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STEM Project

STEM Project. Renewable Energy Is it the right decision for your business?. October 1 st 2013. Agenda. Introduction The risk finance journey Resource Grid Planning Finance Technology considerations & information sources Summary. Introduction - Energy.

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STEM Project

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  1. STEM Project Renewable Energy Is it the right decision for your business? October 1st 2013

  2. Agenda Introduction The risk finance journey Resource Grid Planning Finance Technology considerations & information sources Summary

  3. Introduction - Energy • Chemical energy (gas, oil, biomass etc): • Can be burned to produce electricity or heat • Can be transported and stored easily • Electricity: • Can use it for anything • Easy to transport in a wire, hard to store • Low grade heat: • Can only use it for heat • Not very transportable, possible to store

  4. Introduction - Technology Perception Impact on energy Cost Perception Free? Dull Energy Management Integrated Design Energy Efficiency Cheap Cheap Renewables Expensive Renewables Expensive Interesting Bolt-on Fuel Cells etc Max Fordham Consulting Engineers

  5. Introduction - Carbon Abatement Carbon Trust

  6. The Risk Finance Journey Verifiable Resource Planning Permission Grid Connection Construction Operation Revenue RISK RETURN Fundable or saleable project

  7. Resource, Resource, Resource • Wind – wind speed (@10m @ hub height) • Hydro – hydrology, hydraulic head, abstraction • Biomass – feedstock security and quality • Anaerobic Digestion - feedstock security and quality • Solar – insolation and shading Banks and funders will want to know… Available resource and incentive thresholds…

  8. Grid • Scale – 11kV or 33kV • Nearest connection • Who else is on the line • Who else is in the queue • Distance to substation • Likely connection costs • Elapsed time to connection agreement

  9. £70k £150k £ ??? £500k £120k £4m Grid 11 kV 11kV Substation 11kV 33kV

  10. Planning • PPS 18 in NI • DOE RE Planning Statistics • Scale of project • Impacts - EIA • Ecology • Agents and consultants • Costs

  11. Finance • Business Case • USP • Financial Models - RETScreen? • Funders – perceived risk, redundancy • funding for some RE projects is very challenging due to risk perception

  12. Policy creep Incentives • Republic of Ireland • Renewable Energy Feed-in-Tariff (REFIT) • Northern Ireland • Renewable Obligation Certificates • Renewable Heating Incentive (RHI) Timing! • Great Britain • Feed In Tariffs – Degression! • ROCS • Contracts for difference incoming • Renewable Heating Incentive (RHI)

  13. ROI – Renewable Energy Feed in Tariff (REFIT) • There have been three separate schemes known as REFIT 1(2006) REFIT 2(2012) and REFIT 3(2012) • REFIT 1 • officially launched on 1st May 2006. • The fixed price tariffs can be seen below: • Wind(Large scale) >5MW: 5.7 cent/kWh • Wind(Small scale) <5MW: 5.9 cent/kWh • Biomass landfill gas: 7.0 cent/kWh • Hydro & other Biomass: 7.2 cent/kWh • In 2009 additional Categories (other than Hydro, wind & biomass) • were added to the established 2006 REFIT. • The reference prices for the additional technologies were as follows: • Anaerobic Digestion: €0.12/kWh • High Efficiency CHP: €0.12/kWh (only for High Efficiency) • Ocean Energy: €0.22/kWh • Offshore Wind: €0.14/kWh

  14. REFIT 2 • Officially launched in March 2012 • Incentives are given to the generators of selected renewable technologies which have been commissioned between 01/01/2010 - 31/12/2015. • Available for 4,000MW of onshore wind, hydro & landfill gas. • The reference price for each technology is shown below: • Onshore Wind (>5MW): €66.35/MWh • Onshore Wind (<5MW): €68.68/MWh • Hydro (<5MW): €83.49/MWh • Biomass (Landfill gas): €81.49/MWh • The support for any particular project cannot exceed 15 years and may not extend beyond 31/12/2030 • REFIT 2 is not payable for electricity generation consumed onsite

