KDWfP: Renewable Heat Incentive - overview and examples

8/6/2019 KDWfP: Renewable Heat Incentive - overview and examples

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Costs and Implications of the RHI and

Modern Wood HeatingLenham, 27th July

Costs and Implications of the RHI and

Modern Wood HeatingLenham, 27th July

Stewart Boyle

Senior Associate

South East Wood Fuels (SEWF)


2/23

Main Points To Cover

SEWF

The Importance of Renewable Heat

The RHI introduction

Tariffs and Income Stream for Wood HeatingSystems

3 worked examples

Key Check List

Summary Conclusions Next Steps

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3/23

South East Wood Fuels (SEWF) Formed 2004 Producer Group

Now more than 7,000 tonnes wood chip fuelunder contract including Pembury Hospital

Expanding rapidly and working closely with a range

of Producers Range of Contracts available multiple year,

rolling, p/kWh on heat meter

Looking at ESCOs and O&M with partners

Boyle Consulting experience with more than 70biomass systems from domestic to 3MW steam athospitals

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Renewable Heat Market

the Sleeping GiantRHI is designed to put the UK on a path to achieving Renewable Energy

Targets

15% of UKs energy has to come from renewable sources by 2020 - EUDirective

11-12% of heating from renewable sources by 2020 including:

110,000 commercial and public sector installations by 2020 (25% ofdemand in these sectors)

13,000 industrial installations

< 1% of heat today from renewable sources

Heating accounts for 47% of UKs CO2 emissions

69% gas, 10% oil, 14% electricity 2 million homes on oil - a key target segment for renewable heat

Modern wood heating likely to be at least 50% of renewable heat target &could be a lot more

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New RE Heat policy

Feed-In Tariffs for Renewable Heat

Value for money is key

Two phase approach second phase of the scheme from

2012

September 30th 2011 commercial/industrial, publicsector, not for profit, domestic district heating

Domestic included from August 2012initial support

through Renewable Heat Premium Payments c.950 via

Energy Savings Trust

Two-tier tariff for biomass


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RHI Scheme Details for Modern Wood

Heating Fuels Include

forest residue, pellets, logs (in boilers not stoves), waste woodeven if contaminated

RHI paid to owner of boiler system for 20 years (15 years fordomestic)

For eligible installations commissioned after 15/7/2009 publicgrants must be paid back

Paid based on metered heat output

Domestic and below 45kW must be MCS registered

Installations >1MW need to report on sustainability

Administration by OFGEM - payments, auditing, enforcement payments quarterly based on meter readings

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Non-Domestic Tariffs for Biomass Heating

Tariff Name EligibleTechnology

Eligible Sizes

Tariff

Rate(pence/

kWh)

Tariff

Duration

(Years)

Support Calculation

Small

Biomass

Solid biomass;

Municiple Solid

Waste (inc.

CHP)

Less than

200kWth

Tier 1:

7.9

20

Metering Tier 1 applies

annually up to the Tier

Break, Tier 2 above theTier Break. The Tier

Break is installed

capacity x 1,314 peak

load hours, i.e.: kWth x

1,134

Tier 2:2.0

Medium

Biomass

200 kWth and

above; less than

1000 kWth

Tier 1:

4.9

Tier 2:

2.0

Large

Biomass

1000 kWth and

above2.7 Metering


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A biomass boiler rated at 250kW(th) operates for 7

hours/day in winter and 3 hours/day in summer, i.e.1,825 hours in total over the year.

This size of boiler is classified as 'Medium Biomass'.

It therefore receives the Tier 1 tariff of 4.9p per kWhfor the first 1,314 hours and the Tier 2 tariff of 2p per

kWh for the other 511 hours

1314 x 250 x 0.049 = 16,096.50

+ 511 x 250 x 0.02 = 2,555.00

Making a total of 18,651.50 per annum

NON DOMESTIC RHI TWO TIER TARIFF A SIMPLE EXAMPLE


9/23

Fuel Price per unit kWh per unit pence per kWh

Wood chips (30%

MC)90 per tonne 3,500 kWh/t 2.6p/kWh

Wood pellets 185 per tonne 4,800 kWh/t 3.9p/kWh

Natural gas 4.1p/kWh 1 4.1p/kWh

Heating oil 56p per litre 10 kWh/ltr 5.6p/kWh

LPG (bulk) 54p per litre 6.6 kWh/ltr 8.2p/kWh

Electricity 13.0p/kWh 1 13.0p/kWh

Information sourced from www.biomassenergycentre.org.uk 16.07.11


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Versatile set of Renewable Technologies

Can provide 24/7 365 days a year low

carbon heating

Chip, pellet and log fuels

Efficiency has increased dramatically as

modern chip and pellet boilers and stoves

have come into the market Automatic pellet room heaters and back

boiler 4kW to 26kW

Domestic scale pellet and chip boilers

Commercial scale chip and pellet boilers

from 75kW up to 10MW

CHP systems multi-MW

Smaller scale CHP (below 1MW (e)) not

currently commercial but this may change


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Boiler Sizing Strategies Winter demand Supplying maximum amount of peak demand

Optimum relationship of boiler size, thermal store andproportion of heat supplied by biomass

0

20

40

60

80

10 0

12 0

14 0

16 0

18 0

00:00

01:00

02:00

03:00

04

:00

05:00

06:00

07:00

08:00

09:00

10:00

11:00

12:00

13:00

14:00

15:00

16:00

17:00

18:00

19:00

20

:00

21:00

22:00

23:00

Ti m e (hou rs)

