The Renewable Heat Incentive

Heating – RHI

RHI First Announcement

July 2009

2009 2015 2013 2012 2011 2010 2014

Non Domestic RHI begins

(Phase I)

Inclusion of ASHP in non domestic

(phase I)

Extension of RHPP Plus Social and Community

Competition

Domestic RHI to begin

(Phase II)

Ground Source Heat Pumps

Air Source and Ground Source

Heat Pumps

Air Source and Ground Source

Heat Pumps

Air Source and Ground Source

Heat Pumps

Planned Activity

Expected Outcome

Increased tariffs for Air and

Ground Source

Domestic

Non-Domestic

The Renewable Heat Incentive (RHI) is the world’s first long-term financial support for generation of renewable heat. DECC launched the RHI in November 2011 with a scheme for the non-domestic sector that provides payments to industry, businesses and public sector organisations. They have now set out plans for providing longer term support for homeowners in the domestic sector.

Heating – RHI

So what is it? DECC will pay for the generation of renewable heat via:

•  Air to Water Heat Pumps •  Ground to Water Heat Pumps •  Biomass Boilers •  Solar Thermal

This is designed to level the playing field and allow all these technologies to compete against traditional fuels.

Heating – RHI

The Domestic Scheme

Heating – Tariffs The tariff is paid for either 7 years (domestic) or 20 years (non-domestic). It is paid to the equipment owner to counter the difference in cost to a traditional heating system. There are 3 inputs to the tariff calculation:

Capital Cost

Hassle Factor

Running Cost

Heating – Tariffs So does a big tariff mean that the financial reward is greater? Simply put - No. The tariffs are designed to deliver compensation for the additional cost incurred for having chosen that particular renewable technology over a traditional system.

Life

time

cost

£/7

year

s Has

sle

fact

or

Ope

x C

apex

*All values are indicative only not absolute

Life

time

cost

£/7

year

s Has

sle

fact

or

Ope

x C

apex

*All values are indicative only not absolute

Life

time

cost

£/7

year

s (C

apex

, Ope

x, H

assl

e fa

ctor

) RHI tariff calculated to repay the difference and give ROR - 12%

The goal of RHI is to level the playing field

*All values are indicative only not absolute

These tariff levels are paid for every kWh of renewable heat delivered to a property. The total required annual heat demand will be calculated by an assessment called Green Deal, that uses a method called RDSAP (Reduced SAP) to calculate the energy requirement.

Heating – The Tariffs

Market Focus

The primary focus of the incentive is to encourage the installation of renewable technology within retrofit single dwelling installations, this will include systems installed in:

•  Owner-occupiers •  Private landlords •  Registered providers of Social Housing •  Self-builders •  Third-party owners of a heating system

Heating – Market Focus

The reason for new build not being included is that DECC feel the building regulations will enforce low carbon solutions for the new build sector and therefore no incentive is needed.

A system that heats more than one dwelling whether new build or retrofit (including multiple flats in a single building) will be managed within the non-domestic RHI scheme. Details of the non-domestic scheme for air source and an increase in the tariff for ground source for this type of application is due to be announced Summer 2014.

Heating – Market focus

The Green Deal

The Green Deal is a new way to pay for energy-saving home improvements, without paying the whole cost upfront. A Green Deal finance option is made available to pay for measures such as loft, cavity or solid wall insulation and double glazing. This is different to a standard loan, because the repayments that are made on the energy bill will be covered by the savings. This is the so called ‘Golden Rule’ where the repayments should not be more than the savings on the energy bill.

Heating – Green Deal

Eligibility criteria for the RHI application requires that the owner has completed: •  A Green Deal assessment, not necessarily taking the finance

o  This assessment will report the insulation levels and energy requirements for the property

•  Minimum insulation levels must then also be met o  250mm loft insulation o  Cavity wall insulation (if cavity walls exist)

Heating – Green Deal

Heating – Green Deal

Green Deal assessment by

an advisor

Option to take Green Deal

Finance

Minimum RHI insulation criteria met or improved with the option of

finance

RDSAP and the EPC

The assessment method used within the green deal is RDSAP. This is a modeling programme designed to calculate the thermal properties of the home and the occupants hot water usage. This information is delivered in the form of a number e.g. 15,000kWh – a measure of the energy required to keep the property warm during the heating season. This number is then used alongside a seasonal performance measure of the heat pump to calculate the renewable contribution.

Heating – RDSAP

EPC output pages are not enough to gain the correct information to run models of the RHI payments. Its important to get the RDSAP model information which explains the full energy requirement for the heating and hot water. Without this modeling it is very difficult.

