Green Energy Republic

Putting your money where your mouth is

 

 
In 1991, Peter and Martin Edwards, father-and-son farmers, began a long and pioneering association with wind power. What began as a wild idea over the kitchen table ended with the family selling its 150-strong dairy herd and milk quota in order to part fund the investment needed to set up the UK’s first commercial wind farm at Delabole, Cornwall. In 2002, Good Energy bought the wind farm, which gave the Edwards’ the chance to become shareholders and Martin became non-executive director of Good Energy Group. Shares were distributed to all members of the family, including Peter’s five grandchildren who are all avid supporters of renewable energy. Martin Edwards said: “As a family we believe in the need for a 100% renewable energy future, so putting our money where our mouth is the best way of making this a possibility, while still getting a reasonable return. Our children have all been given shares to stimulate their interest in a sustainable future.”

Another of our shareholders is Stewart Dodd, who runs the sustainable architecture practice Satellite Architects. Stewart is a long-standing Good Energy customer, who first switched his home supply to us in 2005, and subsequently his business. “We are concerned about all aspects of our business being sustainable, we design low carbon, low impact sustainable buildings so it’s imperative that we practice what we preach,” Stewart explains. “All the projects we specify are environmentally conscious and we suggest to every client that they sign up to Good Energy on completion of the project, as the only way to be truly sustainable is to have a green grid. Good Energy is the closest thing we have to this in the UK.”

 
From being a customer it was a short step to becoming a shareholder – Stewart and his wife, Kristin, bought shares in the company in our third share offering in 2007. “As a small ethical company with a good product, investing in Good Energy felt like an opportunity to make a difference - and it fits with  our ethos. We try to invest ethically as much as we can, including our child’s trust fund,” he says. “Being both a customer and a shareholder gives you a sense of commitment and there is no doubt that I recommend Good Energy more because I'm a shareholder, as I feel invested in more than just the good cause.”

Good Ownership – how our customers have helped us to grow

 

 
Most people know that Good Energy is unique because of our 100% renewable electricity fuel mix.  It’s less well known that we are also largely owned by our customers – something we’re rather proud of, and a big point of difference with other energy companies.

Since Good Energy was first founded in 1999, we’ve always listened to what our customers want – and have made some key business decisions, like launching our award-winning Homegen product, in response to their feedback.  So in 2002, when we decided to raise capital and launched our first public share offering, we were delighted that more than 600 of our customers bought shares in the company. The funds we raised enabled us to buy Delabole wind farm in Cornwall, and to further expand the business.

We made two further share offerings in 2004 and 2007, raising additional funds from the public and our growing customer base, with many customers coming back for a second bite of the cherry. This provided us with the buffer we needed to be able to grow the company to over 26,000 customers and travel the sometimes rocky road of trading renewable energy. Funds from the third share offering also provided much of the capital we needed to invest in redeveloping Delabole wind farm, to more than double its output.

To date we’ve raised £2.7 million through share offerings, and the Good Energy Group has around 1700 shareholders, some 90% of whom are also our customers.

Good Energy Group plc, is the holding company for Good Energy’s electricity and gas supply businesses, Good Energy Generation and Good Energy Shop.  Ordinary shares in Good Energy Group are listed on Plus Markets.

We’re also investigating ways in which our existing customers and local communities will be able to participate financially in our new prospective wind farm developments. We’ll be making an announcement about this soon, so watch this space

Rewarding our shareholders

 

 
In December 2010 the Board decided to give our shareholders the good news that Good Energy Group would start paying dividends, and made a first payment of 2.5 pence per ordinary share. Our chairman, John Sellers, said: “As the company continues to go from strength to strength we feel the payments of dividends should be part of our natural evolution – and that our shareholders are entitled to a cash return for supporting our mission to help the UK achieve a 100% renewable future.”

Employee partnership

 

 
As well as offering our customers the chance to invest in our business, we also want to offer the same opportunities to our staff. So we’re planning to launch a Good Energy Employee Share Scheme, giving all permanent members of staff the ability to benefit from buying shares in the company. Our CEO, Juliet Davenport said: “Good Energy wouldn’t have achieved as much as we have without the hard work and commitment of our fantastic team. So it is only right that they should be able to share in the success of the company by being able to invest in it.”

Disclaimer: This article does not constitute any form of advice, recommendation or arrangement by Good Energy and is not intended to be relied upon by you in making any specific investment or other decisions. Appropriate advice should be obtained before making any such decision. 

