Overview of Biomass for Heating - Wood Energy Scotland
Overview of Biomass for Heating - Wood Energy Scotland
Overview of Biomass for Heating - Wood Energy Scotland
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<strong>Biomass</strong> ESCOs<br />
www.hwenergy.co.uk
180 Projects across <strong>Scotland</strong><br />
www.hwenergy.co.uk
Service Network<br />
www.hwenergy.co.uk
• Various definitions<br />
What is an ESCO<br />
– <strong>Energy</strong> Service Company<br />
– <strong>Energy</strong> Supply Contract:<br />
• <strong>Energy</strong> Per<strong>for</strong>mance Contracting<br />
• <strong>Energy</strong> Supply Agreement<br />
• A <strong>for</strong>m <strong>of</strong> outsourcing that allows the client<br />
to reduce operating costs, transfer risk &<br />
concentrate on core activities.<br />
– London <strong>Energy</strong> Partnership 2007 ESCO<br />
Report<br />
www.hwenergy.co.uk
Scottish Procurement<br />
• 4 main areas <strong>of</strong> risk identified:<br />
– Design Risk<br />
– Construction Risk<br />
– Operational / Per<strong>for</strong>mance Risk<br />
– Financing Risk<br />
www.hwenergy.co.uk
Scottish Procurement<br />
• 3 “Live” Framework Options:<br />
1. Design, Build, Operate & Finance: ESCO in<br />
industry parlance<br />
• Risk and RHI transferred to supplier – low capital<br />
outlay<br />
2. Design, Build, Operate:<br />
• Financed by client who retain the RHI. Design,<br />
Build, Operate delivered by supplier.<br />
3. Operate: Heat Supply<br />
• System already exists or purchased separately.<br />
Transfer <strong>of</strong> operational risk to supplier. RHI<br />
retained by the public sector organisation.<br />
www.hwenergy.co.uk
Key ESCO Considerations<br />
• Define project objectives: cost, carbon,<br />
risk etc<br />
• Contract duration<br />
• Split <strong>of</strong> capital funding<br />
• Responsibility <strong>for</strong> existing boilers / back up<br />
• <strong>Biomass</strong> per<strong>for</strong>mance specification<br />
– % availability or kWh’s or CO2<br />
• Minimum kWh “take” requirement<br />
www.hwenergy.co.uk
Key ESCO Considerations / 2<br />
• Understanding <strong>of</strong> design philosophy<br />
• Weighing non-financial criteria (deliveries,<br />
logistics etc)<br />
• Long term price indexing<br />
• Sustainability / Air Quality Standards – use<br />
RHI standards?<br />
• Quality weighting – can the company<br />
realistically deliver the <strong>of</strong>fering.<br />
• Defining how the overall bid will be assessed<br />
www.hwenergy.co.uk
Contract<br />
• ESCO Contract needs to be clearly<br />
defined<br />
• Needs to reflect the project objectives<br />
• Needs to be workable <strong>for</strong> both parties.<br />
www.hwenergy.co.uk
<strong>Biomass</strong> Demo Day<br />
Friday March 22 nd : Fort William<br />
10am – 2pm<br />
Visit multiple larger sites including pellet & woodchip &<br />
district heating schemes<br />
stuart.reid@hwenergy.co.uk<br />
Tel: 01397 70 6412<br />
www.hwenergy.co.uk
• What is it?<br />
The RHI<br />
– “A trans<strong>for</strong>mation in the way we heat our country”<br />
– Greg Barker, Minister <strong>of</strong> State, DECC, 10 th March 2011<br />
• <strong>Overview</strong>:<br />
– Annual, guaranteed payment <strong>for</strong> every unit <strong>of</strong><br />
renewable heat produced.<br />
– Payable every quarter <strong>for</strong> 20 years and inflation (RPI)<br />
uplifted.<br />
– An attractive financial return to encourage investment,<br />
particularly against oil.<br />
– If use <strong>of</strong> building is “domestic” then at least two<br />
council tax paying properties need to be included<br />
www.hwenergy.co.uk
RHI Detail<br />
Tarrif Name<br />
Eligible<br />
Technology<br />
Eligible sizes Tier Updated Tarrif<br />
(pence/kWh)<br />
Small<br />
Commercial<br />
<strong>Biomass</strong><br />
Medium<br />
Commercial<br />
<strong>Biomass</strong><br />
Large<br />
Commercial<br />
<strong>Biomass</strong><br />
Solid biomass<br />
including solid<br />
biomass<br />
contained in<br />
municipal<br />
solid waste<br />
(incl. CHP)<br />
Less than 200 kW Tier 1 8.3<br />
Tier 2 2.1<br />
200kW to 999kW Tier 1 5.1<br />
1,000kW and<br />
above<br />
Tier 2 2.1<br />
N/A 1<br />
www.hwenergy.co.uk
RHI in Practice<br />
"Small" Boiler<br />
Heat Demand (kWh) 400,000<br />
Boiler size (kw) 195<br />
Equivalent to approx<br />
40,000 litres <strong>of</strong> oil<br />
Tier 1 eligible kWh's 256,230 (195 x 1314)<br />
Tier 1 Payment £21,267.09 (256,230 x 8.3p)<br />
Tier 2 kWh's 143,770 (400,000 - 256,230)<br />
Tier 2 Payment £3,019.17 (143,770 x 2.1p)<br />
Annual RHI £24,286.26<br />
Lifetime RHI £485,725.20<br />
www.hwenergy.co.uk
What’s the alternative?<br />
www.hwenergy.co.uk
Project Process<br />
Initial<br />
Contact and<br />
High Level<br />
Assessment<br />
Stage 1:<br />
Client<br />
needs<br />
assessment<br />
and<br />
Business<br />
Case<br />
<strong>Overview</strong><br />
Stage 2:<br />
Outline<br />
Design<br />
Report and<br />
Detailed<br />
Proposal<br />
Stage 3:<br />
Project<br />
Delivery<br />
Stage 4:<br />
Project<br />
Completion<br />
and<br />
Handover<br />
to Heat<br />
Supply<br />
Team<br />
www.hwenergy.co.uk
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