Green Breakfast - Renewable Energy Opportunities

Carter Jonas

� National firm of property consultants dating back to 1855

� 30 Offices across England & Wales� Multi disciplined firm:

� Residential� Rural Land & Business� Commercial� Planning & Development � Architecture & Building Consultancy Specialist Teams:� Energy & Marine� GIS CAD & Mapping� Minerals and Waste � Infrastructures

The Energy Team (Energy & Marine)

West/South West Eastern/South East

Northern

Current projects

� Clients include: Land and property owners, developers, energy companies, utility companies, investors in the sector, businesses with high energy demands

� Proven track record: 200+ ongoing projects

� Strong market knowledge and experience of renewable energy sector, including manufacturers & their products

Wind Farm

Wind medium

Wind small

Hydro

Solar - roof mounted

Solar - ground mounted

AD

Biomass

UK Renewables - drivers:(not exhaustive)

� UK signed up to EU Renewable Energy Directive - by 2020 15% of energy from renewables

- Aim to tackle climate change in UK and reduce our CO2 emissions between ’09 and 2030 by 750M tonnes

- Reduce fossil fuel demands by circa 10% and gas imports by 20-30% versus likely use by 2020

- Create employment

� Carbon Reduction Commitment – CRC (users of 6000mWh/annum -£500K+)

� Middle East – supply of fossil fuels…reliability??

� Oil price (Brent Crude) $125/barrel

� UK Nuclear development – effects of Fukushima

Proposed Electricity Market Reform

� Announced by Government - Dec 2010

� “Seismic shift” and proposals include long term contracts and a carbon price floor

� Aims include electricity market shake up to ensure £100++bn of infrastructure investment by 2020

� Proposals include Feed-in Tariff scheme using contracts for difference (CfD) to create a stable revenue stream for low carbon generators

� Intention to set an emissions performance standard – ruling out gas power stations not fitted with CCS tech

� Carbon floor price plans – Treasury – 3 scenarios up to either £20/30/40 per Tonne by 2020.

� Plans were out to consultation to March 2011, possible legislation by year end?

Support Mechanisms at present

� Renewables Obligation and ROCs

� Feed-in Tariff (FiT) – up to 5MW

� RHI – forthcoming July 2011 on a phased basis

Background to the Renewables Obligation

� UK’s support scheme for large renewable electricity projects – runs to 2037

� Obligation on UK electricity suppliers to source a proportion of their electricity from renewables

� ROC – the “green certificate”

� 27 April 2011: average single ROC trading at £50.54

� In England and Wales renewable projects receive varying ROC support levels

ROC BandingsTechnology Payment examples:-

� Onshore Wind 1.0 ROC per MWH

� Offshore Wind 1.5

� Hydro-electric 1.0

� Solar Photovoltaic 2.0

� Wave/Tidal Steam 2.0

� Anaerobic Digestion/Energy Crops 2.0

� Biomass with CHP 2.0 (1.5 without CHP)

Feed-in Tariff (FiT) – Micro to Medium Scale Generation

� 1st April 2010 - AD, Hydro, Micro CHP, Solar PV, Wind

� Designed to encourage the adoption of renewable energy sources

� For projects sub 5 megawatts (MW) in generating capacity

� FiT means smaller scale schemes are also viable despite higher capital costs per MW installed

� Has led to more property owners developing their own projects

� Guarantees a fixed payment per kilowatt hour (kWh) generated for20 years, apart from solar pv which is 25 years, export tariff too.

Project exampleswe will look at today:

� Wind – Commercial, medium, micro

� Solar pv

� Anaerobic Digestion Plant

� Hydropower

Wind - Commercial Scale

� 100m -135m tall to the tip of the blades

� 2-3MW per turbine

� Wind farms and merchant sites

� Developers and large companies

� ROC’s

Wind - Medium Scale

� 40 – 60m tall

� 100kW – 500kW

� Located at farms, schools, companies

� Developers, local authorities individuals

� Suitable for the Feed-in Tariff

Micro wind

� Gaia 11kW - 18m to hub

� Less than 100 kW

� Agricultural and business use.