Roofs, yes. But PV or not PV – that’s the question

Secret files on solar energy collaborator, Part 1:  Dave Hampton

EVIDENCE
9-panel, 1.66KWpeak, photovoltaic (PV) solar panel installation

LOCATION
on the Carbon Coach’s home in Marlow, Bucks

COST
£10,000 all inc

SUPPLIER
Freesource, Good Energy’s chosen renewable energy installation partner

ACCOMPLICES
Transition Town Marlow 100 Solar Panel project:http://www.transitionmarlow.org/index.php?p=1_2_Solar

The low-carbon detectives are on my trail. Here’s my review of the installation.

I am delighted to report that my PV panels are up, on the roof, and generating much clean raw power, plus useful cash.  The panels are of course being very closely watched and monitored, by me, and by my friends and Marlow neighbours.

They make me feel deeply and inordinately happy. I get waves of pleasure just to see my powerful panels and to witness their production of sustainable energy.

They look good, feel good, are in good taste, and, by golly, they do you good!

Hi-visibility roof coat
My installation is on the side roof, the exposed side of our house which is on a corner plot.  The nett (curtain) effect of which is that my panels are quite noticeable to passers by. I view my panels with as much awe and admiration as I would a Picasso original. They are both a work of genius.

The elegant clean lines, the silver and dark blue crystalline refraction/reflection effect, the large-tile-upon-small-tile pyramid cubist design. The light and shade, the diametric composition of juxtaposition and orthogonality…

None of my neighbours seems unhappy about the installation. One said he didn’t exactly find them attractive, but neither did he notice them much. Most neighbours are interested in how we get on with them.

One household is having a survey, and is currently deciding if they want to go solar.  I hope they will.

Local nuclear – or new clear vision

If some people insist they really ‘don’t like the look’, then I suppose I could ask them if they would prefer a small local nuclear power station – somewhere near them – in Marlow on (cooling water) Thames instead?

Some of my friends are positive or neutral about nuclear, but I don’t think any would welcome it within 50 miles of their home town, let alone bolted onto their roof. Like my micro ‘nuke’ is…

My solar PV installation is in effect a local nuclear power harnessing plant, human scale, with the core reactor located a nice, safe distance away. (93 million miles: The Sun.)

The waste trail you don’t see
Upstream in the supply chain, to make my solar panels and kit, if you think about it, is an alarming trail of waste, mining, manufacturing and energy use, from all over the world. Long before they generate their first unit of clean power in Marlow, my beloved panels have left some sort of trail of pollution behind them. But here’s the deal. It’s not big.

In ball park terms, the upstream damage, the ‘eco-baggage’ that my panels arrived with from day one, amounts to some 1000kg of greenhouse gas equivalent impact. They will pay that back in full within two years.  They will sweep up all their own eco-mess, their footprint in manufacture etc, during the first two years of operation.  Thereafter, for the next 20 years or more, they will be sweeping up other people’s pollution – and fully be in (planetary) credit, increasingly so, for each year they keep on keeping on.

In carbon terms, my panels weigh less than minus 10 tons – over their lifetime!

This thought gives me a little lift.  Like the balloons in the movie ‘UP’, my panels uplift me.

In less than 20 years, well before my 70th birthday, my panels will have saved a nett 10 tons of CO2, after taking into account the CO2 involved in manufacture and transport. And they will have saved, at a power station, over their lifetime, the equivalent of around 20 barrels of oil being burnt as well. Picture all that fossil fuel being left in the ground.

The whole process of old-fashioned power generation, from the oil well, coal mine, fuel extraction, fuel intake, the waste streams (heat, smoke, spent fuel) and all the risks, is fully concealed from us. It takes place many miles away, behind concrete walls, with coal trucks, smoking chimneys and warmed up local rivers the only tell-tell signs. In contrast, PV panels are open, transparent, risk free and locally autonomous.  Also, the more they generate, the more they don’t pollute, whereas the more power old-fashioned fossil or nuclear plants generate, the more they pollute, and the higher the bill, until eventually they cost us the Earth.

Each PV panel ever made has effectively a negative legacy footprint on the world. It is also carbon quids-in, providing it is given a nice roof to sit on, and a nice home to power for life. The technology is ecologically restorative, when it displaces dirtier generation.

The more PV we use, the less CO2 we put into the atmosphere overall.
In this sense, planting PV panels on your roof is almost as good as planting a tree.