  15. REFIT 3 • Officially opened in February 2012 • Incentives are given to the generators of selected renewable technologies which have been commissioned between 01/01/2010 - 31/12/2015 • Available for 310MW of anaerobic digestion, biomass CHP & biomass combustion • Technology limits to the incentives under REFIT 3 are; 50MW for AD (including CHP), 100MW for Biomass CHP and 160 MW for Biomass Combustion. • The reference price for each technology is shown below: • AD CHP (K500kW): €0.15/kWh • AD CHP (>500kW): €0.13/kWh • AD Non CHP (K500kW): €0.11/kWh • AD Non CHP (>500kW): €0.10/kWh • Biomass CHP (K500kW): €0.14/kWh • Biomass CHP (>500kW): €0.12/kWh • Biomass Combustion Technologies (non CHP) which use energy crops will get 9.5cent/kWh and all other biomass will get 8.5cent/kWh.

  16. NI Renewables Obligation (NIRO) • The main support mechanism for renewable energy generation in the UK • First introduced in GB in April 2002 • Adopted by Northern Ireland in April 2005 as the NIRO. • Prior to 1st April 2009 all renewable electricity generation technologies received 1 ROC/MWH generated • However, banding of the RO was introduced in April 2009 to allow different levels of support for different technologies depending on their stage of development and their costs, with reviews of banding levels set to be undertaken every four years. • Certificates can then be sold to electricity suppliers who are legally required to purchase ROCs to show that a specified quantity of electricity supplied can be accounted for by generation of renewables.

  17. Sample of ROC/MWh Levels from 1st May 2013 DETI, 2013

  18. Sample ROC levels – 1st May 2013

  19. NI Renewable Heating Incentive (RHI) • In May 2012 the Renewable Heat Premium Payment scheme was launched as an interim scheme to the RHI • Phase 1 of the RHI was Launched in NI in November 2012 with a budget of £25 million up to 2015 • Phase 1 concerns Non-domestic installations of renewable heat • Phase 2 (Domestic installations) launched in Autumn 2013 • The technologies that are to be covered under phase 1 of the RHI are: • solid biomass and solid biomass contained in municipal waste (including CHP) • ground and water source heat pumps, • geothermal (including CHP) • solar thermal (at capacities of less than 200 kWth) • biogas combustion (except from landfill gas but including CHP; at capacities of less than 200 kWth) • biomethane injection.

  20. NI RHI Tariffs

  21. Technologies CTG011 www.carbontrust.co.uk/publications http://www.seai.ie/Publications/Renewables_Publications_/

  22. Technologies - Wind • Considerations: • Scale • Noise • Flicker • Visual Impact • Ecology • Transportation • Grid connection

  23. Technologies - Wind

  24. Technologies - Hydro • Considerations: • High head low flow • Low head high flow • Turbine type • Ecology • Civil costs • Resource

  25. Technologies - Solar • Considerations: • PV or Thermal • Insolation • Shading • Roof structure • Matching demand • Cleaning • Guarantees Carbon trust images

  26. Technologies - Solar Solar thermal Photovoltaic

  27. Technologies - Biomass • Considerations: • Size • Pellet or chip or other • Water, Steam, Gasification • Fuel supply • Contract terms • WID

  28. Technologies - Biomass

  29. Technologies – Anaerobic Digestion • Considerations: • Advanced • All revenue streams • Blend of feedstock • Feedstock security • Long term commitment • Operation and maintenance • Grid

  30. Technologies – Anaerobic Digestion

  31. Summary • Prioritise the business case for all your options • Exhaust all more cost effective alternatives • Identify, verify and secure your resource • Identify the most cost effective technology • Produce project finance model • Minimise your risk finance journey • Get planning permission and any other consents • Get a grid connection • Secure equipment guarantees and maintenance costs for the lifetime of the project

  32. Thank you for listening Facilities and Energy Management Ltd 250 Ravenhill Road Belfast BT6 8GJ T: +44 (0) 8456 891 257 M: +44 (0) 7513 994 936 F: +44 (0) 2890 466509 E: david@fandem.co.uk W: www.fandem.co.uk

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