FREE EVENT - Drier wood chip fuel: Multiple benefits for your biomass boiler system

South East Wood Fuels will be holding a seminar that will examine the benefits of well dried wood chip.

The event will include a site visit to a new wood chip drying facility at Hawkinge.

Places can be booked via Eventbrite.

Woodfuel Quality Standards - new course available

Ignite is an innovative training programme of practical seminars and interactive workshops with a focus on woodfuel. 

Ignite is designed for those wanting to know more about woodfuel and to equip new and existing woodfuel businesses with the skills and knowledge required to meet the increasing demand from this growing market. Ignite courses have been developed and are run by RDI Associates Limited, a registered training provider with Lantra Awards and all courses are delivered by experienced and accredited trainers.

Woodfuel Quality Standards

This one day course introduces woodfuel suppliers and users to the full range of standards and quality assurance schemes in use in the supply chain and how to produce and specify the correct type of fuel. 

It looks at how to ensure your woodfuel is compliant with the Timber Standard for Heat and Electricity covering the legal and sustainability criteria and the requirements of the Biomass Suppliers List. 

The course also looks at how woodfuel properties can affect compliance with standards, how to specify and test fuel, and match fuel specifications to combustion systems. 

An introduction to BS EN solid biofuels standards will be provided, as will a review of the various woodfuel quality assurance schemes and the relevance these may have to your business. 

Finally, the course involves a practical sampling demonstration at a working woodfuel supply depot. 

Course attendees will also receive a copy of our Woodfuel Quality Standards Handbook and a Lantra Awards certificate of attendance.

Cost

1 day course - £140+ VAT

A 10% discount is offered to members of the Woodfuel Suppliers Group and Wood Heat Association. Please confirm your membership on booking. Prices include all course materials, refreshments, lunch and course registration and certification fees.

This course is being run in partnership with Forest Advisory Consortium England partners Woodnet and the Kent Downs AONB Woodfuel Pathfinder and the High Weald AONB.

How to book:

Phone : 01765 609355
Email : Erica.spencer@ruraldevelopment.org.uk
Post: Rural Development Initiatives Ltd
Unit 9
Sycamore Business Park
Dishforth Road
Copt Hewick
Ripon
HG4 5DF

Further details from www.ruraldevelopment.org.uk/events

Wood Heat Conference 2015 - Now open for bookings

The 2015 Wood Heat conference is now open for bookings.

Despite degression, the UK renewable heat industry continues to grow thanks to effective support from the Renewable Heat Incentive.

Of all the renewable heat technologies, wood and biomass heat is still outperforming all others.

The UK's dedicated biomass and wood heat industry conference will run three weeks prior to the Government's Comprehensive Spending Review, offering the opportunity to learn from the experiences of UK businesses and those overseas.

The conference has the sub-title “Raising Our Standard”, and speakers will cover subjects including:

• Fraud and compliance under the RHI
• Soft support for the biomass heat sector in Scotland, Austria and the USA
• Biomass CHP deployment in the UK
• Evaluating the in-situ performance of biomass boilers - results from DECC research
• The UK biomass boiler market

The conference will include a host of other subjects for all parts of the wood heat supply chain - installers and fuel producers/suppliers.

The conference will also include speakers from government, the Wood Heat Association and the Renewable Energy Association, enabling delegates to gain a thorough understanding of the opportunities available in the UK's modern wood heat and biomass industry.

The conference will take place on Wednesday 4th and Thursday 5th November 2015 in Bristol.

Full details can be found here.

RHI - tariff changes for biomass boilers announced

The Department of Energy and Climate Change has announced changes to the RHI tariffs for biomass in both the domestic and non-domestic schemes.

Domestic RHI

DECC announced on 29 May 2015 that the degression ‘super trigger’ for domestic biomass had been passed. 

This means that the current biomass tariff of 8.93p per kilowatt hour will be reduced by 20% to 7.14p per kilowatt hour for all new applications made from 1 July 2015.  The new tariff table is shown below.

To calculate the impact of this change simply multiply the tariff by the kWh total for space heating and hot water on your EPC (e.g. 15,000 kWh x 0.0893 = £1,339 per year for seven years).

The tariffs for domestic air source heat pumps, ground source heat pumps and solar thermal are not affected by the 1 July 2015 degression.  Legacy applicants are not affected by degression.

Non-Domestic (Commercial) RHI

DECC has also announced a 25% reduction to the small commercial biomass tariff for the quarterly period starting on 1 July 2015.

This is a fairly significant reduction that will affect the economics of schemes up to 199 kW - particularly those involving wood pellets and the replacement (partial or full) of mains gas.