Put your money where your roof is

Despite knowing all this, it still took me five years to take the PV plunge. And to save up the money. When we eco-refurbished our entire house five years ago, we satisfied ourselves with just a solar hot water panel (and a small token PV panel for the pump for the solar system.) But I had set aside an area of south-facing roof. It was designated for PV one day.

£10,000 is a shed-load of money

Let’s get the big, scary number out of the way.

£10,000 (fully inc).
£10,000 is a shed-load of money. It’s a roof-full of PV.  It’s also on a par with an ISA, or a slice of pension fund, going without a new car for a few years, or missing out on a family foreign holiday or two.  I appreciate it is still a shed-load of money, and I know I was lucky to be able to do it, and not everyone can. 

If you are a homeowner, the ‘asset value of the home’ is a moot point, as no-one really knows what the asset value is, but I wouldn’t be surprised if our home would raise £10k more on the open market than a similar property without the PV panels.  So you can view it as home improvement.

And Home improvement too – with a capital H. 
Sooner or later we need to start living on our HOME planet as if we intend to stay here forever. See ‘HOME’ the movie: http://www.youtube.com/watch?v=jqxENMKaeCU

It is possible my kids will benefit more from the legacy of millions of solar panels than they ever will from the legacy of £1000s in my will.  Is PV making my WILL POWER-ful?  Globally, there need be no shortage of will power.

Rent
"No generation has a freehold on this Earth. All we have is a life-tenancy—with a full repairing lease." Rt Hon Margaret Thatcher MP
If you rent your home, there is every reason to lobby your landlord or the council to fit PVs.  Many landlords are already considering doing this. Your voice in support could tip them into action.  You may even be able to help educate them about the grants, Feed in Tariffs (e.g. business benefits, etc. Don’t assume they know all about how good it can be.)

PV is a well-kept secret that the nice fossil companies don’t really want people to discover...yet...

The Numbers
I don’t want to throw too many numbers at you, but here is the deal.  Depending on the weather, rain, cloud or shine, my panels generate about 10 to 70 pence an hour during daytime. 

On a bright day, and averaged over 24 hours, my nine panels supply ALL my electricity needs. Over an entire year, I expect them to generate around a THIRD of all that we use.
Over a year we expect the savings, plus the Feed in Tariff income, to be worth £800.

Our energy provider, Good Energy, won’t be sending us bills. They will be sending us cheques! Cheques for the (government enhanced) value of all the FiT power we generate, less the small cost of the energy we import.  

Next week I will be reviewing the highly acclaimed ‘Wattson’ remote energy display meter which is the perfect accompaniment to a PV installation.

Dave Hampton

The Carbon Coach

http://www.carboncoach.com/

Overcoming the barriers to microgeneration

In a four-part series we've been researching the barriers to generating independent renewable energy, and here we suggest some potential solutions to the problems.

Week 4 - Access to Information & Consumer confidence

Anyone investing in microgeneration will need between £4,000 and £25,000 to get set up. This is significant expenditure for any household and the homeowner wants peace of mind that they are opting for the right technology at the right scale and the right people to install it.

Our survey confirmed our perception that people found it difficult to access detailed, informative, impartial and reliable information on microgeneration.

Homeowners find it hard to understand which technology they will benefit from most, because they don’t necessarily know how a home uses, conserves and wastes heat and power. They’re also concerned that the most detailed and useful information comes from microgeneration installers that they could not view as impartial because they were selling a product.

Good Energy, despite having a commercial interest, has tried to fill the information vacuum through our website www.generateyourown.co.uk. This recommends a stepped approach for homeowners to follow guiding them through decision making on technology, identifying installers, identifying products, accessing finance and grants and getting paid for the energy generated.

The Energy Saving Trust has also recently expanded its resources on microgeneration to help homeowners with their decision making.

As companies in this industry establish their brands and certifying bodies such as the Microgeneration Certification Scheme become more recognisable, the information they provide should be more trusted by homeowners.  

Keep an eye out around June as Good Energy will be launching an online forum giving people an opportunity to share knowledge and experience in this field.

Consumer Confidence

Closely linked to the access of information about microgeneration is the confidence - or lack of confidence - consumers have in microgeneration in relation to the products and the installers. Our  awareness of this lack of confidence was a motivator for providing a service in the market. Good Energy’s customers were expressing an interest in microgeneration but also a concern that it was difficult for a homeowner to identify which installers in the market had the skill and experience to provide excellent service. Good Energy undertook independent research to evaluate a number of installers and, through the www.generateyourown.co.uk website, recommends a shortlist.

