friday, to having a certain level of energy efficiency in the building, as there is with the other technologies.

In the above context, micro-CHP units can potentially deliver carbon savings of 5–10%; fewer than a condensing boiler, since capacity is likely to be best matched to demand, for both heat and power.

This morning I was in a 200-year-old energy-inefficient house heated by a gas-fired Aga. Although it is the middle of summer (if you can call it that) the Aga had to be on in order to boil a kettle. Consequently, the doors were open to prevent the kitchen from overheating.

Micro-CHP is the only reasonable, more efficient upgrade option possible for such a house that gives them the same level of comfort and ease of use. Biomass wouldn't do that because of the space and labour requirement for pellets or timber. Modern pellet-fired boilers can also consume a fair amount of electricity in their motors. The roof of this particular house faces east-west, so no form of solar power is appropriate.

Micro-CHP offers limited benefits for smaller and newer dwellings, however, because they are more energy-efficient or have too little requirement for heat. The key to success in micro-CHP is matching the thermal output to the building’s pattern of use, so that they operate not intermittently but for many hours at a time, making the value of electricity generated, which will be helped by the feed-in tariff, pay for the marginal investment in as little as three years in a typical family home. It therefore works best with a buffer storage tank to save the surplus heat for later.

Grid connection for electricity export is crucial to micro-CHP’s widespread acceptance. On average, half of all electricity generated by a typical 1kWe micro-CHP device is exported to the grid, as it’s not needed at the time.

Reliability is also a key issue; service agreements will be essential.

So you shouldn’t yet trade in your condensing boiler, which has about the same overall heating efficiency without also producing electricity, but you might keep an eye on developments.

Superinsulated homes will have to wait until the next generation of machines, based on fuel cells. These generally come in two types – proton exchange membrane fuel cells (PEMFCs) and solid oxide fuel cells (SOFCs). They have a heat to power ratio that is approximately equal, so for example they could produce 5kW of heat and 5kW of electricity.

It's an interesting technology. As the Government is fond of saying: “we need a mix of different generation technologies in this country". The same is true at the micro level. There is no one size fits all. Micro-CHP has a valuable part to play, as long as it is installed in the appropriate spaces.

Microgeneration Strategy published - but will it over-achieve?

The government's new strategy envisages the ideal cost of installing renewable microgeneration technologies to move to around £5-6,000 with a payback period of around five years so that millions of householders take it up. But it's worried that if its strategy is a success, then its support schemes may run out of money.

Its new Microgeneration Strategy and Action Plan for England, published yesterday, aims to remove non-financial barriers to the spread of these technologies, and calls for more demonstration homes, which are known to be the best way to promote uptake, and for industry, local authorities and government bodies to work together.

But the Government is worried about the scheme becoming a victim of its own success. Its accompanying impact assessment warns that implementing the strategy "could encourage greater uptake than we have projected" which ″could drive up subsidy costs of the schemes".

As a result it promises to keep tight watch on levels of uptake given that more funding would not be available over and above the ｣15 million allocated to the Renewable Heat Premium Payments, ｣850 million funding for the Renewable Heat Incentive or the ｣610 million a year for FITs.

Launching the strategy and action plan, Greg Barker said, "The onus is on the industry itself to make the most of the opportunities presented by the financial incentives - supported by Government action to streamline regulation such as planning and standards, while at the same time ensuring consumers are protected."

As an example of what could be done, the Government proposes that information on financial incentives could be included in Energy Performance Certificates (EPCs) to stimulate take-up of renewables. Market research by Consumer Focus has shown that more people would take up renewable energy in their homes if this was included at the point of property sale or rental as part of the green deal advice process.

An army of skilled workers will be required to meet the demand but accreditation needs to be standardised. A survey is to be undertaken of all training schemes to recommend what's needed to create the competent installers of tomorrow to be completed by October 2012.

Industry must do its bit as well, including analysing the whole product life-cycle for each microgeneration technology to pinpoint where things could go wrong in advance and bolster customer confidence. It should do more to market the concept of microgeneration and the potential benefits to consumers with independent source of advice by September this year, and produce a guide on warranties and insurance schemes for customers and factsheets for each technology with information on maintenance and the longevity of key components, by April next year.

