stem project renewable energy is it the right decision for your business? october 1 st 2013

STEM Project

Renewable EnergyIs it the right decisionfor your business?

October 1st 2013

Agenda

Introduction The risk finance journey Resource Grid Planning Finance Technology considerations & information sources Summary

STRATEGY SUSTAINABILITY SAVINGS

Chemical energy (gas, oil, biomass etc):

• Can be burned to produce electricity or heat

• Can be transported and stored easily

Electricity:

• Can use it for anything

• Easy to transport in a wire, hard to store

Low grade heat:

• Can only use it for heat

• Not very transportable, possible to store

Introduction - Energy


Max Fordham Consulting Engineers

Impact on energy Cost

Free? Dull

Interesting Bolt-on

Perception

Integrated Design

Expensive

Cheap

Energy Management

Energy Efficiency

Cheap Renewables

Expensive Renewables

Fuel Cells etc

Introduction - Technology Perception


Carbon Trust

Introduction - Carbon Abatement


Verifiable Resource

Planning Permission

Grid Connection

Construction

Operation

Revenue

RISK RETURN

Fundable or saleable project

The Risk Finance Journey


Wind – wind speed (@10m @ hub height) Hydro – hydrology, hydraulic head, abstraction Biomass – feedstock security and quality Anaerobic Digestion - feedstock security and

quality Solar – insolation and shading

Banks and funders will want to know…

Available resource and incentive thresholds…

Resource, Resource, Resource


Scale – 11kV or 33kV Nearest connection Who else is on the line Who else is in the queue Distance to substation Likely connection costs Elapsed time to connection agreement

Grid


Substation

11 kV

11kV33kV

11kV£70k

£150k

£4m

£ ???

£500k

£120k

Grid


PPS 18 in NI DOE RE Planning Statistics

Scale of project Impacts - EIA Ecology

Agents and consultants

Costs

Planning


Business Case USP Financial Models - RETScreen?

Funders – perceived risk, redundancy

funding for some RE projects is very challenging due to risk perception

Finance


Republic of Ireland- Renewable Energy Feed-in-Tariff

(REFIT)

Northern Ireland- Renewable Obligation Certificates- Renewable Heating Incentive

(RHI)

Policy creepGreat Britain- Feed In Tariffs – Degression!- ROCS- Contracts for difference incoming- Renewable Heating Incentive

(RHI)

Timing!

Incentives


• There have been three separate schemes known as REFIT 1(2006) REFIT 2(2012) and REFIT 3(2012)

REFIT 1• officially launched on 1st May 2006.

• The fixed price tariffs can be seen below:- Wind (Large scale) >5MW: 5.7 cent/kWh- Wind (Small scale) <5MW: 5.9 cent/kWh- Biomass landfill gas: 7.0 cent/kWh- Hydro & other Biomass: 7.2 cent/kWh

• In 2009 additional Categories (other than Hydro, wind & biomass)were added to the established 2006 REFIT.

• The reference prices for the additional technologies were as follows:

- Anaerobic Digestion: €0.12/kWh- High Efficiency CHP: €0.12/kWh (only for High Efficiency)- Ocean Energy: €0.22/kWh- Offshore Wind: €0.14/kWh

ROI – Renewable Energy Feed in Tariff (REFIT)


Officially launched in March 2012

• Incentives are given to the generators of selected renewable technologies which have been commissioned between 01/01/2010 - 31/12/2015.

• Available for 4,000MW of onshore wind, hydro & landfill gas.

• The reference price for each technology is shown below:- Onshore Wind (>5MW): €66.35/MWh- Onshore Wind (<5MW): €68.68/MWh- Hydro (<5MW): €83.49/MWh- Biomass (Landfill gas): €81.49/MWh

• The support for any particular project cannot exceed 15 years and may not extend beyond 31/12/2030

• REFIT 2 is not payable for electricity generation consumed onsite

REFIT 2


Officially opened in February 2012

• Incentives are given to the generators of selected renewable technologies which have been commissioned between 01/01/2010 - 31/12/2015

• Available for 310MW of anaerobic digestion, biomass CHP & biomass combustion

• Technology limits to the incentives under REFIT 3 are; 50MW for AD (including CHP), 100MW for Biomass CHP and 160 MW for Biomass Combustion.

• The reference price for each technology is shown below:- AD CHP (K500kW): €0.15/kWh- AD CHP (>500kW): €0.13/kWh- AD Non CHP (K500kW): €0.11/kWh- AD Non CHP (>500kW): €0.10/kWh- Biomass CHP (K500kW): €0.14/kWh- Biomass CHP (>500kW): €0.12/kWh

• Biomass Combustion Technologies (non CHP) which use energy crops will get 9.5cent/kWh and all other biomass will get 8.5cent/kWh.

REFIT 3


• The main support mechanism for renewable energy generation in the UK

• First introduced in GB in April 2002

• Adopted by Northern Ireland in April 2005 as the NIRO.

• Prior to 1st April 2009 all renewable electricity generation technologies received 1 ROC/MWH generated

• However, banding of the RO was introduced in April 2009 to allow different levels of support for different technologies depending on their stage of development and their costs, with reviews of banding levels set to be undertaken every four years.

• Certificates can then be sold to electricity suppliers who are legally required to purchase ROCs to show that a specified quantity of electricity supplied can be accounted for by generation of renewables.