Accreditation of products and installation companies is essential and is being delivered through the Microgeneration Certification Scheme (MCS).  While the value of this accreditation process is understood and appreciated within the industry, it will take time for consumers to develop the requisite trust and understanding for the MCS to deliver widespread consumer confidence in microgeneration.

A concern that Good Energy has noted several times is the cost of the accreditation process for both installers and products. These costs present obstacles for start-up companies and some homeowners believe the cost of accreditation is reflected in the price they pay. This is causing some consumers to opt for non-accredited products and installers. This directly contravenes what the MCS should be achieving and is pushing some homeowners away instead of towards accredited products and services. This may result in some homeowners paying for bad products, badly installed.

This is not what we want to see.

While it is likely that the MCS will help to safeguard most homeowners, the costs of accreditation must be kept to a minimum to ensure fairness for new microgeneration market entrants and affordability for homeowners.

Conclusion

Over the last four weeks we have looked at the barriers to independent renewable energy generation and made some suggestions for how they can be resolved. Please let us know what you think too. If you’re interested in generating your own energy the best place to start is www.generateyourown.co.uk

 

Overcoming the obstacles to microgeneration

In a four-part series we've been researching the barriers to generating independent renewable energy, and here we suggest some potential solutions to the problems.

Week 3 – Planning

A wide range of issues get filed under planning. For fear of you falling asleep at your computer, in this blog we will focus on

• The process of planning application and approval
• Planning directives

The process of planning application and approval
In April 2008 Permitted Development Orders (PDO) were introduced to simplify the process for installing solar PV panels, solar thermal panels, ground source heat pumps and biomass heating systems. However these PDOs do not apply to properties in conservation areas or to listed buildings. Also, PDOs have not been introduced for small-scale wind turbines and air source heat pumps.

Broadly, the PDOs have been well designed and have simplified the process of installing the widely applicable technologies such as solar, enabling wider uptake. Issues have arisen where planning officers within local authorities have failed to incorporate the PDOs into their processes or when a PDO does not apply (e.g. conservation areas), the officers have failed to use sufficient initiative and collaborate with the homeowner. This has resulted in protracted and intensive projects for homeowners, some of which are never completed despite their being no real reason for their failure.

Often the homeowner pinpoints the problem as being a lack of understanding within the planning department and planning officers. Better training and imposing standard procedures that would allow microgeneration projects that sit both in and outside of PDOs to be assessed and approved/declined more quickly and more efficiently would help.

Exactly where this training can come from, and more importantly how it should be funded, is a point for discussion, and we welcome comments on this blog. The information and the training could be delivered through the government website www.planningportal.gov.uk. Resources at this website on PDOs and planning issues for microgeneration could be expanded, forming the basis of more detailed training.

Two possible sources would be the Carbon Emissions Reduction Targets (CERT) scheme that applies to the larger energy suppliers; and the Microgeneration Certification Scheme, the body responsible for assessing and delivering accreditation to both microgeneration products and installers.

Planning directives
The government has ambitious targets for building new homes and by 2016 all new homes that are built are to be zero carbon. Exactly what “zero carbon” means nobody is quite sure. Oh well, sweep that under the carpet for now! The challenges are significant but they present opportunities for microgeneration. The results of our survey suggest that simple amendments can be made to planning directives to trigger growth in microgeneration.

For example, it should be mandatory that all new homes are built with microgeneration systems integrated. This would build on the Merton Rule, a forward-thinking district that stated that all new development should be sourcing at least 10% of its energy requirement from onsite renewable energy generation.

In addition, all new housing stock should be designed so that the roof pitch and orientation of the roof pitch maximises the potential for harnessing solar energy. This would ensure that any solar microgeneration installed during the build or fitted retrospectively would make the most of the potential solar resource.  

________________________

Next week we will look at access to information and consumer confidence

Overcoming the obstacles to microgeneration

In a four-part series we've been researching the barriers to generating independent renewable energy, and here we suggest some potential solutions to the problems.

Week 2 - Finance

People are motivated to install microgeneration systems for environmental, self-sufficiency and - with the arrival of the Feed-in Tariff - economic reasons, but a major barrier for many is the initial capital outlay. Microgeneration installations can cost between £4,000 and £25,000. Access to sums of capital of this size is not realistic for the majority of UK homeowners.