Nevertheless, a subsidy is still a subsidy and 4.4 p/kWh is still a positive contribution.

The risk with this degression is that larger boilers will be installed to gain the 'medium' tariff.  Whilst tempting this is likely to be a false economy as an over-sized boiler will be used less and is likely to have worse overall efficiency (it may well cost more as well).

Our advice would be to size correctly and be satisfied that a subsidy is still available.

If your sub-200 kW project is nearing completion then you have only a few weeks left to commission and apply in order to gain the current tariff (5.87 p/kWh).

More details can be found on the Ofgem website.

Kent Downs Woodfuel Pathfinder - FREE Conference

The Woodfuel Pathfinder has now been operating for almost four years and we are fast approaching the end of the current phase of the project.

The ADAFOR Interreg project, which has enabled the Pathfinder to operate for the last two years, comes to a close at the end of March 2015.

To mark the end of ADAFOR the project partners will hold a small, two-day conference on March 5th and 6th at East Brabourne.

We would like to extend an invitation to readers of this blog and their colleagues.  The conference is FREE to attend.

To book a place please go to our Eventbrite page.

Alternatively email us at matthew.morris@kentdowns.org.uk or call 01303 815 171.

Working with wood chip at Hever Castle - FREE CLA event

You may have heard a bit about Hever Castle's wood fuel and biomass heating project already.  

If you want to learn more then Douch Biomass and South East Wood Fuels will host a talk and site visit at Hever on March 24th.

Full details can be found on the CLA website.  Details can also be found below.

Re-ignite: A seminar for Wood Heating in the Public Sector

Installing biomass heating in public sector buildings can be very hard to achieve.  Barriers range from institutional inertia to a basic lack of understanding of alternatives to oil, gas or LPG systems.

To help unravel this complicated set of problems South East Wood Fuels, in partnership with Rural Energy, will deliver a one day seminar on November 18th at The Keep in Brighton.

Places can be booked via the South East Wood Fuels website or by telephone on 01323 340041.

Development of Forestry Businesses - FREE Demonstration Workshops

The Forestry Commission will deliver three demonstration events in November.  

These are designed to illustrate how three forestry businesses located in the South East have grown over the last seven years and how Rural Development Programme England (RDPE) support has helped facilitate this growth.

The events are described below.  Contact and booking details can be found at the end of the article.

Friday 7th November – Balcombe Estate nr Crawley

Balcombe Estate has a long history of integrated woodland management maintaining their estate sawmill and pursuing new markets for wood products. 

RDPE support has helped them build their woodfuel supply business, including supporting the purchase of a 360 mounted harvester in partnership with a nearby estate. They are currently exploring how they can grasp the growing interest in locally grown timber by upgrading their sawmill and marketing. 

As they grow their business they are also exploring how they can work collaboratively with complimentary businesses and neighbours.

This event will include:

• First hand experience of a previous grant recipient
• A walking tour and demonstration of harvesting/firewood processing
• Lunch and refreshments

This event will illustrate how entrepreneurial management and enthusiasm can grow forestry business in lowland England and how RDPE support and collaboration can help accelerate this process. 

This event will be of particular interest to anyone exploring how they can grow their forestry business in SE England. 

Registration from 9.45am for a 10am start. Lunch will be provided.

Tuesday 18th November - H G Matthews Brickworks nr Chesham

H G Matthews illustrates how a local business with high energy needs has developed the use of locally sourced wood as a fuel along with the supply chain to meet their needs. 

This event will be of particular interest to local businesses considering use of locally grown wood, contractors who are looking to expand or establish woodfuel supply chains and owners exploring options for woodfuel supply. 

This event will include:

First hand experience of a previous grant recipient

• Walking tour of the brickworks
• Lunch and refreshments at a nearby public house. 

Space is restricted and so we can only accommodate 20 individuals at this event. Only one person per company/organisation please. 

Registration from 9.45am for a 10am start. Lunch will be provided.

Thursday 27th November - Brockwood Park Farm nr Petersfield

Brockwood Park Farm illustrates how woodlands on farms and estates can be managed cost effectively to deliver woodfuel to heat the owner’s, neighbours’ and/or local business properties. 

Heating oil is becoming ever more expensive and few people realise that a tonne of seasoned wood can deliver as much heat as 350 litres of heating oil and you may be eligible for support from the Government’s Renewable Heat Incentive.

Alex Morton at Brockwood Park has carefully considered his options and brought together a package of equipment, infrastructure and skills to help him manage his woods extremely well and supply woodfuel to the adjacent school as well as heat his home. He is now exploring opportunities to extend his forestry management with neighbours.

