Marketing of MicroCHP MicroCHeaP meeting Copenhagen 29 September 2005

UK Government CHP Strategy Energy Prices CHP Capacity microCHP Forecast Marketing

UK Government CHP Strategy Government committed to CHP as a significant part of its CO 2 reduction target Eligibility for Enhanced Capital Allowance Exemption from Climate Change Levy for all Good Quality CHP fuel inputs and electricity outputs

UK Government CHP Strategy Climate Change Agreements to provide an incentive for emissions reductions Grants available via Community Energy programme for community heating schemes

UK Government CHP Strategy Improvements to existing CHP schemes Energy efficiency and low carbon technologies microCHP field trials VAT on microCHP units reduced from 17.5% to 5%

UK Government CHP Strategy Consultation on the development of microgeneration of low- carbon energy Revising renewable energy & energy efficiency grant funding schemes

UK Government CHP Strategy Energy Act 2004 Cutting emissions of greenhouse gases Reducing fuel poverty Reducing demands on transmission & distribution systems and need for modification Enhancing availability of electricity and heat

Energy Prices Powergen supply 6M UK customers with gas and electricity Increased gas prices four times and electricity prices three times since January 2004 Electricity: 7% price increase Gas: 12% price increase On a “dual fuel” bill, adds £52 (€76) annual bill

Energy Prices British Gas warn that gas prices may rise a further 15% Typical UK household energy bill has risen by about 20% in the last 18 months Electricity: 28.5% Gas: 17.4%

Energy Prices

CHP Capacity 1990’s: UK CHP installed capacity doubled to 4,700MW e Target of 10,000MW e by 2010 However low electricity prices and high gas prices has slowed the adoption of CHP

microCHP Forecast UK >1.5M new or replacement boilers each year Forecasts suggest that 50% of these can use micro-CHP British Gas predict that by 2010 nearly 200,000 UK households will be generating their own electricity through a microCHP replacement for domestic boilers Source: Baxi

Marketing Behaviour Change Homeowner is a co- producer of a climate change solution rather than a passive consumer of energy Visible component of the climate change solution

Marketing Carbon Reduction Micro CHP misses out all the energy loss from centralised energy generation

Marketing Fuel Poverty Micro CHP is an investment for the medium term, which gives vulnerable households low or zero energy bills over the lifetime of the technologies

Marketing Security of Supply Significant gain to security of supply occurs when domestic power generation coincides with peak demand times. Micro CHP can reduce this demand

Marketing Economic Value Consumer Reduce/remove energy costs Supplier Added value service Enhance customer income Improve customer retention

Marketing Economic Value In a free market, the value of brand differentiators and value added services should not be underestimated

Marketing Economic Value If a micro CHP is generating their energy at times of peak demand, this saves the supplier the cost of supplying them with electricity when wholesale prices are highest

Marketing Economic Value Reducing the imported demand defers/avoids investment in large power stations and strengthening of the grid HV transmission line €5,200/kW/km

Marketing System Resistance Policy makers – accustomed to large centralised power projects Consumer protection that prioritises low energy prices

Marketing Value High value exported energy Close to the point of demand Not subject to transmission losses Generated at times of peak demand Net metering

Marketing Renewable Obligation Certificate Microgenerator owner sells ROC to supplier if total annual output >0.5MWh 1 ROC = €72

Marketing Renewable Obligation Certificate Supplier pays about €60/MWh for all power generated whether it is exported or not. Supplier reclaims investment through the ROC 25 page application form & supply regular meter readings. Suppler to apply for ROC on customer’s behalf.

Marketing Rethinking Demand reduction via energy efficiency and microCHP driven by higher energy prices Energy suppliers need to shift away from selling a product to understanding what the customer wants in terms of comfort, convenience and climate protection

Marketing Home Energy Ratings From 2007, all houses for sale will need an energy rating 1.2M homes sold each year. Install microgeneration technologies to increase property value

Marketing Home Energy Ratings Financial incentives needed to encourage homeowners and landlords to assess the carbon footprint of their property and then make changes to increase the property value e.g. stamp duty/council tax rebate

Marketing Future Use of planning and procurement measures to get microCHP designed into new build – lower cost through economies of scale Development of local heat and power networks

Marketing Future Higher upfront capital costs offset by lower energy costs Customer pays back the upfront cost of microCHP at an affordable rate through their bills Tariffs that reward electricity generated/exported especially at times of peak demand

Marketing Future Suppliers lease microCHP providing an ongoing source of revenue to the supplier and a more attractive form of payment for customers.

Dr Duncan Child Sustainable Technology Solutions Ltd