So how do we get around this?

Grant funding
Grant funding through phase 1 of the Low Carbon Buildings Programme (LCBP) used to provide a valuable means for accessing capital for microgenerators. However, our experience was that many microgeneration installation companies found the grant system difficult to work with. Grants tend to create a ‘synthetic’ and unstable market and, while a business can grow when it offers a product that can be heavily subsidised, once that subsidy is removed it jeopardises the security and further growth of these companies. The LCBP grants are now being phased out.

It is not only at the sub 50kW microgeneration level where access to capital is a challenge. Projects that require an investment of up to £20 million, such as 10 -20MW wind farms powering 10-15,000 homes, are finding it hard to attract the investment they need.

Financing is a critical obstacle but there are existing lending models that can be adapted and offered to installers of microgeneration. Here are some of our suggestions:

Government Interest-Free loans
Under the terms of the Feed-in Tariff, the accredited generator can nominate who is to receive the Feed-in Tariff payments. The government could provide interest-free loans to microgenerators much as it does to UK students to fund their education. The lending body (similar to the Student Loans Company) could be nominated as the recipient of the Feed-in Tariff payment which would deliver security to the lender as the payments would be made regularly by the energy supplier that was delivering the Feed-in Tariff service.

There would be an option to assign the loan to the property or to the homeowner, depending on the intentions of the homeowner and how long they anticipated they would live in the house. This might alter the risk profile of the loan application but could be adapted accordingly.

Top-up grants
Many local authorities across the UK offer top-up grants for residents installing microgeneration. These can be as much as £1000 and can be counted towards a local authority’s carbon reduction targets. While it was stated above that grants do not help to stabilise a young market, Good Energy believes that sums below £1000 will help incentivise residents but are small enough that they do not challenge the stability of installation companies.

We think Local Authorities should be encouraged to offer top-up grants and their availability should be communicated clearly to the region’s residents.

Commercial loans
At both microgeneration scale and small commercial scale up to 20MW, the nationalised high street banks should be instructed to offer debt finance. The Royal Bank of Scotland and Lloyds TSB have accessed funds through the European Investment Bank (EIB) and been instructed to make investment funds available for large-scale renewables but this does not provide for entrepreneurial landowners or independent developers.

An amount of EIB funds should be ring fenced for generators of 5MW or less which are eligible for the Feed-in Tariff. These loans can operate on similar principles to the government interest-free loans: the lending body could be nominated as the recipient of the Feed-in Tariff payment which would deliver security to the lender as the payments would be made regularly by the energy supplier that was delivering the Feed-in Tariff service.

These loans can be offered at a commercial rate, generating secure income for the banks.

Local Credit Unions
Credit unions are financial co-operatives owned and controlled by their members. They offer savings and low interest loans to local borrowers. They are primarily a social enterprise and are not solely focused on commercial return. Microgeneration projects can offer secure investment opportunities for credit unions and credit unions can offer suitable access to finance for homeowners wanting to install microgeneration.

Involving credit unions with microgenerators should be relatively simple to encourage. Principally, the challenge is to improve communication and educate homeowners interested in microgeneration about the existence of credit unions and make credit unions aware of the safe investment opportunities presented by microgeneration projects.

As Local Authorities are often linked with credit unions, they could communicate the opportunities to homeowners.
  
Tax Efficient Investments
Access to debt financing for small commercial scale renewable energy projects can be challenging to obtain, as can access to equity investment. There is a need to stimulate the creation of more tax efficient investment opportunities, such as a Venture Capital Trust (VCT) that will deliver more equity investment into viable renewable energy projects.

To encourage the introduction of new VCTs that focus strongly on renewable energy investments, we recommend that HM Revenue and Customs review the terms for companies qualifying, and adapt the criteria to make investment in Renewable Energy Developments increasingly attractive.

____________________________________

Next week we will look at planning renewable energy projects…

Farmers who are cutting their carbon – already…

The Farm Carbon-cutting Toolkit cic (FCCT) is organising an all day farmer to farmer event, at Westmill wind farm, near Swindon on Thursday June 10th to explore how you can reduce your farm’s green house gas emissions, increase the farm’s energy resilience and add to its business performance.