Heating – RDSAP

Why is a Heat Pump Renewable?

Heating – Renewable Energy

The COP (Coefficient of Performance) of a heat pump is calculated by: The Seasonal Performance (SPF or SCOP) is calculated over a heating season by: Seasonal performance is a key measure of a heat pump and quite often not used by manufacturers of lower quality equipment

Heating – Renewable Energy

𝐶𝑂𝑃= 𝑃𝑜𝑤𝑒𝑟  𝑂𝑢𝑡𝑝𝑢𝑡  (𝑘𝑊)/𝑃𝑜𝑤𝑒𝑟  𝐼𝑛𝑝𝑢𝑡  (𝑘𝑊) 

SPF/SCOP= 𝐸𝑛𝑒𝑟𝑔𝑦  𝑂𝑢𝑡𝑝𝑢𝑡  (𝑘𝑊ℎ)/𝐸𝑛𝑒𝑟𝑔𝑦  𝐼𝑛𝑝𝑢𝑡  (𝑘𝑊ℎ) 

The calculation of the renewable contribution can be made by using the following formula: This is an important aspect in the impact that RHI and the system running costs will have on the installation – the higher the SPF the higher the renewable contribution.

Heating – Renewable Energy

𝑅𝑒𝑛𝑒𝑤𝑎𝑏𝑙𝑒  𝐶𝑜𝑛𝑡𝑟𝑖𝑏𝑢𝑡𝑖𝑜𝑛=𝑇𝑜𝑡𝑎𝑙  ℎ𝑒𝑎𝑡  𝑟𝑒𝑞𝑢𝑖𝑟𝑒𝑑  ×1−(1/𝑆𝑒𝑎𝑠𝑜𝑛𝑎𝑙  𝑃𝑒𝑟𝑓𝑜𝑟𝑚𝑎𝑛𝑐𝑒 )

15,000𝑘𝑊ℎ×1−(1/3.2  𝑆𝑃𝐹 )=𝟏𝟎,𝟑𝟏𝟐𝒌𝑾𝒉

Good Heat Pumps

Alongside Good Applications

The driving force behind quality installations will be MCS (Microgeneration Certification Scheme). This scheme comes in two parts, the installer and the product, both of which need to be MCS registered in order for the installation to be eligible. Firstly the product, the product undergoes vigorous testing and scrutiny in order to ensure it will deliver the performance it says it will. The scheme covers heating technology up to 45kWth - however the domestic scheme covers all habited building sizes regardless of the heating capacity.

Heating – MCS

Products are then listed on the MCS website to allow the installer to make a choice of which product to choose. The list includes many technologies some of which are not necessarily eligible to receive RHI.

Heating – MCS

So what about the installer and the application? All installers effectively go through an ISO9001 audit in order to assess whether they operate standards within their company and provide consistently good installations.

Heating – MCS

One very important area of responsibility for the installer is deciding how to set up the system to achieve high levels of efficiency, this is primarily delivered through MIS3005 and the heat emitter guide.

The installer will need to explain to the user (and also to MCS) how the system is set up and therefore the flow temperature chosen to deliver heat to the home. This is done in the form of a star system – 1 to 6 stars.

Heating – MCS

This star relates to a seasonal performance and this can then be used to calculate the RHI payment. The higher the SPF the higher the payment.

Heating – MCS

Worked Example

The below worked example shows an installation as below: •  4 bedroom detached property •  25,000kWh energy requirement •  Loft and cavity insulation •  Electricity price 13p/kWh, Oil price 5p/kWh (90% efficient) •  RHI tariffs are linked to inflation – 2.5% currently •  ASHP tariff set at 7.3p/kWh for the first year •  8.5kW Ecodan fully installed cost with packaged cylinder •  4 Star installation – Heat Emitter guide SPF 3 •  Ecodan true SPF 3.25 – Inverter driven •  RHI Payments based on 4 star SPF, savings based on Ecodan SPF •  The load factor is a calculation based on:

25,000kWh (energy) / (8760 (hrs in year) * 8.5kW (HP capacity)) = Load Factor

Heating – Worked Example

Heating – Worked Example

Heating – Worked Example

The RHI payments make this system payback period very reasonable and give a good ROR (rate of return) on the investment made. Most importantly though is that the running cost savings are a significant proportion of the benefit to the user and these savings are made by choosing high quality kit with a proven track record of delivering savings.

