applying DECC’s estimates of load and efficiency factors as set out in its 2013 RHI Impact Assessment31, this report estimates total required renewable heat capacity of 20.1GW, an increase of c. 10GWover the estimated 2013 installed capacity. By applying the cost assumptions as also set out in the Impact Assessment, an estimated £5.9bn of investment would be required.32 It is important to note that this investment represents one mix of technologies that can be deployed to reach the total renewable energy requirement. The graph below summarises this required investment in the bioenergy, solar thermal and heat pumps sectors.
|
0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0
84% 3.7 Figure 13: Forecast investment in renewable heat by technology, 2014-202033 FIGURE 18 FORECAST INVESTMENT IN RENEWABLE HEAT BY TECHNOLOGY, 2014-202033
2014-20 Investment to NREAP targets
Historical Share of Investment 2.2
7% 0.1 Bioenergy
form of RHI payments) are consuming RHI budget rapidly. Despite the similarities, the RHI mechanism is seen as more robust to overspend in given technology areas, given the feedback mechanism in place (degression). Although there is not yet sufficient data to comment reliably on the impact of degression, January 2015 deployments suggest a cooling off of installations; as such, it is seen as unlikely that biomass will see a solar PV-like boom.
4.3. Future investments 2014–2020 Looking ahead at potential renewable heat deployment in 2020, the UK’s 2010 NREAP projects a total of 6,199ktoe (or 72TWh) of final energy consumption coming from a range of renewable heat sources in 2020. By applying DECC’s estimates of load and efficiency factors as set out in its 2013 RHI Impact Assessment31
State of the Renewable Industry Solar thermal
Also shown in the chart is the historic (2010-2013) share of investment by technology, demonstrating investors’ technology appetite has notmirrored the requiredmix of technology investment well. This is seenmost strongly with the share of investment required in heatpumps (37%), against amoremodest historical share of investment (9%).
This poses a risk for the overall renewable heat targets insofar that each of the three core technologies have varying capital costs and technical characteristics (e.g. load factor, efficiency). If the NREAP is to be achieved, investmentmust be coordinated in such a way that delivers the necessary energy output in themost capital efficient way. The combination of cost and efficiency variancesmeans that under fixed investment volumes to 2020, the impact on generation of applying historic technology splits (where interest in heat pumps is low and bioenergy high), is a reduction in output frominvestment. Achieving the NREAP technologymix, and by extension the renewable heat targets, will therefore require a change in investor behaviour.
(ground and air-source), while investment in solar thermal is assumed to be minimal. Also shown in the chart is the historic (2010-2013) share of investment by technology, demonstrating investors’ technology appetite has not mirrored the required mix of technology investment well. This is seen most strongly with the share of investment required in heatpumps (37%), against a more modest historical share of investment (9%). This poses a risk for the overall renewable
5. RENEWABLE TRANSPORTATION FUELS 5.1. Consumption and supply of renewable fuel
, this report estimates total
required renewable heat capacity of 20.1GW, an increase of c. 10GW over the estimated 2013 installed capacity. By applying the cost assumptions as also set out in the Impact Assessment, an estimated £5.9bn of investment would be required.32
that this investment represents one mix of technologies that can be deployed to reach the total renewable energy requirement. Figure 18 summarises this required investment in the bioenergy, solar thermal and heat pumps sectors.
As indicated in the chart, the majority
of investment (£3.7bn) is assumed in the NREAP to be undertaken in the bioenergy sectors, followed by the heatpump sector
31 RHI Tariff Review, DECC, September 2013 32 Totals may not sumdue to rounding 33 The bioenergy data includes burning wood and logs in open fire places.
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
TABLE 2 CURRENT RTFO BIOFUEL TARGETS34
Table 2: Current RTFO biofuel targets32 Year
Target Share (% Vol.)
2008 2009 2010 2011 2.50
3.25 3.50 4.00
2012 4.50
5.1. Consumption and supply of renewable fuel Consumption of renewable transport fuels in the UK is primarily driven by the Renewable Transportation Fuel Obligation (RFTO). The RTFO requires transport fuel suppliers delivering above 450,000 litres annually to produce evidence showing that a percentage of fuels for road transport supplied in the UK comes from renewable sources and is sustainable, or that a substitute amount ofmoney is paid.
It is important to note that compared to the renewable electricity sector, renewable heat is lessmature. There is therefore significant uncertainty in relation to both current and future volumes of installed renewable heat capacity and the level of investment required to support future capacity additions.With the launch of both the non-domestic RHI (andmore recently the domestic RHI) schemes, the total volume and relative share of future installations by technology group could therefore be significantly different to that set out in the NREAP.
5. Renewable transportation fuels It is important to note
The RFTO sets out the percentage required in each year of the obligation. Under the current regulatory framework, the annual increase to the target has reached themaximumat 4.75%.
heat targets insofar that each of the three core technologies have varying capital costs and technical characteristics (e.g. load factor, efficiency). If the NREAP is to be achieved, investment must be coordinated in such a way that delivers the necessary energy output in the most capital efficient way. The combination of cost and efficiency variances means that under fixed investment volumes to 2020, the impact on generation of applying historic technology splits (where interest in heat pumps is low and bioenergy high), is a reduction in output from investment. Achieving the NREAP technology mix, and by extension the renewable heat targets, will therefore require a change in investor behaviour. It is important to note that compared to the renewable electricity sector, renewable heat is less mature. There is therefore significant uncertainty in relation to both current and future volumes of installed renewable heat capacity and the level of investment required to support future capacity additions. With the launch of both
2013+ 4.75
Consumption of renewable transport fuels in the UK is primarily driven by the Renewable Transportation Fuel Obligation (RTFO). The RTFO requires transport fuel suppliers delivering above 450,000 litres annually to produce evidence showing that a percentage of fuels for road transport supplied in the UK comes from renewable sources and is sustainable, or that a substitute amount of money is paid. The RFTO sets out the percentage required in each year of the obligation. Under the current regulatory framework, the annual increase to the target has reached the maximum at 4.75%. The RTFO targets (below) fails to set out
Heat pumps
As indicated in the chart, themajority of investment (£3.7bn) is assumed in the NREAP to be undertaken in the bioenergy sectors, followed by the heatpump sector (ground and air-source), while investment in solar thermal is assumed to beminimal.
the non-domestic RHI (and more recently the domestic RHI) schemes, the total volume and relative share of future installations by technology group could therefore be significantly different to that set out in the NREAP.
9%
0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9
0
RENEWABLE ENERGY VIEW 2015
Investment in Renewables
how the RTFO obligation will rise towards the 10% target for renewable transport fuels in 2020 as set out in the EU’s Renewable Energy Directive (RED). Without a clear policy framework in place, consumption of renewable transport fuels has been relatively stable at c. 3-3.5% by volume from 2010-14, with blending rates steady at
27
www.r-e-a.net
The above RTFO targets fails to set out how the RTFO obligation will rise towards the 10%target for renewable transport fuels in 2020 as set out in the EU’s Renewable Energy Directive (RED).
REview Renewable Energy View 2015 91
Without a clear policy framework in place, consumption of renewable transport fuels has been relatively stable at c. 3-3.5% by volume from2010-14, with blending rates steady at approximately the 2010/11 obligation period
£bn
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