The event, ‘ Carbon cutting farming – Getting it from the horse’s mouth’ will start with the four morning speakers  presentations on why carbon aware farming is important, how an energy generating project might work on your farm and how you go about assessing the risks and accessing the grants.

The afternoon will have a range of farmers talking about what they have done on their farm - what did and didn’t work – and how they did it. The areas covered are small and large scale wind farming, growing different energy crops, roof and field scale photovoltaics, solar thermal water heating, small and large farm scale anaerobic digestion, micro hydro and a range of other technologies and experiences from using biomass boilers, precision farming, reducing N usage through legumes, on farm carbon accounting, heat recovery systems etc etc.

The day will be chaired by the NFU’s renewable energy and climate chief policy advisor, Dr Jonathon Scurlock and the NFU is supporting the event.

FCCT is a not-for-profit organisation recently set up by Adam Twine and Chris Walford. Adam farms 500 ha near Swindon and was responsible for setting up Westmill wind farm, the only wind farm in central and southern England.

Adam said “Having taken 15 long years to get the wind farm up and running I was determined to try and make it easier for other farmers. I’ve set up FCCT as a way of supporting farmers who want to do something about climate change... and improve their farm business profitability. I hope FCCT will in time become a national network of farmers engaging with and supporting each other – with FiTs already in place and RHI coming on stream next year there are real opportunities out there for almost all farmers. This event will give farmers a really useful overview and first hand experience from the people who are already doing it – unmissable!”

The tickets for the day are excellent value at £25 for farmers (£40 for corporates) and expected to sell out quickly. Phone 01367 700616 or email adamtwine@phonecoop.coop for tickets.

Good Energy: Campaigning on your behalf

By Juliet Davenport, CEO

As we head towards election day, we thought it would be a good opportunity to update you on some of the work we’ve been doing in Westminster recently.

At Good Energy we’ve always been proud of our campaigning credentials and we’ve always tried to be more than just a company to our customers and generators. Empowering individuals to make a difference to climate change is at the heart of our ethos. It’s for that reason we strive to act as an advocate in Westminster for our generators and customers to ensure that politicians of all parties recognise the importance of growing renewable energy, particularly on a small and medium scale. Over the years we’ve built up a wealth of knowledge and experience from working with our community of energy entrepreneurs and we want to capitalise on that by communicating that information to those politicians most likely to influence Government and Opposition policy.

Our recent Fair Deal for Energy Entrepreneurs campaign is just one example of some of the work we’ve been doing. By working with Liberal Democrat MP Alistair Carmichael and by providing our generators with the materials necessary to write to their own Members of Parliament, almost 100 MPs have rallied to our cause and called for the fair treatment to those microgenerators who broke the ground that made the Clean Energy Cash Back Scheme (aka feed-in tariff) possible. At the same time, we’ve been speaking to key MPs, both on the front and back benches, to get them to press our case further through their own contacts. With it now looking increasingly likely that the current Labour Government will be in Opposition in a week’s time, and with the Conservatives committed to reviewing early adopters’ policy immediately upon taking office and with the support from the vast majority of Lib Dem MPs, we now stand a very good chance of winning this campaign.

The next few days is sure to be one of the most exciting ends to a General Election campaign for years, and who knows what the result will be! Whether it is a new Conservative government, a hung Parliament or a coalition government, a whole range of opportunities will exist in Westminster to press Good Energy’s case in the debate on the issues that matter. Whether it be campaigning for a Fair Deal for Energy Entrepreneurs or arguing that it’s not right to expect renewable electricity customers to pay for carbon capture and storage plans, we hope to take full advantage of those opportunities and try our best to act as your advocate into the future.

Some of the other issues we hope to take up with whoever wins power include: delivering a fair and effective renewable heat incentive; addressing some of the planning problems associated with onshore wind and other renewable schemes; and reform of the national grid to ensure independent electricity generators can deliver their power. So, please watch this space.

YouGen: Renewable Heat Incentive: A homeowners guide

 
A guest blog by our good friends YouGen

Heat is the biggest use of energy in the UK. Just under half of the UK's CO2 emissions and 60% of domestic energy bills are used on heating space and water. Heat in the UK is currently supplied predominantly by fossil fuels - less than 1% comes from renewable sources. The proposed renewable heat incentive (RHI - also known as clean energy cashback) aims to change that. Its ambitious goal is that 12% of heat is generated renewably by 2020. The Government is currently consulting on the proposals, which (if it survives the election), will be the first such scheme in Europe. It should give a stable framework for the industry to expand and develop.The aim is to introduce the scheme from April 2011.

