Monthly Archives: October 2010

How many domestic systems will RHI fund?

So we now know that there will be £860 million available to fund the RHI over its first 4 years. But just how many heat pumps and solar hot water systems is that likely fund at the domestic scale.

The NERA report that laid the financial foundations for the RHI proposals in the original DEC consultation document divided systems into separate bands depending upon the rated kW capacity. Boilers up to 45kW were defined as ‘small’, 45 to 500 kW as ‘medium’, and over 500kw as ‘large’ – see Table 3.1 in the report for the full details.

The contribution that each band then makes to the total amount of renewable heat generated is shown in Figure 4.1 and reproduced here:

This shows that only around 14% of the total heat is going to be coming from the ‘small’ band of systems. And as only a percentage of those small systems will, in fact, be domestic (45kW is too big a boiler for all but mansion-sized properties) then we can estimate, taking the relevant tariff values into account, that only 30,000 heat pumps and 35,000 solar systems will be funded over those first 4 years.

Spending Review impacts RHI and FiTs

The government have announced some details on the changes to both the RHI and FiTs following their Comprehensive Spending Review.

The RHI will be centrally funded to the amount of £860 million covering the period 2011-2015, not via a fossil fuel levy as mooted by the consultation document. This will commit DECC to paying out a minimum of around £10 billion over the full lifetime of RHI though, even if no new entrants are allowed after 2015. I hope someone in DECC has done a proper cash-flow analysis. Will DECC need to go cap-in-hand to HM Treasury for more funds after 2015? If so then this could be a painful repeat of the on-off funding that destroyed the credibility of the LCBP and which the FiTs and RHI were supposed to avoid.

[later update] It seems that DECC have decided to retain the income generated from the Carbon Reduction Commitment (CRC) rather than recycling the cash back to the 4,000 or so big businesses, that have been forced into the scheme, as originally planned.  It is just coincidental that this is estimated to amount to about £1 billion up to 2014, just enough to pay for the RHI over the same period with a little petty cash left over.

FiTs rates will be adjusted (‘refocussed’ in DECC-speak) saving £40 million in 2014-15. DECC says: ‘The changes will be implemented at the first scheduled review of tariffs unless higher than expected deployment requires an early review.’

Further details are available in the Complete Report and Policy Costings.

DECC put Severn Tidal project on hold

DECC minister Chris Huhne has announced that the government do not intend to proceed with the Severn Barrage. Today he said:

I am also today publishing the conclusions of the Severn Tidal Power Feasibility Study and the key documents which informed its conclusions.

Following a positive recommendation from the Sustainable Development Commission in October 2007, a two-year cross-Government Feasibility Study was launched to inform a decision whether or not to promote a tidal power scheme in the Severn Estuary. The cross-Government Feasibility Study, led by my Department, also included representatives from the Welsh Assembly Government and the South West of England Regional Development Agency.

The Severn’s enormous tidal range could provide up to 5% of our current electricity generation from an indigenous renewable source, and bring new employment opportunity both locally and nationally. But costs would be high, and a scheme would have to have a strategic need compared to other ways of meeting our need for renewable energy. Furthermore, the Severn estuary and some of its tributaries are designated as internationally important nature conservation sites. The Study has considered whether Government could support a tidal power project in the Severn estuary and, if so, on what terms.

It has looked at five potentially viable scheme options in outline and assessed their costs, benefits and risks. The evidence base which I am publishing with the findings of the study is extensive and includes a Strategic Environmental Assessment of the Severn tidal power options short-listed following last year’s consultation.

The key conclusion of the Feasibility Study is that the Government does not see a strategic case at this time for public funding of a tidal scheme to generate energy in the Severn estuary. The costs and risks for the taxpayer and energy consumer would be excessive compared to other low-carbon energy options. Furthermore, uncertainties over compliance with regulation would add to the cost and risk of construction. The Government believes that other options, such as the expansion of wind energy, carbon capture and storage and nuclear power, represent a better deal for taxpayers and consumers at this time.

However, the Government recognises that factors which will determine the feasibility of Severn tidal power could change over time. The Feasibility Study evidence therefore includes potential triggers for a future review, so that it can be considered by the Committee on Climate Change in the work they will be doing on the level of renewables ambition required to meet the 2050 greenhouse gas reduction target. The Committee is expected to report next year. The Government does not intend to review Severn tidal power before 2015.

The reports are available here:

http://www.decc.gov.uk/EN/Default.aspx?n1=3&n2=51&n3=58&n4=60&n5=171

WAG publish plans for addressing climate change

In publishing the Climate Change Strategy for Wales and its partner detail reports Delivery Plan for Emission Reduction and Adaptation Delivery Plan, with an overall vision for 2050, the Welsh Assembly Government have determined that an annual 3% reduction in carbon emissions is required.

The reports have been based on input from the Climate Change Commission for Wales, which is now headed by Peter Davies, the outgoing Sustainable Development Commissioner for Wales.

Getting plastered

Had a day on a Ty Mawr lime plastering course yesterday, run by Nigel Gervis at Dinefwr Park Home Farm in Llandeilo. This was my first hands-on experience with lime and I found it fabulous stuff to work with compared to modern plaster.

The courses are organised by Nell Hellier of Tywi Afon Yr Oesoedd, who run the Traditional Sustainable Building Centre at Home Farm.

Thanks to Nigel, and his assistant Gail, for an educational and entertaining day.

Conservatives confirm Green Deal and RHI

Oliver Letwin, Conservative Minister for Policy, said in a speech today:

Our ‘Green Deal’ – which will be introduced in Parliament before the end of the year – will provide a new, radical way of making energy efficiency affordable to all, reducing household energy bills at no upfront cost to the householder. It will hugely reduce the energy demands of Britain’s households and create a whole new industry – with new jobs in every part of the country.

Our smart grid and the roll out of smart meters will transform the way energy is supplied and used.

Our incentive for renewable heat will bring forward the generation of heat from waste and other renewable sources – a crucial part of cutting carbon and maintaining energy security.

Our transformation of the Climate Change Levy into a proper Carbon price will pave the way for low carbon power stations, including a new generation of self-financing nuclear power.

Our Green Investment Bank will support the next generation of British green technology investment – helping to rebalance the economy and generate new jobs and economic growth across the UK.

Our system of feed-in tariffs will encourage micro-generation, stimulate diversity and decentralisation of our power supply, and turn hundreds of thousands of houses into sources of energy.

Presumably ‘our’ in this context means the UK’s rather than the coalition government’s.

Micropower Council plead for FiTs to be left alone

The Micropower Council have written an open letter to government ministers asking that the Feed-in Tariff rates be left as they are.

Concern is growing that the coalition are preparing to announce a cut in the FiT rates as part of the current Spending Review – due to be disclosed by Chancellor Osborne on 20th October. Any unplanned changes will have the potential to severely affect confidence for investors in small renewable systems.