This event will include:

• First hand experience of a previous grant recipient
• A walking tour of woodfuel processing site

Registration from 9.45am for a 10am start. 

As these are ‘on site’ visits spaces are limited and hence early registration is encouraged. To book please click here.

Renewable Heat Incentive - latest uptake figures from DECC

The latest RHI figures continue to demonstrate how successful the scheme has been at increasing the rate of renewable heat generation in Great Britain.

Biomass heating remains the clear 'winner' of the RHI and account for 94% of all installations, 99% of the installed capacity and 85% of the payments made under the scheme.  

Whilst the number of biomethane installations is small (just 3) they are starting to account for around 5.6% of the total payments made (which is great than the 'large biomass' category).  As I stated before this seems to demonstrate the enormous potential of biomethane production from anaerobic digestion.

Of note, particularly to those considering installing a biomass system, is the recent acceleration in applications seen in June.

Whilst the precise reasons for this dramatic increase are not clear (backlog?) it is possible that it might lead to additional tariff adjustments later in the year (on top of the 5% reduction for small biomass implemented on July 1st).

In terms of geography the South West region continues to lead the way with 19% of all installations. 

In the South East, where this blog lives, Kent has the most accredited installations.

The top 10 business types benefiting from the RHI are shown in the table.

Will there be more tariff adjustments in 2014?

In simple terms - yes, quite likely.

The results of the next tariff review will be  the announcement on 31 August 2014 (with any changes commencing on 1 October 2014).

The data suggests the expenditure thresholds for the overall RHI budget are starting to be exceeded.  The cause of this is 'small biomass' tariff which is now well over its  expenditure threshold. 

This situation has been tolerated for a while because uptake of the non-biomass tariffs was, and still is, well below forecast and the overall budget was within its limits.  The difference now is that uptake of the 'small biomass' tariff has accelerated so fast that it has now impacted the finances of the overall scheme.

Given the scale of the current overspend it is possible that a 10% reduction in the 'small biomass' tariff might take place on October 1st.  This would reduce the tariff from 8.4 p/kWh (tier 1) and 2.2 p/kWh (tier 2) to 7.6 pence and 2.0 pence, respectively.

The impact of this reduction for a 199 kW biomass boiler is around £2,000 a year (although this depends heavily on the heat load and of course the actual meter readings).

Summary

There has been a large 'spike' in applications in June - whether this develops into a 'trend' is yet to be seen.  Regardless of this the scheme overall is starting to overspend and as such the rules for degression are clear.

Any decision to reduce tariffs (in October) will most likely affect the 'small biomass' tariff.

Any sub-200 kW installations that are currently in progress now have a clear signal to complete as soon as possible.  New projects, with an expected commissioning date post-October 1st, should probably factor-in a lower tariff for feasibility and business planning purposes.

Non-domestic RHI - small biomass tariff reduced

Ofgem has announced that the small biomass tariff will be reduced by 5% from July 1st 2014.

This is in response to increasing uptake in the sub 200 kW category as well as higher than anticipated levels of eligible heat being submitted in meter readings.

This degression of the small biomass category follows the annual inflation increase that took place on April 1st.  This saw the tariff increase from 8.6 p/kWh (Tier 1) and 2.2 p/kWh (Tier 2) to 8.8 and 2.3 p/kWh, respectively.

The 5% reduction from July 1st will mean that the tariff falls again to 8.4 and 2.2 p/kWh (which is similar to the levels seen in 2012).

The latest uptake figures clearly indicate that whilst the RHI overall is operating within it budgets, uptake of the small biomass category has accelerated.

Meanwhile, uptake of the medium tariff remains strong but is currently operating below budget forecasts.

Activity in the large biomass tariff category is far lower than the other categories.  However, there are clearly a number of schemes at pre-application stage (green column) and these may start to have greater impact on budgets over the next 24 months.

Overall biomass heating remains the clear 'winner' in the non-domestic RHI.  The majority of the available budget (and installed capacity) is currently allocated to biomass technologies and activity in the other RHI-eligible technologies remains relatively modest. 

Biomass Suppliers List

We have been referring to new requirements around the sustainability of biomass fuels for some time now so we were pleased to see that the Biomass Suppliers List (BSL) has now been launched.

The Biomass Suppliers List is the process employed by UK Government to ensure that publicly funded subsidies such as the Renewable Heat Incentive (RHI) remain eligible under the EU Renewable Energy Directive (RED).

The RED Directive requires users of biomass fuel that are claiming the RHI to meet a lifecycle greenhouse gas (GHG) emissions target of 60% GHG savings against the EU fossil fuel average.