Therma

lrate(k

Biom ass bo i le r re -charg ing the rma l s to re

Auxi l iary boi ler supplying peak load

Therma l s to re s e rving dem and

Biom ass bo i le r se rving demand


12/23

RHI Case Studies for Modern Wood

Heating

Three Case Studies

150kW pellet container system (pellet

or chip)

500kW district heating system (chip)

Domestic System (pellet)


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1. Small Off-gas grid: An example RHI Calculation

150kW packaged pellet boiler & integration

98,000 Current: old oil boiler

38,000 l /yr at 55 p/l

5 p/kWh

19,600 oil cost pa

Future: Hargassner pellet boiler

85 tonne/yr at 200/tonne

4.1 p/kWh

17,000 pellet cost

16,100 RHI payment

Net benefit (fuel + RHI)

18,600 = < 6 yr payback

If domestic gas similar payback

If public sector gas prices 3p/kWhpayback = >10 years

If wood chip system Capex higher(+25%) but fuel costs 40% lower so

payback similar 13


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2. District Heating Project on Gas Grid.

Potential RHI scenario Retrofit existing gas community heating

scheme

132 bungalows, 40 flats

3.9m kWhs fuel@ 2.4p/kWh = 2.7m kWhsheat @ 3.4p/kWh

1.2 MW peak load

Econergy supply: replace central gas boiler withbiomass

Design Main contractor (inc CDM)

M&E supply

Froling 500KW chip boiler

400,000 capital

Biomass Heat

1.5 mkWhs heat @ 2.9p/kWh

510 Tonnes PA wood chip (30% mc)

RHI benefit (chip = gas price)

49,800 RHI payment pa

7-8 yr payback

If off gas-grid Payback down to 6 years

14

Froling 500KW boiler delivery

into retrofit energy centre


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CASE STUDY 3 DOMESTIC RESIDENCE East Sussex Coast


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CASE STUDY 3 DOMESTIC RESIDENCE

DETACHED 4 BED CHALET STYLE HOUSE SOUTH COAST

Built 1960

Traditional Construction

Double Glazed, cavity & loft insulation

CAPITAL COST OF SCHEME = 12.5k

35Kw Biomass Pellet Boiler (WoodViking)

Higher cost if External Pellet Silo (15K)

Single Heat Interface Unit & Commissioning


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CASE STUDY 3 - DOMESTIC RESIDENCE

ANNUAL HEAT ENERGY FOR SITE

Annual Heat Energy Required : 27,280 kWh

Efficiency of Biomass Pellet System: 90% Annual Energy Consumption: 27,280/.9 = 30,310 kWh

OPERATING COST COMPARISON

Existing gas fired system running at 80% efficiency

27,280kWh / .8 = 34,100kWh @ 0.041p/kWh = 1,398 perannum

Biomass system running at 90% efficiency

27,280kWh/.9 = 30,310kWh @ 0.039p/kWh = 1,182 per

annum

Pre RHI saving of annual running cost of 216 which provides a

payback of just under 58 years.


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CASE STUDY 3 - DOMESTIC RESIDENCE

RHI ASSESMENT FOR THISSITE

35kW biomass pellet system 27,280 kWh per annum

Say RHI Allowance for system = 0.08/kWh No tiered system payment on metering only

27,280kWh x 0.08 = 2,182 RHI payment per annum

PAYBACK & INCOME STREAMAnnual Energy Cost Saving 216 + RHI Payment 2,182 = 2,398

Return of Capital Expenditure: 15,000/ 2,398 = 6.2 years. If Week

pellet hopper only payback down to 5 years

Income Stream following payback for remainder of RHI 20 year award

period :20yr 5 yrs = 15yr x 2,398 = 35,970

If this scenario was pitched against an existing oil fired heating system

at 70% efficiency the payback would be 3.8 years with a fuel saving of

1

,000 per annum


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Summary Conclusions

The RHI offers: Quarterly payments for 20 year

dramatically improved economics of renewable heat

10-12% ROI

Reduced payback by up to 90% (domestic) and 50% (commercial)

Limited window of opportunity (first come, first served)

Scheme opens via Ofgem on 30th September 2011 (1st August Domestic)

On-line application process

RHI will apply after the installation is commissioned

Some (large) schemes involving big can be pre-registered to help de-risk investment

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Next StepsMore information

www.decc.gov.uk/rhi to see:

Policy document, Draft regulations, Impact assessment and supporting

documentation, Frequently asked questions

For queries e-mail [email protected]

The REA web-site www.woodfuelheat.org.uk

Carbon Trust Biomass Heating Design Guide

www.carbontrust.co.uk

Environmental Protection UK: Biomass and Air Quality -

http://www.environmental-protection.org.uk/biomass/

Get good advice! An experienced consultant, e.g. Carbon Trust low

carbon consultants, or experienced wood heating company for

Design support avoid the Google Consultant!

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22/23

Thanks!

Stewart Boyle

[email protected]

07785 726 306


23/23

Wood fuel sources and sustainability

Are there enough trees?

2020 UK Government Biomass Heat Target: 38TWh Requires 11 million tonnes per annum of wood fuel: > 1 billion

pa Wood fuel sources (1)

Forestry & sawmill residues, arboricultural arisings, undermanaged woodland, incl. domestic pellets: 3-4 m tpa possible by2020

Energy crops: short rotation forestry, willow, poplar etc: c.700,000hectares by 2020 possible (>9m tpa) Wood pellets:

Very substantial supply, not believed to be limited if importsincluded

eg. >6 billion of wood products are currently imported intothe UK

Recycled waste wood: > 4m tpa available now (industrial plantonly) Low carbon, sustainable sourcing is essential

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KDWfP: Renewable Heat Incentive - overview and examples

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