1. The Renewable Heat Incentive explained 1 Paul Bourgeois Director Zero Carbon Britain Ltd.

2. Agenda Introduction Context and History Technology RHI rates and accessing them Progress to date What are the options? Designing heat technologies Case Studies 2

3. Context and History Legislation Government Strategy Renewable Heat Incentive history 3

4. Energy Act 2008 Royal Assent on 28 th November 2008 – Implemented the legislative aspects of the Energy White Paper 2007 – Secretary of State to establish a financial support programme – Carbon Capture and Storage (CCS) – Feed in Tariffs – Smart metering... 4

5. UK Renewable Energy Strategy July 2009 20% reduction on greenhouse gas emissions 20% energy from renewable sources – 12% from renewable heat All by 2020 60% by 2050 5

6. Renewables Obligation (RO) Feed in Tariff (FiT) Renewable Heat Incentive (RHI) Increase bio-fuels to 5% by 2013/4 Green Deal Main support initiatives

7. Why are heat incentives needed? A policy mechanism to accelerate growth Long term generation contracts – 20 years for most technologies Price certainty over a fixed time Retail Price Index (RPI) Payment levels are performance based 7

8. The RHI, as originally planned Announced on 10 th March 2011 World first First phase until 31 st March 2012 – Non-domestic – metered heat – Domestic – limited to £12m via voucher scheme Second phase from 1 st April 2012 – Non-domestic – additional technologies – Domestic – similar to Feed in Tariff 8

9. What actually happened Non-domestic scheme – Phase 1 Launched 28 th November 2011 – Phase 2 Consultation to extend to new technologies Air quality and biomass sustainability issues July 2012 9

10. Applicable technologies Heat generation and Bio-methane production Biomass boilers (including CHP biomass) Solar thermal Ground source heat pumps Water source heat pumps Deep geo-thermal Energy from municipal waste On-site biogas Injection of bio-methane into grid 10

11. Non-domestic RHI Tariff Rates Tariff nameTechnologyEligible sizeRate Small Biomass Tier 1Solid biomass/solid waste (CHP)< 200 kWth8.3p Small Biomass Tier 2Solid biomass/solid waste (CHP)< 200 kWth2.1p Medium Biomass Tier 1Solid biomass/solid waste (CHP)200 - 1000 kWth5.1p Medium Biomass Tier 2Solid biomass/solid waste (CHP)200 - 1000 kWth2.1p Large BiomassSolid biomass/solid waste (CHP)> 1000 kWth1.0p Small Heat PumpsGround & water source, deep geothermal < 100 kWth4.7p Large Heat PumpsGround & water source, deep geothermal > 100kWth3.4p Solar collectorsSolar thermal collectors< 200 kWth8.9p Bio-methane/BiogasInjection & Combustion, not landfill gas All scales7.1p 11

12. Tier 1 and 2 Tier 1 rate purpose is to compensate heat users for the installation and fuel costs. Tier 2 tariff is slightly lower than the fuel cost to incentivise not wasting heat. Tier 1 applies annually up to the Tier Break (installed capacity x 1,314 peak load hours, i.e. kWth x 1,314) Tier 2 applies above the Tier Break. 12

13. What happened - Domestic Renewable Heat Premium Payments – Voucher scheme operated by the Energy Saving Trust from 21 st July 2011 to 31 st March 2012 – 26 th March 2012 Extended in light on lengthy consultation Not coinciding with Green Deal – October 2012 – Summer 2013 13

14. Renewable Heat Premium Payment - RHPP For domestic properties - £12m (Phase 1) £3m through Social Housing projects Solar thermal (any property) - £300 Air Source Heat Pumps - £850 Ground Source Heat Pumps - £1,250 Biomass - £950 Phase 2 – additional £10m

15. Cost Control Measures - Timeline RHI from general taxation September 2012 – Extending to other technologies and Deployment of household Renewable Heat Incentive End of financial year – Cost Control Regime policy to be implemented Summer 2013 – Domestic RHI to be introduced 15

16. Access to payments Microgeneration Certification Scheme (MCS) – Up to 45kWth for heat generation MCS Products and Installation Companies – Standards and levels competency – Building Regulations Compliance Certification through one of 16 bodies REAL Assurance Scheme Over 45kWth direct to Ofgem 16

17. A Mark of Quality Certification Body Certification Body

18. RHPP Phase 1 Statistics August 2011 to March 2012 £2.95m (less than 25% take up) 18 TechnologyVouchers issuedVouchers paidConversion rate Solar thermal2479127751.5% Ground source138971051.1% Air source2571134852.4% Biomass99656957.1%

19. RHI Non-domestic Statistics 28 th November 2011 to 31 st March 2012 20 installations accredited 5.25MW total capacity – 80% Biomass – 15% Ground source heat pump – 5% Water source heat pump 376 applications (5.3% successful) – Incomplete, insufficient detail, inconsistencies 19

20. The big question... Uncertainty or opportunity? 20

21. Opportunities On site generation High heat demand – Short payback periods – Minimal transmission losses Cross fertilising initiatives – Stimulated by Green Deal New build agenda – CfSH, Passivhaus, home economics 21

22. Burning questions? or Q&A at the end 22

23. Consultancy and Advisory Service Carbon reduction project management Supply chain development Passivhaus and Code for Sustainable Homes Certificated and bespoke training courses Sustainable Construction options appraisal paulb@zerocarbonbritain.co.uk Zero Carbon Britain