Background
Over the past few years the Government has sought to better understand the opportunities and prospects for renewable heat in the UK and its potential contribution to our 2020 15% renewable energy target. The Heat Call for Evidence, published in January 2008 was followed by additional commissioned analysis on the barriers and constraints to renewable heat deployment (Enviros, 2008) and on the possible financial instruments required to promote renewable heat (NERA, 2008). These latter studies were published alongside the Renewable Energy Strategy Consultation in June 2008.
In analysing the potential supply for renewable heat the studies drew the following conclusions:
- Due to the very low starting point of renewable heat deployment in the UK significant increases in take-up rates are likely to be associated with considerable demand and supply side barriers.
- Biomass was considered the dominant renewable heat technology going forward, with heat pumps although cost effective having more limited installation potential. At higher levels of deployment large amounts of costlier solar heat and biogas would need to come forward to meet these levels of output.
- The domestic sector could offer the most significant volume of renewable heat going forward, while opportunities in industry were limited by the difficulty of using renewable heat for industrial processes.
New Analysis
Following stakeholder comments on the RES consultation we commissioned additional research by NERA and AEA on the UK supply curve for renewable heat. The purpose of the analysis was to:-
- Validate and expand existing analysis on the potential deployment for renewable heat technologies leading up to 2020
- Revisit the potential contribution of the industrial and commercial/public sectors.
- Provide a greater segmentation of the supply curve and the composition of heat demand capturing variations across different supply segments.
The new report, taking into account responses to the RES consultation, comes to the following conclusions:
- There are significant uncertainties associated with high levels of renewable heat deployment. These depend heavily on the rate at which UK supply capacity can grow, which could limit significantly the level of renewable heat achievable up to 2020.
- From the covered technologies (which exclude CHP), biomass boilers and heat pumps are expected to be the most significant contributors to renewable heat. Solar thermal could provide additional output, albeit at substantially higher £/MWh costs.
- Based on the new cost evidence and analysis of potential, industry, and the commercial/public sector are likely to offer the lowest cost opportunities for renewable heat projects. Depending on the desired contribution of renewable heat to the UK’s overall renewable energy target, the availability of lower cost opportunities in these sectors could mean that a much smaller number of higher cost domestic installations of renewable heat technologies would be required.
Invitation for comments
The data resulting from this study is expected to play a key role in helping us design the structure of the Renewable Heat Incentive going forward.
It is therefore important to ensure that the robustness of this evidence is tested. We hence invite interested stakeholders to provide comments, particularly on the following parts of this analysis:
All comments on the above questions should be accompanied by supporting evidence that the consultants can use to justify any revisions in the analysis.
Comments should be sent by e-mail to NERA Economic Consulting, at the following address: UK_Renewable_Heat@nera.com no later than Friday 21st August 2009 - this deadline has been extended by 1 week.
If you would like to discuss these findings with the relevant officials within DECC, please contact Jo Greasley – 0300 068 6154 or email
Joanna.Greasley@decc.gsi.gov.uk
- The technology assumptions and costs underpinning this analysis, presented in detail in Appendix B.
- The supply growth rates and associated technology contributions presented in Tables 2.1 and 2.2 of the report.
- The increase in the contribution to renewable heat potential provided by the commercial/public and industrial sectors, relative to the domestic sector (illustrated, for example, in Figures 4.6 and 4.7 of the report).