This article concentrates on the aspects of the scheme that apply to the domestic market (and also smaller businesses). It looks at the proposals, what they will mean for homeowners, and issues you might want to consider if you feel moved to respond to the consultation.

How much will I be paid for heat I generate?
Proposed tariff levels for small installations (up to 45kW, except solar thermal which is up to 20kW):

• Solid biomass, 9p per kWh for 15 years
• Biodiesel, 6.5p per kWh for 15 years
• Biogas on-site combustion, 5.5p per kWh for 10 years
• Ground source heat pumps, 7p per kWh for 23 years
• Air source heat pumps, 7.5p per kWh for 18 years
• Solar thermal, 18p per kWh for 20 years

Which technologies are included in the scheme?
Air, ground and water heat pumps, solar hot water panels and biomass boilers are the main technologies that will be used in the domestic market. The government proposes omitting wood burning stoves, air heaters and open fires from the heat incentive, as they are generally used as optional secondary heating, and because it's difficult to monitor to what extent they are used with non-renewable fuel such as coal. We would argue that they should consider including wood pellet stoves with and wood burners with back boilers where this is the main method of heating water; and wood pellet stoves used for space heating more than just one room.

People who have oil-based heating systems will be eligible for the renewable heat incentive if they convert their boiler to run on a blended fuel that is part renewable oil/part heating oil. Bioliquids (ie oils made from arable crops such as rapeseed) will not generally eligible, apart from this special case. The blended fuel will have to be certified to be eligible.

What return on investment will I get?
The payments are intended to give a 12% rate of return. This is a better return than under the feed-in tariff because the government sees renewable heat as a priority area for growth; and also because it thinks the hassle factor involved in the installation of technologies such as ground source heat pumps will mean people need more incentive to do it. The rates have been set so that they cover the higher cost of installing and running new technologies.

How will it work?
To qualify for the RHI payments, you will have to use an accredited installer and product. The main accreditation scheme is the Microgeneration Certification Scheme (MCS), and equivalent European schemes will also apply. Once a system is in place, your installer will issue a certificate that will enable you to register the installation with Ofgem. Once it has accredited the installation it will pay the incentive - this is likely to be an annual payment into your bank account.

How is the payment calculated?
The payments will be 'deemed' rather than metered. Although it is possible to meter heat the technology is in the early stages of development. The final methodology for how it will be done is yet to be decided. It is likely to be based on a table of average energy needs for space heating broken down by property type and size. For example, a 2-bedroom flat, with 61m2 of floor space, and cavity wall construction may be deemed to need 4,441kWh/year for space heating. A 3-bedroom semi, with solid wall construction may be expected to need 16,390kWh/year. The useful energy requirement for hot water will be assumed constant across property types and sizes at 3,742 kWh/year. This is based on an average occupancy of 2.9 people.

Are there any energy efficiency requirements?
You will need at least 125mm of loft insulation and cavity wall insulation, where appropriate, to qualify for the heat incentive. DECC does not propose to make more stringent requirements, as a deemed tariff system will encourage people to make their home as energy efficient as possible. The more efficient it is, the less energy will be needed for heating, so energy bills are lower, and more of the incentive payment is available to be saved or spent on other things.

Who can receive the payment?
The 'owner' of the heat installation is the only person who can receive the payment under the Energy Act 2008. This will usually be the person who bought and paid for the installation of the equipment. However, where there has been a hire purchase or similar agreement to fund the purchase, the payment can be made to the person who has taken out the loan even if they are not the legal owner. There may also be times when the person who owns the equipment is not the person who benefits from the heat it produces - ie if a landlord installs it in a rented property. In this case the landlord can receive the payment.

To receive the payment the owner may be asked to sign a declaration that they agree to keep the equipment working and well maintained to qualify for ongoing payments. Ofgem may want evidence of ongoing maintenance and repair by an approved person.

What installations are covered?
People who installed their heat generating equipment after 15 July 2009 are eligible for the renewable heat incentive. Only the installation of new equipment is eligible - refurbishment , repair or conversion will not be. There is considerable weight of feeling that existing microgenerators (who installed prior to the cut off date) should also be included in the scheme, as installers are being asked to rip out kit that works well, and install new, so people can claim. There is also strong feeling that a lot of education is needed for the RHI to really work, and that pioneer users with good stories to tell are vital to that education process.