In a nutshell this means that the carbon footprint of a biomass fuel must deliver a substantial carbon saving compared to oil, gas or coal to ensure that biomass retains its 'low carbon' or 'carbon neutral' status.

What does this mean to users and producers of biomass fuels?

The BSL applies to users, producers, self-suppliers and traders of 'woody biomass'.  

For a fuel user in receipt of the RHI (commercial or domestic) they will need to demonstrate to Ofgem that their fuel is from a source recognised by the BSL. 

In turn this means that anyone supplying an RHI accredited biomass boiler will need to be registered on the BSL.  Self-suppliers will also need to be listed on the BSL.  

In addition to BSL accreditation biomass traders/wholesalers will also be listed on a public register.

Effectively any fuel used or supplied to an RHI accredited boiler will need to have BSL accreditation.

Which fuels are included?

• Pellets – virgin
• Pellets – waste
• Pellets – waste virgin blend
• Briquettes – virgin
• Briquettes – waste
• Briquettes – waste virgin blend
• Chip – virgin naturally seasoned
• Chip – virgin force dried
• Chip – waste
• Chip – waste virgin blend
• Firewood – virgin naturally seasoned
• Firewood – virgin force dried
• Firewood – waste
• Firewood – waste virgin blend

What are the requirements?

All applicants must agree to the scheme terms and conditions, which include requirements around reporting, agreement to be subject to periodic audits, and the provision of proofs of purchase in the form of invoices or receipts with information about the fuel on them.

How do I apply?

The application process is completed online at the new BSL portal.

For users and self-suppliers the process is relatively simple.  After selecting the a supplier type applicants are required to respond to a set of questions (which vary according to the supplier type).

Self-suppliers, for example, are required to sign a declaration and upload a copy of a Forestry Commission approved management plan.

For traders and producers the process is a little more complicated and may require the completion and uploading of product data and carbon footprint calculations (via the B2C2 carbon calculator).

All applicants need to accept a set of terms and conditions that confirm acceptance of the scheme rules and which enables the BSL to undertake ongoing checks or audits.

The BSL FAQ is a good place to start.  Application guidance is also available on the BSL portal.

Overall we feel that the BSL is an appropriate method for accrediting and monitoring biomass fuels that are being used in publicly-funded biomass boilers.  

The BSL may initially appear to be bureaucratic but we are confident that most people will get to grips with it fairly easily.

New biomass sustainability requirements for the Renewable Heat Incentive

Ofgem has revealed more detail on how it intends to roll out and implement sustainability requirements for biomass fuels.

This is particularly important as it not only affects the owners and operators of RHI accredited biomass boilers but also producers and traders of biomass fuels.

The guidance applies to both the non-domestic (commercial) and domestic RHI and participants will need to comply with requirements from date they come into force (although the precise dates are not stated).

All participants are strongly encouraged to start sourcing from a supplier on the forthcoming Biomass Suppliers List (BSL) supplier in advance of the criteria coming into force later this year.

The new requirements also take into account participants who self-supply, for example an estate that processes wood chip from its own woodland.  Details on this can be found below.

From Autumn 2014 (no earlier than 1st October 2014)

Biomass fuel used by RHI participants must meet a lifecycle greenhouse gas (GHG) emissions target of 34.8g CO2 equivalent per MJ of heat.

Don't panic!  All this means is that the fuel (chip, logs, pellets) must achieve a 60% GHG saving against the EU fossil fuel average.  And it is the supplier of the fuel that has to demonstrate the GHG saving and not the end user (although the end user will have new reporting responsibilities if they are participating in the RHI).

From Spring 2015 (subject to the Parliamentary process)

Ofgem plans for biomass fuel to meet land criteria, which will differ for different types of biomass:

For woodfuel the criteria are outlined in the UK Timber Standard for Heat and Electricity.

How do non-domestic RHI participants comply?

This is rather simple actually.  A new Biomass Suppliers List (BSL) is currently being set up.  This is being managed by the good people at Woodsure who have been appointed by Ofgem to manage the BSL.  The alternative option is to self-report directly to Ofgem.

Participants can switch between these methods.  Of the two the BSL route sounds more straightforward to us.

• Sourcing woodfuel from the Biomass Suppliers List (BSL)
• Participants may still need to also provide Ofgem with a quarterly declaration that the biomass fuel they have used was sourced from a supplier registered on the BSL and marked as sustainable.

• Self-reporting to Ofgem on the sustainability of their fuel
• This will involve making a quarterly declaration to Ofgem of the lifecycle GHG emissions associated with each consignment of fuel used in that quarter, and provide an annual independent audit of the lifecycle GHG emissions associated with biomass used in that reporting year.