Heating – Worked Example

What is the Minimum Seasonal Performance to be

Considered Renewable?

The EU Renewable Energy Directive states: “Heat pumps enabling the use of aerothermal, geothermal or hydrothermal heat at a useful temperature level need electricity or other auxiliary energy to function. The energy used to drive heat pumps should therefore be deducted from the total usable heat. Only heat pumps with an output that significantly exceeds the primary energy needed to drive it should be taken into account.”

Heating – Renewable Directive

45.5%

45.5% - is the EU27 (27 European countries) average grid efficiency

Heating – Renewable Directive

Minimum = 2.53

Heating – Renewable Directive

Hybrid Systems

- Must be monitored

Hybrid or Bivalent systems are a real option for hard to treat properties. They allow the user to switch between a traditional heating system and a heat pump easily and smoothly. They can be set up to switch based on minimum CO2, running cost or based on an ambient temperature changeover. Under RHI the installer must use an MID approved heat meter to monitor the output from the heat pump. The reason for this is that there is the possibility of a user only using the traditional system and not actually running the renewable technology.

Heating – Hybrid

Heating – Hybrid Monobloc

Heating – Hybrid Split

RHI High Performing

Heat Pumps– Payment for allowing

monitoring

Heating – DECC Monitoring DECC will offer householders installing heat pumps an optional additional payment of £230 per year for purchasing a Metering and Monitoring Service Package from their installer. This package will give users peace of mind that their installation is working as expected; enable the installer to continually improve performance where possible; and also to diagnose common problems if they occur. Payments for Metering and Monitoring Service Packages will be available on a first come, first served basis to 2,500 applicants in the first year of the scheme. So installers need to move quickly on this.

Monitored Sites -

Dashboard

Heating – Monitored Sites We now have over 80 monitored sites in order to provide and an open honest depiction of heat pump performance in the real world. Some of these are visible to the public on our Ecodan dashboard.

Visit http://heating.mitsubishielectric.co.uk

RHI Tools

Heating – RHI Tools Mitsubishi Electric will soon be launching a tablet/iPad app (also available on the web) in order to promote Ecodan and also show the benefits of RHI to the user.

This will be coming soon…

What’s in the Small Print?

Heating – RHI Small Print Customer protection – MCS certified installers must also be members of the Renewable Energy Consumer Code which sets out standards that installers must meet in contracting with domestic consumers. The Code is backed by the Trading Standards Institute under its Consumer Codes Approval Scheme. The Code covers advertising and promotion, behaviour of sales staff, proposals, estimates and quotes, terms of business, cancellation rights, deposits and prepayments, guarantees, maintenance and service agreements and service and repair. Guidance for consumers is provided at the following link: http://www.recc.org.uk/consumers

Budget Management - The main method of controlling the budget for the domestic RHI will be degression (lowering) of the tariffs paid to new applicants as more renewable heating systems are installed. Tariffs will be reduced as spend on the domestic scheme reaches certain “triggers” (expressed as an amount of budget). This is the same method that is used for the non-domestic RHI scheme.

Maintenance – It is important that renewable heating systems are regularly maintained to ensure they are working well. Applicants will need to confirm that their system is operating correctly as part of the application process, and if they are accredited on to the scheme will need to confirm annually that their system is being maintained according to the manufacturer’s instructions.

Legacy Applications

Heating – Legacy Applications We have produced a separate leaflet to cover this information. But legacy applications are eligible to apply for from 15th July 2009, but must meet the same criteria set up for the scheme now. This may mean some changes in order to ensure the schemes money is spent correctly. Applications for legacy installs will be invited in a phased programme in order to not overload the administrative body (Ofgem).

Thank you

BACK UP SLIDES

Why is a Heat Pump Renewable?

Renewable Heat Pump? P

RE

SS

UR

E

ENTHALPY (ENERGY)

Liquid Vapour (Gas)

Electricity

Total Energy Delivered

Renewable Energy

Evaporator

Condenser

Expa

nsio

n Isotherms

PR

ES

SU

RE

ENTHALPY (ENERGY)

Liquid Vapour (Gas)

Electricity

Total Energy Delivered

Renewable Energy

Evaporator

Condenser

Expa

nsio

n Isotherms

Renewable Heat Pump?

Electricity

Total Energy Delivered

Renewable Energy

Evaporator

Condenser

Expa

nsio

n

Renewable Heat Pump?

COP

Renewable Heat Pump?

