PwC RENEWABLE ENERGY VIEW 2015
additional 10GWof renewable heat capacity would be required (from2013 capacity) tomeet NREAP’s forecasts of renewable heat generation in 2020.
| 4.1. Historical investment 2010-2013
Based on the deployment of additional heat capacity over the period 2010-13, estimated total investment across different renewable heat technologies is summarised in the graph below. Figure 11:Historical investments in renewable heat25
FIGURE 16 HISTORICAL INVESTMENTS IN RENEWABLE HEAT25
0.0 0.2 0.4 0.6 0.8 1.0 1.2
1.1 1.0
0.6 0.3
Heatpumps Solar thermal Bioenergy
2010
4.2. Degression thresholds triggered DECC has put in place a mechanism of ‘degression’, or gradual reductions in incentive payments, to manage the total budget available for renewable heat support under the RHI. The degression mechanism applies tariff reduction to new applications when technologies absorb more of the total budget than anticipated. This means that degression can react to different rates of renewable heat technology (c.f. the RO for renewable electricity).
State of the Renewable Industry boilers are running ahead of DECC’s forecast,
Similarly, solar thermal deployment figures used in this report are based only on RHI applicable systems, excluding solar thermal systems used to heat swimming pools. The estimated size of thismarket is unknown.
Over the period 2010 to 2013, c. £3.6bn has been invested in UK renewable heat capacity: £3bn in bioenergy heat, £360min solar thermal and £260min heat pumps.26 Investment during 2013 showed strong growth on 2012 figures, equalling those seen in 2011.
As already noted, some technologies present challenges to accurate data collection and analysis, domestic wood combustion being one of the areas DECC considers to be ‘notoriously difficult to assess’.27 2011 DECC data showed a drop in the domestic wood combustion heat energy consumed, as reported in DUKES (2011: 402 ktoe, 2010: 458ktoe). This fall in energy consumption has been reflected in nil capacity investment for the technology in 2011, causing the bioenergy sector to register low investment in 2011.
Installations of non-domestic biomass 4.2. Degression thresholds triggered Figure 16: Domestic biomass forecast expenditure28
24 National Renewable Energy Action Plan for the UK, DECC 25 DUKES 6.6, DECC 26 DECC reported energy consumption data for ‘wood combustion – domestic’ has been amended retrospectively,
10 12 14 16 18 20
investment and capacity figures have been updated for historical years. 27 Renewable energy statistics, data sources andmethodologies, DECC
This report is solely for the use and benefit of Renewable Energy Association and should not be relied upon by any other party. State of the renewable industry - Investments in renewable electricity, heat and transport PwC
2 4 6 8
-
Forecast expenditure (£m) Expenditure threshold (£m) Super expenditure threshold (£m)
25
of the same year. The figure below shows the forecast (domestic heat is notmetered) expenditure, as calculated by DECC. The figure shows the expenditure threshold breached in December 2014 and January 2015.27 FIGURE 17 DOMESTIC BIOMASS FORECAST EXPENDITURE30
and small biomass has accordingly seen tariffs degressed by 10% in January 2015 and a further 15% from April 2015. Should this trend continue, the July 2015 degressions would take small boiler tariffs below the rate payable for medium boilers for the first time. Other technologies, including solar thermal and ground source heat pumps, are not currently at risk of degression.28 The domestic biomass scheme, which began in April 2014, has seen deployment of domestic biomass exceed recent DECC forecasts. As a result domestic degression has also taken place; 10% in January 2015,
DECC has put in place amechanism of ‘degression’, or gradual reductions in incentive payments, tomanage the total budget available for renewable heat support under the RHI. The degressionmechanismapplies tariff reduction to new applications when technologies absorbmore of the total budget than anticipated. Thismeans that degression can react to different rates of renewable heat technology (c.f. the RO for renewable electricity).
2011
2012
2013
followed by 20% in of the same year. The figure below shows the forecast (domestic heat is not metered) expenditure, as calculated by DECC. Figure 17 shows the expenditure threshold breached in December 2014 and January 2015. 29 Given the deployment of a technology
above the forecast rates, it is possible to draw parallels with the growth of large scale solar PV. Just as the solar PV subsidies (in the form of the RO) consumed LCF budget above what was expected by DECC leading to a change in the level of support available, so the domestic biomass support costs (in the
Investment in Renewables
90 REview Renewable Energy View 2015
Given the deployment of a technology above the forecast rates, it is possible to draw parallels with the growth of large scale solar PV. Just as the solar PV subsidies (in the formof the RO) consumed LCF budget above what was expected by DECC leading to a change in the level of support available, so the domestic biomass support costs (in the formof RHI payments) are consuming RHI budget rapidly. Despite the similarities, the RHI mechanism is seen asmore robust to overspend in given technology areas, given the feedbackmechanism in
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£bn £m
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