For the domestic RHI all fuel used from the date the criteria come into force must be sourced from a supplier registered on the BSL at the time the fuel was purchased. Participants are required to make an annual declaration to Ofgem that the biomass fuel used meets this requirement.

Self-suppliers (domestic and non-domestic) < 1 MW

Participants self-supplying woodfuel from the same estate as the installation will be able to register on the BSL as a self-supplier without undertaking an assessment against the sustainability criteria if the boiler is less than 1MW capacity. 

Ofgem recommendeds:

• Self-suppliers provide some evidence of their ability to self-supply, such as a Forestry Commission approved management plan. 
• Self-suppliers should register on the BSL before the sustainability criteria come into force in Autumn 2014.

Self-supplying participants who cannot meet all of their needs from their own woodland will be able to top up with fuel purchased from a BSL supplier.

Updated commercial RHI tariffs announced

Ofgem has recently released the updated tariffs for the commercial RHI scheme.  These changes have taken place primarily due to the annual inflation of the RHI, the third increase since the scheme was launched.  However, changes have also taken place in response to increasing uptake of the scheme, particularly in the small and medium biomass projects.

The inflation of the tariff, this year by 2.7%, affects those already in receipt of payments from Ofgem as well as installations that will become accredited after April 1st 2014.

The following table focuses on the biomass tariff.  For example, for boilers sized up to 199 kW the Tier 1 tariff has increased from 8.6 p/kWh to 8.8 kWh (the Tier 2 tariff from 2.2 to 2.3 p/kWh).  The last column in the following table shows the updated tariff (from 01/04/2014).

Whilst these changes are not earth shattering the increases help to further enhance the economics of RHI accredited biomass boilers.  For example, the annual RHI payment for a 199 kW boiler serving a 280,000 kWh heat load would increase by around £500 per year.

The only downside to these changes is the reduction in the tariff for medium-scale biomass boilers that were accredited after July 1st 2013 (Tier 1 down to 5.1 p/kWh and Tier 2 remains at 2.2 p/kWh).  This change indicates that degression has taken place in the medium category due to rising uptake of the RHI in this category.

Whilst the overall expenditure for the RHI is proceeding according to forecast it is clear that the small biomass category has seen the largest increase in expenditure.

Ofgem states that:

"Forecast spend over the next 12 months for small commercial biomass is £44.4m. This means that estimated spend for this technology is already £10.4m above its 30 April 2014 individual technology trigger point of £34.0m. This increases the possibility of a reduction to this tariff in the next quarter. However, this would only occur if next quarter’s 50% trigger for the scheme as a whole of £96.4m was also exceeded, which would require a £10.1m increase in total expenditure over March and April."

Other developments include:

• Forecast spend over the next 12 months for medium & large commercial biomass has increased by 4% and 6% respectively.
• Forecast spend for small heat pumps has seen a significant increase of 25% in the last month.
• Forecast spend for all other tariff categories have seen little to no activity this month and remain considerably below their individual tariff triggers for the next quarter.

The future risk of degression is summarised by Ofgem as follows:

"Whether any reductions occur next quarter depends on how well the scheme overall, and each technology tariff, performs during March and April and whether total scheme spend grows by £10.1 million in that time. An increase of this size would occur if the scheme was to continue to grow at the rate we have seen this month which would cause the 50% total scheme trigger of £96.4m to be hit. DECC will receive the data needed to make this forecast in May, and will publish the next quarterly degression announcement by 1 June 2014, following which, any reduced tariffs would come into effect from 1 July 2014."

Forestry & Wood Fuel Update - April 2014 - Free Event

The Woodfuel Pathfinder will deliver its next event at Kingston Barn on the evening on April 1st.  Full details can be found below.

To register for the event please use this link.  

Alternatively please call the AONB Unit on 01303 815 171.

RHPP due to end soon - £2,000 grant towards the cost of a biomass boiler

Last chance for off-the-gas-grid households who want to make the most of the Government’s one-off grant designed to help meet the costs of installing renewable technologies in homes across the country.

The Renewable Heat Premium Payment Scheme will close on March 31st 2014 and householders are encouraged to apply now before it’s too late. 

Grants of up to £2,300 are available for households to help pay for new renewable heating systems including biomass boilers and ground, water source or air-to-water heat pumps.

The cut-in date for this scheme is 21st July 2011 and participating households must have undertaken a Green Deal assessment.

Vouchers will be valid until 31 March 2014  when all required paperwork will need to be submitted for payment  to the Energy Saving Trust. No extensions will be available to this deadline.

The following leaflet has now been developed to explain the benefit of applying in customer friendly language and where to go for more information.

