Boom and Bust?The UK Pellet Boiler Market

European Pellet ConferenceWels, 25 February 2016

Neil Harrison

Scheme

Aspect

Bioenergy Capital Grant

Scheme

Low Carbon Building

Programme Phase 1

Low Carbon Building

Programme Phase 2

Scottish Biomass SupportScheme

Scottish Biomass

Heat Scheme

Wood Energy

Business Scheme 1

Wood Energy

Business Scheme 2

Dates 2002-2011 2006-2010 2007-2010 2006-2008 2008-2010 2004-2008 2009-2013

Total Budget €66,3m €143m €11,7m €3,2m €13m €22,1m

For Bio-heat €4,9m €4,2m €6,5m* & ** €3,2m €13m** €0.8m***

FormatFramework

then “random rounds”

Capped monthlyrounds

Rolling programme Rounds Rounds Rolling Rolling

Bio-heat Schemes

c. 350 752 55 64 90 c. 33

Availability UK-wide UK-wide Scotland Scotland Wales Wales

FunderBERR/Defra

& LotteryDECC

Scot. Exec./ FCS & EU

Scot. Govt./ FCS

& EU

Welsh Assy.& EU

Welsh Assy.& EU

* Balance unallocated because of tight time constraints on applications from EU funding.** Portion of funds also available for supply chain and soft support, but primarily boilers.*** Arrival of RHI meant large underspend, but portion allocated to supply chain and soft support.

S U P P O R T M E C H A N I S M S P R E - R E N E W A B L E H E A T I N C E N T I V E

C a p i t a l G r a n t P r o g r a m m e s 2 0 0 2 - 2 0 1 3

Scheme

Aspect

Bioenergy Capital Grant

Scheme

Low Carbon Building

Programme Phase 1

Low Carbon Building

Programme Phase 2

Scottish Biomass SupportScheme

Scottish Biomass

Heat Scheme

Wood Energy

Business Scheme 1

Wood Energy

Business Scheme 2

Dates 2002-2011 2006-2010 2007-2010 2006-2008 2008-2010 2004-2008 2009-2013

Total Budget €66,3m €143m €11,7m €3,2m €13m €22,1m

For Bio-heat €4,9m €4,2m €6,5m* & ** €3,2m €13m** €0.8m***

FormatFramework

then “random rounds”

Capped monthlyrounds

Rolling programme Rounds Rounds Rolling Rolling

Bio-heat Schemes

c. 350 752 55 64 90 c. 33

Availability UK-wide UK-wide Scotland Scotland Wales Wales

FunderBERR/Defra

& LotteryDECC

Scot. Exec./ FCS & EU

Scot. Govt./ FCS

& EU

Welsh Assy.& EU

Welsh Assy.& EU

* Balance unallocated because of tight time constraints on applications from EU funding.** Portion of funds also available for supply chain and soft support, but primarily boilers.*** Arrival of RHI meant large underspend, but portion allocated to supply chain and soft support.

S U P P O R T M E C H A N I S M S P R E - R E N E W A B L E H E A T I N C E N T I V E

C a p i t a l G r a n t P r o g r a m m e s 2 0 0 2 - 2 0 1 3

Number of identified woodfuel heating installations in England by 2011 : 2,372*

Number of identified woodfuel heating installations in Scotland 2010 : c. 230**

Number of identified woodfuel heating installations in Wales by 2012 : <200 (estimate)

* FORESTRY COMMISSION BIOMASS ENERGY CENTRE, 2011** FORESTRY COMMISSION SCOTLAND, 2010

Almost impossible to gauge exact spend on supporting biomass heat between 2000 and 2011, but figure is at least €35m

S U P P O R T M E C H A N I S M S P R E - R E N E W A B L E H E A T I N C E N T I V E

W h e r e W e r e W e B y 2 0 1 1 ?

UK had seen cycles of grant aid, creating a “boom and bust” industry, without the confidence to invest, or ability to grow and professionalise;

11 years of public funding failed to create a coherent and properly integrated biomass heat sector;

Public sector projects in particular had a history of poor performance or total failure - confidence in the technology low;

Lack of information collation and transfer, little (if any) learning from experience, and no sharing of knowledge between companies or even government departments.

S U P P O R T M E C H A N I S M S P R E - R E N E W A B L E H E A T I N C E N T I V E

W h e r e W e r e W e B y 2 0 1 1 ?

Pre-RHI, the UK was (and still is) an immature market for biomass heat;

A world first, the non-domestic RHI went live in November 2011, domestic RHI followed in April 2014;

Pays a fixed subsidy per kWh of heat produced for a 20 year period (7 for domestic), to anyone installing eligible renewable heat equipment;

Supports solid biomass, biogas, deep geothermal, GSHP, EfW, solar thermal, biomethane injection, ASHP, biomass CHP, on-site biogas combustion and commercial and industrial waste combustion;

Budget to 31 March 2016 is €1.1bn, and €1.56bn from 1 April 2016 to 31 March 2021.

