Community Energy Solutions

David Lacey

Operations Director

Who are we?Community Energy Solutions is a community interest company set up by the Regional Development Agency, One North East and the Department of Energy and Climate Change (DECC).

We are a non-profit distributing company.

We have no shareholders dividends and no directors emoluments to pay.

An asset lock ensures that any margins or other forms of income are redirected into the funding of new projects.

From 1st April 2009 CES has been working to a new remit from

One North East called:

“Mobilisation of Microrenewables”

Output/Outcome Total 2009/11 NTF1 (i) Jobs created 15 NTF1 (ii) Jobs safeguarded 70 NTF4 Business support 200 NTF4a Knowledge base/business collaboration 20 NTF5 (ii) Total private sector leverage £24.5m NTF6 Skills 60 Increase the number of microrenewable installers trained to a high quality by CES

20

Installation of microrenewables in homes 3,000 Increase the prevalence of microrenewables installed in new build homes

500

Reduction in carbon emissions from NE building stock

20,000 tonnes/annum

Assistance provided to households 4,500 Alleviation of fuel poverty 2,000

Our Targets

The Plan Year 1 (2009/10)

Tender for equipment Tender for installers Train the workforce Develop relationships with customers Commence delivery

Year 2 (2010/11) Mass marketing and delivery Address funding for 2011 and beyond

Renewables

• More than 30% of our electricity generated from renewables, up from about 5.5% today.

• 12% of our heat generated from renewables, up from about 1% today

Market Drivers “Pushers”

National targets Local Authority targets

“Pullers” Feed in Tariff (FiT) Renewable Heat Incentive (RHI)

Feed-In Tariff (FiT) and Renewable Heat Incentive (RHI)

• Contribution towards the Government’s Low Carbon Transition Plan which includes the Renewable Energy Strategy.

• 34 percent cut in emissions on 1990 levels by 2020 • More than 1.2 million people will be in green jobs. • 7 million homes will have benefited from whole house

makeovers, and more than 1.5 million households will be supported to produce their own clean energy.

• Around 40 percent of electricity will be from low-carbon sources, from renewables, nuclear and clean coal.

• We will be importing half the amount of gas that we otherwise would.

• The average new car will emit 40 percent less carbon than now.

The Feed-In Tariff• Administered by OFGEM• Started on 1st April 2010• Applies to installations since 15th July 2009• Eligible technologies are:

– Wind– Solar PV– Hydro– Anaerobic Digestion– Micro - CHP

Technology SizePayment

p/kwh (early years)

Term (years)

PV retrofit <4kw 41.3 25

Wind <1.5kw 26.7 20

Hydro <15kw 19.9 20

Micro -CHP <2kw 10.0 10

FiT Generation Tariffs – a Selection

Note: a typical average supply tariff price is 13p/kwh

PV Generation and Export

Technology

Scale

FIT (Generation Tariff) p/kWh

FIT + Export(add 3p/kWh)

PV <4kW retrofit 41.3 44.3

Note: Export payments may be negotiable.

“Deeming”

• For small scale installations only and until smart meters are installed the amount of exports for the payment of export tariffs will be “deemed”.

• These arrangements will not apply if an export meter is fitted.

What Does it Mean?• Assume a 2.5kwp array is installed• It will need about 18.5 square metres of

roof space.• It will generate about 2,000kwh/annum.• Assume half is consumed on site and

half is exported.• Then……..

The Economics (1)• Value of generated electricity is

2,000 x 41.3 = £826/annum• Value of exported electricity is

1,000 x 3 = £30/annum• Value of electricity used on site is

1,000 x 13 = £130/annum

The Economics (2)• Assume cost of 2.5kwp array installed

is £8,500• Annual saving and income is £986• Payback is achieved in 8.6 years.• Income in remaining 16.4 years is

£16,170 index linked and tax free.

PV Can Be Flexible!

System Size

(kWp)

Area (m²)

InstalledCost(£)

Estimated Year 1

FiT (£)

Estimated Year 1

Savings(£)

Total Lifetime

FiT(£)

Total Lifetime

Electricity Savings

(£)

Payback Year

Total Profit

(£)

2.0 15 5,950 728 108 22,975 4,817 7 21,892

2.7 20 7,450 982 146 31,016 6,503 6 30,069

3.5 26 9,950 1,273 190 40,206 8,430 6 38,686

• CES has tendered for the supply of PV equipment and its installation using OJEU procedures to ensure that the best possible deal has been secured.

• We can supply equipment for installation by your MCS accredited contractors.

• We can supply equipment and have it fitted by our own MCS accredited contractors.

• CES has partnered with, a cooperative energy service company (esco).

• It has access to large amounts of low interest capital funding from “green” organisations.

• A Special Purpose Vehicle (SPV) would be set up to manage the flow of funds (including FIT).

• After the interest and capital is paid off the PV equipment will revert to original ownership.

PV OPTIONS (1)Buy the kit and install it yourself.

a) Advantagesi. Benefit in full from FIT incomeii. Could purchase via CES at OJEU tendered

pricesiii. Free electricity for residents

b) Disadvantagesi. Must find capitalii. Must have MCS trained workforce to installiii. Must project manage the contract.

PV OPTIONS (2)Buy on “installed and working” basis.

a) Advantages• Benefit in full from FIT income• Could contract with CES using our OJEU

tendered “fitted and working prices”• Free electricity for residents• CES can project manage

b) Disadvantages• Must find capital

PV OPTIONS (3)Buy on “Solar For Free” basis.

a) Advantages• No capital required• Benefit from FIT income after kit paid off• Free electricity to residents

b) Disadvantages• No FIT income until capital and interest paid

off.

The Renewable Heat Incentive• Administered by OFGEM

• Starts on 1st April 2011• Applies to installations since 15th July 2009• Eligible technologies are:

– Air Source Heat Pumps– Ground Source Heat Pumps– Solar Thermal– Biomass Boilers– Biogas and Bioliquids– Renewable Combined Heat and Power– Renewable District or Community Heating

Technology SizePayment p/kwh

(output is deemed)

Term (year

s)

Solid biomass

Up to 45kw

9.0 15

Ground Source Heat Pumps

Up to 45kw 7.0 23

Air Source Heat Pumps

Up to 45kw 7.5 18

Solar Thermal Up to 20kw 18.0 20

RHI Tariffs – a Selection

Solar Thermal installation at Satley for Derwentside Homes

Daikin Heat Pump at Satley for Derwentside Homes

Skills and Training

Training Centre

Other Business Issues• CES is licensed by OFGEM via Northern

Gas Networks to deliver the OFGEM Fuel Poor Voucher Scheme. We have scoped out 32 potential mains extension projects.

• CES has signed a Memorandum of Understanding with the Energy Saving Trust regarding renewables leads.

• CES is negotiating with North East Procurement to set up a web driven system for social housing providers and fuel rich one-off customers to buy renewables kit from us.

For Information and HelpPlease contact Community Energy

Solutions:

By e-mail:

david.lacey@communityenergysolutions.org.uk

By phone:

0191 537 7202

Thank You.

Questions?