Commercial RHI - summary of changes to tariffs and technologies

Are you sitting comfortably?

DECC has been busy releasing new and updated information about both the commercial and domestic RHI and renewable heat in general.

To my eyes the overall renewable heat situation looks extremely healthy at the moment, particularly if you are in the biomass sector.  However, it is also clear that biomass is dominating the commercial RHI.  Consequently DECC will introduce changes to the budgetary process to increase the degression trigger sensitivity for sub-1MW biomass.

We have read the latest update on the commercial RHI and have picked out the main points from the executive summary.  We would urge interested readers to look at the entire document in case we have missed anything.


A key change is the capping of all tariffs at 10p/kWh.  This means that the RPI inflation of tariffs will stop at 10p/kWh.  For biomass it is the tier 1 small biomass tariff that is closest to this limit (n.b. the solar thermal tariff will be increased to 10p/kWh).

It is true that some renewable heat technologies are underperforming in the RHI, such as heat pumps and solar thermal.  However, DECC has recognised this and will beef up support - via increased tariffs and budgets - as well altering some requirements (such as energy efficiency).  The large biomass tariff, for example, will increase to 2.0p/kWh from 1.0p/kWh.



Eligibility

For new technologies and updated tariffs - 4 Dec 2013.  Any applications with a date of accreditation of 21 January 2013 or later will benefit from the tariff increases brought forward as a result of the Early Tariff Review consultation (this applies to ground source heat pumps (GSHP), solar thermal and biomass over 1MWth).


Energy Efficiency

DECC will not be introducing explicit energy efficiency criteria for non-domestic RHI applicants at this time. The mixed views from consultation respondents made it clear that more work needs to be done to establish a range of effective but not unduly burdensome energy efficiency measures that could be introduced into the scheme.


Biomass Sustainability Update

Based on feedback from stakeholders about industry readiness,  DECC  will postpone implementing mandatory compliance with GHG lifecycle emissions savings to Autumn 2014, so that industry and participants can monitor their processes in light of the sustainability criteria and build the audit trail necessary to demonstrate compliance.

DECC intend for the Biomass Suppliers List to be open for applications from suppliers of biomass in Spring 2014.

Subject to the availability of Parliamentary time,  DECC  intend to implement land-use sustainability criteria by 1 April 2015.


Biomass CHP

DECC will be introducing support for biomass CHP (4.1p/kWh), biogas >200kW (5.9 p/kWh and 2.2pkWh depending on size) and deep geothermal (5.0p/kWh). 

However, we do not intend to proceed at this time with support for heating only air-to-air heat pumps or biomass direct air as the consultation did not enable the development of appropriate deliverable policy.

Biogas combusion >200kWth

Subject to State Aid approval, tariffs will be set at 5.9p/kWh for installations with a thermal capacity of between 200 to 600kWth and 2.2p/kWh for those greater than 600kWth.

Deep geothermal

DECC will introduce a new tariff for deep geothermal heat at 5p/kWh. Deep geothermal heat will be defined as heat coming from a drilling depth of a minimum of 500m.

Heating only air-to-air heat pumps (AAHPs)

Although these technologies do produce renewable heat,  DECC  will not be introducing support for them at this time. This is primarily because of the risk of incentivising the installation of separate heating and cooling AAHPs in order to claim the RHI, rather than a reversible AAHP, which is likely to be more energy efficient.

Air to Water Heat Pumps and Energy from Waste

DECC will be introducing support set at 2.5p/kWh for AWHP (designed to achieve a minimum seasonal performance factor of at least 2.5) and 2.0p/kWh for the biogenic proportion of energy from waste (commercial and industrial).

Value for Money Cap and Tariff Rate of Return

From Spring 2014 tariffs across the RHI will be capped at 10.0p/kWh of renewable heat (and continue to be adjusted by RPI annually).

Biomass

To date deployment of large biomass has been below expectations and therefore  DECC  will go ahead with the proposed tariff increase to 2.0p/kWh.

Ground Source Heat Pump Tariffs

DECC will be replacing the current banded GSHP tariffs with a single tariff of 7.2p/kWh, which will be tiered.

The tier 1 tariff of 8.7p/kWh will be paid on the initial heat generated for an eligible purpose and the tier 2 tariff of 2.6p/kWh will be paid on the remaining eligible heat generated. This is equivalent to a tariff of 10.0p/kWh renewable heat assuming an SPF of 3.6.

Solar thermal

DECC will be raising the solar thermal tariff to 10.0p/kWh.

Budget management

Since implementation,  DECC  has made three quarterly degression assessments, one of which resulted in the medium biomass tariff being reduced by 5%. The outcome of the most recent assessment was published at the end of November.  DECC  will publish the fourth quarterly announcement by 1 March 2014.