NI Renewables Obligation (NIRO)


Technology Current (2012/ 13)

Confirmed ROC Levels 2013/14 2014/15 2015/16 2016/17

Anaerobic digestion (≤ 500kW)

4

4

4

4 4

Banding levels from 2015/16 subject to further review

Anaerobic digestion (500kW – 5MW)

3

3

3

3 3


Anaerobic digestion (above 5MW)

2 2 2 1.9 1.8

Hydro (≤ 20kW)

4 4 4 4 4 Banding levels from 2015/16

subject to further review Hydro (>20kW – 250kW)

3

3

3

3 3 Banding levels from 2015/16

subject to further review Hydro (>250kW – 1MW)

2

2

2


subject to further review Hydro (>1MW – 5MW)

1

1

1


subject to further review Hydro (>5MW)

1 0.7 0.7 0.7 0.7

Onshore wind (≤ 250kW)

4 4 4 4 4 Banding levels from 2015/16

subject to further review Onshore wind (>250kW – 5MW)

1

1

1


subject to further review Onshore wind

Sample of ROC/MWh Levels from 1st May 2013

DETI, 2013


Onshore wind (Above 5MW)

1

0.9

0.9

0.9

0.9


Offshore wind

2

2

2

1.9

1.8

Solar photovoltaic (up to 50kW)

4

4

4

4 4 Banding levels from 2015/16 subject to

further review Solar photovoltaic (>50kW to 250kW)

2

2

2

2 2 Banding levels from 2015/16 subject to

further review Solar photovoltaic – Ground mounted >250kW

2

1.6

1.4

1.3

1.2

Solar photovoltaic –Building mounted >250kW

2

1.7

1.6

1.5

1.4

Sample ROC levels – 1st May 2013


• In May 2012 the Renewable Heat Premium Payment scheme was launched as an interim scheme to the RHI

• Phase 1 of the RHI was Launched in NI in November 2012 with a budget of £25 million up to 2015

• Phase 1 concerns Non-domestic installations of renewable heat

• Phase 2 (Domestic installations) launched in Autumn 2013

The technologies that are to be covered under phase 1 of the RHI are:

- solid biomass and solid biomass contained in municipal waste (including CHP)

- ground and water source heat pumps,- geothermal (including CHP) - solar thermal (at capacities of less than 200 kWth) - biogas combustion (except from landfill gas but including CHP; at

capacities of less than 200 kWth)- biomethane injection.

NI Renewable Heating Incentive (RHI)


Tariff Name Eligible Technology

Size Range (kW)

NI RHI Tariff (p/ kWh)

Length of Tariff

Biogas I njection

Biomethane injection & biogas combustion (except landfill gas)

Biomethane all scaled; Biogas combustion less than 200kWth

3.0 20 years

Biomass Boilers

Solid Biomass; Municipal Solid Waste (inc.CHP)

Less than 20kWth

6.2 20 years

20kWth and above up to but not including 100kWth

5.9 20 years


1.5 20 years

Ground Source Heat Pump

Including water source heat pumps and deep geothermal

Less than 20kWth

8.4 20 years


4.3 20 years

100kWth and above

1.3 20 years

Solar Thermal

Below 200kWth

8.5 20 years

NI RHI Tariffs


Technologies

CTG011www.carbontrust.co.uk/publications

http://www.seai.ie/Publications/

Renewables_Publications_/


Technologies - Wind

Considerations:

• Scale

• Noise

• Flicker

• Visual Impact

• Ecology

• Transportation

• Grid connection


Site electrical generation and consumption

0

500

1000

1500

2000

2500

3000

3500

04/1

2/20

03

01/0

1/20

04

29/0

1/20

04

26/0

2/20

04

25/0

3/20

04

22/0

4/20

04

20/0

5/20

04

17/0

6/20

04

15/0

7/20

04

12/0

8/20

04

09/0

9/20

04

07/1

0/20

04

04/1

1/20

04

DAYS

kW

h p

er

da

y

Building consumption

Net wind generation

Technologies - Wind


Considerations:

• High head low flow

• Low head high flow

• Turbine type

• Ecology

• Civil costs

• Resource

Technologies - Hydro

STRATEGY SUSTAINABILITY SAVINGSCarbon trust images

Considerations:

• PV or Thermal

• Insolation

• Shading

• Roof structure

• Matching demand

• Cleaning

• Guarantees

Technologies - Solar


Solar thermal Photovoltaic

Technologies - Solar


Technologies - Biomass

Considerations:

• Size

• Pellet or chip or other

• Water, Steam, Gasification

• Fuel supply

• Contract terms

• WID


Technologies - Biomass


Technologies – Anaerobic Digestion

Considerations:

• Advanced

• All revenue streams

• Blend of feedstock

• Feedstock security

• Long term commitment

• Operation and maintenance

• Grid


Technologies – Anaerobic Digestion


• Prioritise the business case for all your options

• Exhaust all more cost effective alternatives

• Identify, verify and secure your resource

• Identify the most cost effective technology

• Produce project finance model

• Minimise your risk finance journey

• Get planning permission and any other consents

• Get a grid connection

• Secure equipment guarantees and maintenance costs for the lifetime of the project

Summary


Facilities and Energy Management Ltd250 Ravenhill RoadBelfastBT6 8GJ T: +44 (0) 8456 891 257M: +44 (0) 7513 994 936F: +44 (0) 2890 466509E: [email protected]: www.fandem.co.uk

Thank youfor listening

stem project renewable energy is it the right decision for your business? october 1 st 2013

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