Micro-hydro will be removed from the Microgeneration Certification Scheme for the purpose of Feed-In Tariff eligibility to make it easier for customers to find an appropriate installer. Schemes under 50kW are already rigorously regulated under environmental and planning consenting requirements. The Chief Executive of the British Hydropower Association, David Williams, called this "a great relief".

Importantly, the strategy recognises also the value of heat pumps, micro-CHP and, into the future, compressors and absorption chillers which could provide solar-powered cooling.

Wood fuel is also considered vital and the Government is developing a Bio-energy Strategy for publication later this year, which will set out the government's strategic direction for bio-energy to 2020 and beyond.

Building Regulations and the Standard Assessment Procedure (SAP) will also be amended to better quantify the benefit of including renewables in developments.

Government and industry will work together to explore opportunities to expand the microgeneration sector by working with European level initiatives. This includes, for example, Smart Cities, which launched on 21 June, and addresses technologies, local production and energy networks, including electricity, heating and cooling.

Launching the initiative, Energy Gnther Oettinger said: "With an 80 million Euro package we plan to demonstrate smart integration of urban energy technologies in selected pilot cities. This will kick-start important new markets for European industry. Cities are key to the EU's objectives of 20% energy saving by 2020 and to developing a low carbon economy by 2050, because 70% of the EU's energy consumption takes place in cities." Manchester is the English city taking the lead in this imaginative scheme.

Community energy

Connected with this, the Government wants to encourage more communities to take up district level renewable energy schemes that would be owned by the communities themselves.

Currently there are many barriers forming an uphill battle to communities that wish to do this, such as lack of knowledge about planning, local awareness, skills, time and access to finance. DECC has pledged to do more to address these issues with a stakeholder group to be set up next month, including developing the Community Energy Online web portal and engaging in collective purchasing of renewable energy in order to get a better deal.

The latter opportunity was identified earlier this year in a BIS proposal, Better Choices: Better Deals. It cites the pioneering example of Barnet in achieving this and, in fact, many of the initiatives set out in the microgeneration strategy.

Good Energy in particular has welcomed the recognition in the strategy that community energy projects come in all shapes and sizes and could be as large as 20MW in capacity, and that the Government is committed to a wider distributed energy strategy as part of its Electricity Market Reform.

Renewable domestic heating

On a domestic level, the Government has committed to support domestic micro-CHP with £2,300* cash support. But this does not apply to district level heating schemes.

This article looks at both ideas, carbon impacts and support in the UK.

District heating

District heating is more carbon-efficient than heating individual homes where the density of accommodation is high enough. The example in Southampton is often cited.

The idea was part of last year's DECC Heat and Energy Saving Strategy Consultation. It did suggest support for these schemes.

The conclusions were published in August 2009. We're still waiting to see what the Government decides to do.... and will probably wait for some time as there is an election on.

District heating is recommended to the Government by this month's report from the Green Building Council. This says:

1. Public sector buildings should be required, where available and viable, to connect to existing or planned community heat networks, to provide an ‘anchor load’ of demand, and large businesses should be encouraged to do the same.

2. The ‘allowable solutions’ mechanism should be used as a way of providing additional ring fenced capital to support the delivery of heat infrastructure. Government has said that developers will be able to invest in so-called 'allowable solutions' in order to meet the required standard when constructing new zero carbon buildings.

It says nothing about existing non-public buildings though.

Neither is district heating part of the current renewable heat consultation. This scheme, which is due to start in April 2011, will subsidise a rapid increase in the number of homes and offices heated by woodfuel, biogas, solar thermal, heat pumps and waste-to-energy technologies. The deadline for responses to this consultation is Monday 26 April so do have your say.

District heating systems are ideal if a whole street, area or block of flats is to be renovated. Economies of scale make this form of heat and power delivery the cheapest on a per-household basis, and by far the most carbon-efficient, if low carbon fuel sources are specified.

A district heating scheme in Southampton, England, serves many residential developments from gas-fired CHP and geothermal energy, saving 11,000 tonnes of carbon a year and benefiting residents with a service price 5 per cent less than the market rate.