In the May 2013 tariff review consultation we set out that the budget management policy would need to be developed in light of any tariff changes or scheme extensions and to reflect the outcome of the spending review for 2015/16, which has since confirmed an RHI budget in 2015/16 of up to £430m.

Having reviewed the budget management mechanism to ensure it remains fit for purpose,  DECC  will make some changes to the policy from Spring 2014 to:

• base the deployment levels set out in the degression mechanism on refreshed market intelligence rather than the expectations that were modelled prior to the scheme’s introduction;
• reduce the tolerance in the technology trigger for biomass under 1MWth and bio-methane injection by reducing the amount that these triggers are scaled above expected levels of deployment. They will change from being 150% of expected deployment to 120% of expected deployment. This will reduce the risk of unsustainable growth and dominance of the budget by a small number of technologies;
• set the triggers for technologies  DECC  expects to deploy in relatively lower volumes (solar thermal, deep geothermal and all biogas) at 2.5% of the overall budget, rather than the current 5%.

Reducing uncertainty for projects with long-lead times

DECC intend to introduce a form of tariff guarantee for the largest installations (for example, those over 1MW), initially available for plant due to be commissioned by 31 March 2016. Subject to further policy development in 2014, State Aid and Parliamentary approval,  DECC  will aim for this measure to be in place from April 2015 to March 2016 and thereafter factored into the next spending review discussions on the RHI so that it can be available from Spring 2016 for plant due to commission by 31 March 2020.

Public Grants

After two years of the non-domestic RHI we think a more flexible approach to the interaction between public grants and the RHI could encourage more renewable heat installations to come forward. Pending further work alongside the 2014 review to look at the interaction between public grants and the non-domestic RHI,  DECC  intend to introduce some additional flexibility next year. We will take forward regulatory amendments to extend the eligibility window for repayment of grants and to allow some grant recipients who are unable to pay back their grants to access the RHI via reduced tariff payments.

Renewable Heat Incentive - safe from degression (for the time being)

Following the most recent check on uptake Ofgem has announced that the commercial RHI tariffs will remain unchanged.

This was the first serious 'degression test' for the commercial RHI. DECC's figures show that both the small and medium commercial biomass tariffs had exceeded their degression trigger points:

• Small commercial biomass: Forecast spend over the next 12 months is £32.3m. This is £4.3m over its individual technology trigger.

• Medium commercial biomass: Forecast spend over the next 12 months for is £26.5m. This is £0.2m over its individual technology trigger.

However, because spend for all other tariff categories were considerably below their individual tariff thresholds for this quarter, and overall spend was within budget, Ofgem has decided to leave all tariffs unchanged.

Commercial RHI - total spend (Nov 14 2013)

Total forecast expenditure for the scheme (as of October 31st) was £70.3 million. 

As the £70.3m figure does not exceed either threshold (see below) the scheme has been left unchanged:

• The “50% trigger” for the scheme as a whole as at 31 October is £71.6m.

• The “100% trigger" for the scheme as a whole as at 31 October is £143.3m.

Biomass heating is clearly the biggest 'winner' from the commercial RHI. In contrast to the feed-in-tariff (FiT) for renewable electricity, which grew exponentially, RHI growth has been far more linear (and thus more predictable).


But as you can see the commercial RHI was very close to its degression trigger in October - for some tariffs - and we suspect that things may get even tighter in the near future.

Uptake of commercial RHI Source: KDAONB

The forecast spend for the small commercial biomass tariff means that it is already above its next quarters individual technology trigger (£30.9m on January 31st 2014).

This means that there is enhanced risk of degression in this tariff.  However, this would only occur if next quarter’s 50% trigger for overall expenditure of £83.2m was also exceeded.

RPI (%) Source: ONS

The good news is that the scheme overall is nearing its third 'inflation point' on April 1st 2014.  

The commercial RHI tariffs have already been increased by the Retail Prices Index (RPI) twice (4.8% in 2012, 3.1% in 2013) and the increase may help offset degression  if it happens.

However, the latest figures from the ONS show that the RPI is falling so the cushioning effect may not be so marked in April '14.

Renewable Heat Incentive - latest results

The latest quarterly report on the Renewable Heat Incentive (Apr-Jun 2013) indicates that uptake of the scheme remains steady and total installed capacity under the scheme now exceeds 400 MW.

RHI installed capacity and payments - cumulative

There are now 1,789 accredited installations with a further 600 applications  at various stages of processing.  76% of installations are in England, 18% are in Scotland and the remainder are in Wales.