S U P P O R T M E C H A N I S M S - T H E R E N E W A B L E H E A T I N C E N T I V E

W h a t i s t h e R e n e w a b l e H e a t I n c e n t i v e ?

Non-Domestic RHI has delivered 2,016MW of installed biomass capacity to date, most of which is classed as new;

95% of all RHI-registered installations are biomass boilers;

B I O M A S S H E A T U N D E R T H E R H I

N o n - D o m e s t i c R H I U p t a k e t o D a t e

Non-Domestic RHI is banded – 1-199kW “Small Biomass”, 200-999kW “Medium Biomass” and >1,000kW “Large Biomass”;

93% of all biomass installations are <200kW in size;

The busiest month for registrations was December 2014, with 2,179 applications, while the quietest full month was December 2011.

Uptake of RHI is shows biomass boilers in the lead by a HUGE margin.

Technology

Biogas

Solid Biomass

Deep Geothermal

GSHP

Solar Thermal

WSHP

Biomethane

Solid Biomass CHP

ASHP

Waste

# England

56

9,109

0

329

166

29

32

7

114

0

# Scotland

7

2,476

0

38

22

2

5

1

5

0

# Wales

1

1,277

0

28

18

2

1

1

3

0

Total

64

12,862

0

395

206

33

38

9

122

0

15:1 ratio biomass : all other technologies combined.OFGEM RHI INSTALLATIONS REPORT, 10 FEB 2016

B I O M A S S H E A T U N D E R T H E R H I

N o n - D o m e s t i c R H I U p t a k e t o D a t e

WHA Freedom of Information Request, September 2015

B I O M A S S H E A T U N D E R T H E R H I

N o n - D o m e s t i c I n s t a l l a t i o n s a n d C a p a c i t y

WHA Freedom of Information Request, September 2015

B I O M A S S H E A T U N D E R T H E R H I

N o n - D o m e s t i c I n s t a l l a t i o n s a n d C a p a c i t y < 1 9 9 k W

B I O M A S S H E A T U N D E R T H E R H I

N o n - D o m e s t i c I n s t a l l a t i o n s a n d C a p a c i t y 2 0 0 - 9 9 9 k W

WHA Freedom of Information Request, September 2015

B I O M A S S H E A T U N D E R T H E R H I

N o n - D o m e s t i c I n s t a l l a t i o n s a n d C a p a c i t y < 1 9 9 k W

WHA Freedom of Information Request, September 2015

B I O M A S S H E A T U N D E R T H E R H I

N o n - D o m e s t i c I n s t a l l a t i o n s a n d C a p a c i t y 2 0 0 - 9 9 9 k W

WHA Freedom of Information Request, September 2015

B I O M A S S H E A T U N D E R T H E R H I

N o n - D o m e s t i c I n s t a l l a t i o n P r o f i l e M o n t h o n M o n t h

DECC RHI Quarterly Statistical Release, December 2015

0

2

4

6

8

10

12

Nov-11 Apr-12 Apr-13 Jul-13 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Mar-16

CEN

TS/K

WH

SMALL BIOMASS Tier 1 SMALL BIOMASS Tier 2

B I O M A S S H E A T U N D E R T H E R H I

N o n - D o m e s t i c R H I D e g r e s s i o n s t o D a t e

5% ↓ Predicted

11.33 Eur Cents/kWh

4.6 Eur Cents/kWh

€ -

€ 0.10

€ 0.20

€ 0.30

€ 0.40

€ 0.50

€ 0.60

€ 0.70

€ 0.80

€ 0.90

€ 1.00

B I O M A S S H E A T U N D E R T H E R H I

H e a t i n g O i l P r i c e

ENPlus Pellets

Premium Chip

Standard ChipOther Fuels

B I O M A S S H E A T U N D E R T H E R H I

W h a t M i g h t t h e F u t u r e H o l d ?

Northern Ireland RHI closed earlier this month due to overspend against budgets. UK introducing a budget cap in 2016;

UK RHI review consultation due imminently;

RHI secure through to 2021, but government wants “better value for money”;

Considered highly likely that adjustments to the RHI will favour larger equipment to deliver more carbon savings per £ spent.

Virtually no uptake of biomass at large industrial scale - arguably where it’s best suited;

Strong direction in policy terms towards electrification of heat in the UK;

+0044 7917 634 171neil@reheat.uk.com

www.reheat.uk.com

@reheatRT

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