Old Buildings, EPC's Insulation Improvements and the RHI payments

[Worcester]

Quite a few of our clients have large, old, high heat load buildings.

So having the EPC done at the correct time is critical to get the right RHI payments.

If the building has already or can't have cavity wall insulation and has 250mm of Loft insulation (or can't have it done), then the EPC as taken at that time will determine the Domestic RHI payments.

Well one of our clients had a heat load of 100,000 kWh and 32kW, and although we could easily have put in a biomass boiler to cope, he wanted to insulate the property, so the concept is: Solid wall insulation, double glazing and additional roof insulation, net effect a building that meets 2014 building regs, and a heat load of 32,000kWh and 10kW - easily doable with a GSHP. the big question was though, if we designed a system to meet 100% of the new load based on the MCS, even though now 1/3 of the EPC figures would they still pay in full?

Note: the cost of the improvements plus the GSHP is actually signifacntly higher that the cost it would have been to install the large biomass boiler. This wasn't about saving the initial capital cost, it was to reduce the on-going heating costs as much as possible.

As we know if the MCS calcs come out higher that the EPC, they are still only paying the EPC, well in this case it is lower, and after the improvements a lot lower, however the client wanted re-assurance that he would still be eleigible for the full RHI - the alternative would have been to install a now massively oversized biomass boiler and large buffer tank to meet only 1/3 of the old load.

Good news - Ofgem aren't worried about the MCS load calcs, so long as the system is designed to meet what the MCS calc say, they'll pay. - Here's ther actual response.:

As long as the information on the MCS Database shows that the amount of heat provided by the system matches the property’s heat demand then it would not require metering. Payments for the Domestic RHI are based on the EPC regardless of any discrepancies between the heat load listed on the MCS Certificate so this would not be a reason an application was flagged for metering.

My only concern is a few installers that may undersize systems to keep their costs down, and increase their profits, whislt effectively short changing the clinet, or delivering a system that doesn't meet the actual loads, and with 2 mild winters so for, they would have 'got away with it' to date. - There again they are probably already doing that anyway

Hope that helps some of you guys out there

 

[BruceB]

You are right there is lots of scope for optimising. I had a similar situation recently. External solid wall insulation was put in after the heat pump. We commissioned the heat pump and client had to apply for the rhi before the second epc reflecting a more efficient house was generated, which he needed because he was getting a grant for the insulation. The was significant work ensuring the timings all matched so that rhi was applied for when the old epc was in force, but the external insulation had been fitted , but the newer epc to get the grant for the insulation had not yet been generated.


If you get involved with big houses with annexes or granny flats with x2 council taxes, then district heating comes into play and there is also scope for optimising the size of the plant based on tiered tariff rates of non-domestic rhi.

 

[Worcester]

Thanks Bruce, the commercial RHI tarrifs do seem to be one open to a bit of manipulation

I believe I have this correct, though welcome any correction:

Let's say the combined heat load on the various propoerties supplied by the one installation is 95kWp, and the kWh requirement is 300,000 kwh.

If I install a 100kW rated boiler, they get paid (based on metered eleigible heat of course) :
15%*24*365*100 = 131,400 kWh @ 6.8p plus 300,000-131,400=168,600 kWh @ 1.8 p = £11,970 per annum
OR if I install a 199kW rated boiler (big buffer tank to ensure efficiency ) , then they get paid:
15%*24*365*199 = 261,486 kWh @ 6.8p plus 300,000-261,486= 38,514 kWh @ 1.8 p = £18,474.30 per annum

all for 20 years ... now I'm sure it doesn't cost £360k, to install a 199kW biomass boiler... (even allowing for borrowing the money)

Hence there appears to be an incentive to put oversized boilers in or "optimising the size of the plant based on tiered tariff rates" ... - Have I got that right?
What are the pitfalls to that approach? (legal / technical / financial ...)

 

[BruceB]

The tiering was done deliberately because it was a way ensuring plant owners did not over-produce heat just to get the rhi payment. Presumably that means tier 1 is designed to be above the marginal cost of producing the heat so it is paying back the additional capital cost involved in biomass, and tier 2 is set at or below the marginal cost of producing the heat.

I think your example above is correct.

You are way above MCS sizes above, but if MCS then you you need to meet MIS3004 which requires a calculation of plant size. So you would need some engineering justification for your plant size. Above MCS, I cannot immediately see where the RHI eligibility rules tackle this point. But I have a recollection of it being discussed a year or 2 ago on one of these forums.

You have to be a bit careful because this is goverment money we are effectively sanctioning being paid out. So personally I would not be involved where I thought the client was totally tearing the bottom out of it, but there is often a grey area where you can have a range of reasonable solutions. Obviously I would document any reasoning, particularly if it strayed from norms.

I have had an RHI audit here at home. The auditor was mainly interested in my paperwork and the metering and everything was fine. It would be quite easy for them to widen that scope if OFGEM wanted.

 

[Worcester]

Hi Bruce,

The thing is of course that Commercial RHI is not simply about district heating, it also covers processes, so for instance the drying process of wood to produce biomass pellets and wood chip at the right moisture content is an eligible use of RHI supported biomass heat , One easy way to justify a cascaded 100kW boiler to 2 x 100 or 1 x 199kW is duty cycle. Also, as with large solar (>50kW) , when outside MCS sizing, it is 'assumed' that a competent person / compnay has been employed to design, install and commission the system