Biomass boilers remain the dominant technology type and comprise 93% of all accredited installations.  

Proportion of accredited installations by technology type

This latest report also provides some new information on recent audits that have been carries out by Ofgem.  These focused on compliance issues but were also carried out for fraud detection purposes.  The main findings were as follows:

• Rates of non-compliance are high and this has led to payments being suspended in some cases.
• The main issues relate to participants not maintaining fuel records for biomass installations, particularly where harvesting their own fuel, and the incorrect installation of heat meters

As a result of these findings Ofgem has commenced a desktop audit programme to complement site audits in order to verify ongoing obligations.

The advice is, therefore, to check that metering equipment has been installed correctly, primarily by checking meter installation manuals.  For biomass installations participants need to record the quantity and type of fuel used and the date of supply to the boiler (see template here).

Remember the date - 24th September

DECC recently announced important changes to the RHI non domestic

scheme which will be implemented on 24 September.  These include changes to metering and air quality requirements.

Simplifying metering requirements

If you are applying for RHI accreditation on or after the 24 September simplified metering requirements will apply:

• In certain circumstances disregard heat loss from external pipework where the pipework is ‘properly insulated’ to the standards outlined in BS5422 and calculated in line with and EN ISO 12241.
• Submit heat loss calculations in place of installing additional meters in such cases where doing so might be physically or financially overly burdensome
• Only install meters which are necessary to calculate the ‘eligible heat output’ from the installation to enable the RHI payment to be calculated.

Biomass air quality requirement

Again, from September 24th a fully completed RHI emission certificate (or environmental permit) will be required to demonstrate compliance with new air quality requirements. 

For more information, including RHI emission certificate template, see here.

Domestic RHI - summary of scheme proposals

DECC has published its response to the consultation on the domestic version of the Renewable Heat Incentive (RHI).  The response includes a lot of detail on the types of technology that will be supported, their 'performance' and the type of properties and tenure that will be eligible.

To assist readers we have produced a summary of the proposals as they stand.  This can be found here.

The proposals for biomass heating are of particular interest to this blog.  The main points of interest include:

• The tariff for biomass has increased from 8.7 p/kWh (initially proposed in 2012) to 12.2 p/kWh.  Whilst this is slightly below the 13-15 p/kWh we would have liked to see it is clearly an improvement.  The final tariff is yet to be announced but presumably it will be well before the proposed scheme opening date of April 1st 2014.

• The tariff will be paid over seven years according to deemed heat.  This is the heat load as determined by the EPC that is created during a Green Deal assessment which is a mandatory requirement.

• Legacy systems installed since 15th July 2009 will also be eligible providing they were installed by an MCS accredited company.  
• Biomass equipment will need to meet meet air quality standards in relation to particulate matter (PM) and oxides of nitrogen (NOx). Legacy installations, installed between 15th July 2009 and the launch of the scheme, will not need to meet this requirement.
• A new requirement around fuel sustainability will be introduced for  biomass installations.  To be eligible for and continue to receive RHI support for a biomass system, fuel needs to be sourced from a supplier registered on an approved supplier list. Such a list will be set up ahead of the launch of the scheme and will be the same one that is being established for the non-domestic RHI scheme.

The final point on sustainability is interesting and has important implications for wood fuel suppliers. To be included on the list, DECC intends that fuel suppliers will have to meet two criteria from April 2014:

• Supply fuel which complies with the greenhouse gas (GHG) lifecycle emissions target of achieving 60% GHG savings against the EU fossil fuel heat average, assuming a boiler efficiency of 70%.
• Report their performance against the relevant land criteria from the following list (although compliance with the criteria will not initially be required):
• For wood-fuel: the UK public procurement policy on wood and wood products or its equivalent

Evidence of legality and sustainability can come in two forms:

• Category A evidence is independent certification of the timber/ timber products by any of the forest certification schemes that meet the policy requirements (such as FSC and PEFC).
• Category B evidence is alternative documentary evidence that provides assurance that the source is legal and sustainable.

Category A evidence is the 'belt and braces' approach and undoubtedly involves the procurement of external expertise from Forest Stewardship Council and the accredited certification bodies are authorised to issue FSC certificates.

The alternative is Category B evidence and you will be glad to hear that this includes use of the Forestry Commission's Woodland Planning Grant (WPG) that falls under the English Woodland Grant Scheme (EWGS).  

However, the WPG Category B option is open to owners with less than 100 hectares of woodland, and more than 3 hectares, and whose woodlands are not certified.  As such it is envisaged that owners with more than 100 hectares will pursue the Category A, full certification option.

As ever we would recommend a good read of the full DECC document to make sure you pick up all of the salient points.