What about fuel?
To qualify for the RHI payment, fuel needs to come from an approved sustainable source. It's not clear yet whether people with their own source of wood (or other biomass) will be able to use that in a biomass boiler - or whether they have to buy from an accredited source. This is something that we will be chasing up on in our response to the consultation

What if I live in rented accommodation?
Private landlords will be able to claim the RHI payments on renewable heat equipment that they install in their properties, with the aim that it is a logical financial decision to install it.

What about people in fuel poverty and social housing?
There is no requirement for social landlords to adopt renewable technologies, but the government thinks that the incentive will offer them a strong business case to offer this choice to their tenants. It is developing guidance to enable them increase the energy performance of their housing stock. The government is also consulting on ways to help low income households in fuel poverty to take advantage of the scheme. A lot of people in fuel poverty live off the gas grid, where switching to renewable technologies can make the most difference. The RHI includes provision for district heating systems, to encourage larger scale installations, for example in large blocks of flats, where that makes sense.

Consultation
The full consultation document can be downloaded from the DECC website. The closing date for responses is 26 April 2010.  Email responses are preferred to rfi@decc.gsi.gov.uk.

For more articles like this one visit YouGen's site. There are lots of high quality posts and easy to access information on renewable energy.

Note from Good Energy - If you already generate heat with renewables and can't wait for the RHI. take a look at our HotRocs scheme. http://www.goodenergygeneration.co.uk/sell-your-energy/hotrocs.aspx 

Isle of Eigg – a model community for the renewable era

At Good Energy, our vision for the UK electricity system is to source an increasing proportion of energy from renewables.  In order to achieve this it’s essential that we all use less energy.

A fantastic example of this in action is the community on the Isle of Eigg in the Hebrides which won NESTA’s Big Green Challenge in January. The £1 million prize is given to communities and groups that most successfully reduce their CO2 emissions over a 12 month period. Good Energy CEO Juliet is vice chair of the judging panel that decided that Eigg, which reduced its CO2 emissions by 32% in a year, deserved a share in the top prize money. Here’s why:
The day-to-day life on a small Hebridean island lashed by the Atlantic Ocean may present its own challenges, but the extreme weather makes it an ideal place to harness the elements and generate renewable power. So, members of the community decided on an ambitious project (http://islandsgoinggreen.org/about/) to develop their own grid powered by renewables.

They realised that it would be much easier and more cost effective to do this if they were able to pare back their energy use dramatically. All the buildings on Eigg had an energy audit and are installing energy efficiency measures like insulation and draught-proofing.

The independent electricity grid, which makes continuous power available to all 86 residents and the small number of businesses on the island for the first time, is the jewel in the crown of the project. Before, most buildings used oil and coal for heating and diesel for generators – all brought across by ferry from the mainland. The new grid is supplied by three hydro generators, four wind turbines and solar PV panels. When they’re generating surplus, power is conserved in batteries or used to heat communal buildings and there are backup diesel generators for times when the grid needs a boost – though these are rarely fired up.

Renewable generation meets up to 95% of the island’s energy requirement because people are careful with what they use. Each domestic property can use 5kW at any one time (enough for an electric kettle and washing machine to run simultaneously) and everybody has an energy monitor so they can see when they’re going to exceed the limit – so at times when usage is high they might decide to forego a cup of tea. A ‘traffic light’ system lets everyone know by email when renewable sources are low so they can be extra prudent and only use energy if it’s absolutely vital.

As well as energy, the islanders have made changes to make other areas of their lives more sustainable. Many are rearing and growing more of their own food, so less needs to be brought from the mainland. They compost, reuse and recycle and have a Swap Shop to reuse old, unwanted items. As many trips as possible are taken by bike or on foot, and there’s a bus for winter transport which runs on biodiesel made from used chip oil on the ferry.

And they have plans to put their Big Green Challenge prize to good use, including installing more PV panels, wood fuel boilers and an anaerobic digester, buying electric vehicles to lease to residents and undertaking a feasibility study for a renewably powered water taxi service.

Eigg is an inspirational project that’s paving the way for renewable communities. And the benefits are not just to the climate. Eigg’s population has increased and more young people are returning to the island, and people are reaping the benefits of working together on projects to improve their surroundings and ensure their economic future too.

We could all learn from their experience.

Jodie

Green Energy Republic

img credit - http://islandsgoinggreen.org