Systems are most efficient when servicing both homes and businesses or premises used during the day, as the two heat loads throughout a 24 hour period suit the continuous running required of a large plant.

District CHP plants may utilize fuel sources from waste to biomass, as well as geothermal where it is available. They work best where buildings are close together. A not-for-profit energy service company is usually formed to manage the system.

Micro-CHP

Micro-CHP – combined heat and power – is a nascent technology of small units for individual homes, typically the size of a fridge. They run on natural gas to produce up to about 10kW of power.

The current crop of models are based on the Stirling engine, Organic Rankine Cycle (ORC) or internal combustion engine. The first two have high thermal efficiency and output but low electrical efficiency (10 per cent) – and this is a sticking point.

Electricity output is around 1.1kW, enough to maintain back-up power in the event of a power cut or boil a kettle. A 1kWe (1kW electrical power) model from Honda called Ecowill has sold well in Japan.

A 2007 trial by the UK’s Carbon Trust concluded that micro-CHP can cut electricity bills and overall CO2 emissions by 15–20 per cent when they’re the lead boiler in larger contexts like care homes, district schemes, apartment blocks and leisure centres.

The best individual home for them therefore is a medium-to-large, moderately well-insulated one, maybe with solid walls, solid floors and no loft space that is harder to insulate well and has a relatively large heat demand.

Here, micro-CHP units can potentially deliver carbon savings of 5–10 per cent – fewer than a condensing boiler, since capacity is likely to be best matched to demand, for both heat and power.

Payback can be as little as five years. But they offer limited benefits for smaller and newer dwellings.

The key to success is matching the thermal output to the building’s pattern of use so that they operate not intermittently but for many hours at a time, making the value of electricity generated pay for the marginal investment in as little as three years in a typical family home.

It therefore works best with a buffer storage tank to save the surplus heat for later.

Grid connection for electricity export is going to be crucial to micro-CHP’s widespread acceptance. On average, half of all electricity generated by a typical 1kWe micro-CHP device is exported to the grid as it’s not needed at the time.

Reliability is also a key issue – service agreements will be essential. So homeowners shouldn’t yet trade in their condensing boilers, which have about the same overall heating efficiency – 90 per cent – without also producing electricity, but they might keep an eye on developments.

Superinsulated homes will have to wait until the next generation of machines, based on fuel cells. These generally come in two types – proton exchange membrane fuel cells (PEMFCs) and solid oxide fuel cells (SOFCs).

They have a heat to power ratio that is approximately equal so for example they could produce 5kW of heat and 5kW of electricity.

Support for micro-CHP

Under the Feed-in Tarriff scheme, from the 1st April 2010, microCHP units with a capacity below 2kW will receive 10p per kW hour generated, for a period of ten years. This tariff is available for the first 30,000 microCHP installations. A review will take place when 12,000 units have been installed.

However the Government has not followed through on commitments made in the Energy Act to support miniCHP units of up to 50 kW capacity.

* - based on 10p generation tariff and assuming a 3p pence export rate. Assuming annual generation of 2000 kWh and 50% export. Assuming import electricity price of 14p kWh-1. The total income paid to a generator over a 10 year FiT period would be £2,300 over full period of 10 years. Annual figure therefore of £230.

The Feed-in Tariff (FiT) scheme is the first phase of the Government’s Clean Energy Cashback programme - see the Energy Saving Trust website for details.

What is the most carbon efficient heating?

An independent survey conducted by the UK Energy Efficiency Partnership for Homes which looked at the carbon impact of different domestic heating and hot water systems in both houses and flats concluded that the following performed best, all other things being equal (figures in kgCO2/m2/yr):
• community heating and CHP, fuelled wholly or mainly by biomass - 4.15
• community heating without CHP fuelled wholly or mainly by biomass - 7.11
• wood burning boilers - 10.02
• wood burning boilers with solar water heating panels - 10.09
• ground source heat pumps with low temperature heat distribution/emitters (e.g. underfloor heating) - 20.83
• solar water heating panels in conjunction with gas boiler systems - 21.98

Source: Heating Strategy Group of the Energy Efficiency Partnership for Homes, January 2008