COP Electricity

Total Energy Delivered 3.2kWh

1kWh

ERP Coming in the Future for Heating

Renewable Energy Directive

Renewable Energy Directive

A+++A++

DCBAA+

EFG SCOP < 0,75

0,75 ≤ SCOP < 0,850,85 ≤ SCOP < 0,930,93 ≤ SCOP < 1,881,88 ≤ SCOP < 2,052,05 ≤ SCOP < 2,252,25 ≤ SCOP < 2,452,45 ≤ SCOP < 3,133,13 ≤ SCOP < 3,75

SCOP > 3,75

98 % ≤ ηs < 125 %125 % ≤ ηs < 150 %

ηs > 150 %

90 % ≤ ηs < 98 %82 % ≤ ηs < 90 %75 % ≤ ηs < 82 %37 % ≤ ηs < 75 %34 % ≤ ηs < 37 %30 % ≤ ηs < 34 %

ηs < 30%

A+++A++

DCBAA+

EFG SCOP < 1,38

1,38 ≤ SCOP < 1,481,48 ≤ SCOP < 1,551,55 ≤ SCOP < 2,502,50 ≤ SCOP < 2,682,68 ≤ SCOP < 2,882,88 ≤ SCOP < 3,083,08 ≤ SCOP < 3,753,75 ≤ SCOP < 3,88

SCOP > 4,38

123 % ≤ ηs < 150 %139 % ≤ ηs < 175 %

ηs > 175 %

115 % ≤ ηs < 123 %107 % ≤ ηs < 115 %100 % ≤ ηs < 107 %62 % ≤ ηs < 100 %59 % ≤ ηs < 62 %55 % ≤ ηs < 59 %

ηs < 55 %

ηs2,25 90 %

SCOP2014 ηs2,88 115 %

SCOP55 ˚C 35 ˚C

ηs2,50 100 %

SCOP2016 ηs3,13 125 %

SCOP

2014 2016

Renewable Energy Directive HHP  -­‐  Full  Load  Equivalent  Hours

Heat  Pump  Energy  SourceEnergy  source  and  distribution  medium

HHP SPF (SCOP  net) HHP SPF (SCOP  net) HHP SPF (SCOP  net)

Aerothermal  energy Air-­‐Air 1200 2.7 1770 2.6 1970 2.5

Air-­‐Water 1336 2.7 2066 2.6 3465 2.5

Air-­‐Water  (Load  lower  than  rated  output  -­‐  supplementary  heater)

1170 2.7 1640 2.6 1710 2.5

Air-­‐Air  (Reversible) 480 2.7 710 2.6 1970 2.5

Air-­‐Water  (Reversible) 470 2.7 660 2.6 1710 2.5

Exhaust  Air-­‐Air 760 2.7 660 2.6 600 2.5

Exhaust  Air-­‐Water 760 2.7 660 2.6 600 2.5

Geothermal  energy Ground-­‐Air 1340 3.2 2070 3.2 2470 3.2

Ground-­‐Water 1340 3.5 2070 3.5 2470 3.5

Hydrothermal  energy Water-­‐Air 1340 3.2 2070 3.2 2470 3.2

Water-­‐Water 1340 3.5 2070 3.5 2470 3.5

Warmer  Climate Average  Climate Colder  Climate

How do you Calculate

SPF?

Seasonal Efficiency

BS EN 14825 A new industry standard calculation for the true performance of heat pump technology.

A Long Time Coming… The industry has been crying out for a consistent industry standard methodology for calculating the performance of heat pump technology over the course of a heating (SCOP) or cooling (SEER) season. This new European standard, although still in draft today, paves the way towards all manufacturers measuring the true efficiency of their system in a consistent, open and more accurate manor.

Boundary for Heat Pumps

Methodology The new standard considers the following variables when calculating the seasonal efficiency, SEER and SCOP –

1.  Heat Source Temperature 2.  Fixed speed/Inverter Technology 3.  Design Condition 4.  Indoor/Flow temperature 5.  Weather compensation

By considering all these variables, an accurate assessment of the seasonal performance can be made. (This only takes into account heating, not DHW)

The Best Setup… Following the standard the best SCOP and SEER are gained by – •  Size the heat source to 100% of the design load •  Use of weather compensation •  Use of inverter driven technology •  Use of cascade control with multiple units •  Sizing heat emitters on the lowest possible flow temperature

The Best Setup… What this all means is, in time manufactures will publish more than just capacity and COP at A7W35 EN14511.

This ensures that manufacturers are honest and open about the capability of their kit and the customer can make an educated choice about which unit to purchase.

This is something we have advocated for some time and will continue to push for.