� Suitable for individuals and small companies

� Qualify for Feed in Tariff

� Fewer planning restrictions than larger turbines

Wind Energy - site selection

� Wind speed

� Proximity to Residential properties: noise and shadow flicker

� Aviation and Radar

� Microwave links from telecom sites

� Landscape designations

� Historical features

� Grid capacity and length of connection

� Access costs

Constraint MappingNote: Map has Client’s approval for

Carter Jonas use in PR

Wind Energy: Feed-in Tariff rates

Energy Source Scale

Generati

on TariffDuration

(p/kWh)[

A] (years)

Wind ≤1.5kW 34.5 20

Wind >1.5 - 15kW 26.7 20

Wind >15 - 100kW 24.1 20

Wind >100 - 500kW 18.8 20

Wind>500kW -1.5MW 9.4 20

Wind >1.5MW - 5MW 4.5 20

Turbine Options – examples of micro/medium

� Gaia 11kW 21m £60k

� Endurance 50kW

� WES 18 80kW

� Northwind 100 100kW

� WES 30 250kW

� Vergnet 275 275kW

� Enercon E-33 330kW 67m £760k

� Note: E-33 is IEC 61400-1 Certified (European engineering

standard)

Micro Windexample Gaia 11kW example at 5.5 m/s

� Generation

� Estimated annual electricity production (MWh) 29.8716

� Wholesale electricity price (MWh) £30.00

� Feed in Tariff £267.00� LEC Price £4.70

� Estimated present annual revenue £9,012

� Estimated present operating margin £8,564

� Estimated Pre Construction Costs

� Planning £3,000� Technical design (inc Met Mast)

£1,000

� Appeal (if required) £0� Ecological Assessments £0� Grid Studies £0

� Total £4,000

� Estimated Construction Costs

� Grid Connection £2,200� Turbine cost £50,000� Infrastructure £3,800

� Total £56,000

� Return � Straight Return 14.3%

Medium Wind Enercon E-33 330kW example at 6.4 m/s

� Generation

� Estimated annual electricity production (MWh) 621.522

� Wholesale electricity price (MWh) £30.00

� Feed in Tariff £188.00� LEC Price £4.70

� Estimated present annual revenue £138,413

� Estimated present operating margin £133,752

� Estimated Pre Construction Costs

� Planning £20,000� Technical design (inc Met Mast)

£25,000

� Appeal (if required) £0� Ecological Assessments £15,000� Grid Studies £7,500

� Total £67,500

� Estimated Construction Costs

� Grid Connection £90,000� Turbine cost £500,000 � Infrastructure

incl foundations £102,500� Total £692,500

� Return � Straight Return 17.6%

Solar Photovoltaics

� Solar PV uses semi-conductor technology to convert solar irradiation in to DC electrical current

� Established technology but expensive when compared to conventional sources

� Feed-in Tariff support has led to a viable investment option sub 50kW

Feed in Tariff Rates – Solar PVSubject to FAST TRACK REVIEW

Energy Source Scale

Generation Tariff

Duration

(p/kWh)[A] (years)

Solar PV ≤4 kW New 36.1 25

Solar PV ≤4 kW Retrofit 41.3 25

Solar PV >4 - 10kW 36.1 25

Solar PV >100 - 500kW 29.3 25

Solar PV>100kW -5MW 29.3 25

Solar PV Standalone 29.3 25

* 9% annual digression of all rates for installations commissioned after March 31st 2012

Solar pv – fast track potential rates……?

� Scale Existing FiT (pence/kWh) Duration (years)

Solar PV>10 - 100kW 31.4 25Solar PV>100kW - 5MW 29.3 25Solar PV Stand-alone 29.3 25

� Scale Possible FiT (pence/kWh) Duration (years)

Solar PV>50kW - ≤150kW 19 25Solar PV>150kW - ≤250kW 15 25Solar PV>250kW - ≤5MW 8.5 25

Solar pv Developers v DECC – Litigation….

Rooftop Array requirements

� South facing roof

� Load bearing capacity of around 15kg/sqm

� Preferably outside of visually sensitive locations

such as conservation areas

� Tiled/composite sheet roofs are easier to fix

panels to though it is possible on fibre cement

� Adequate on site transformer capacity – ideally

50 kVa or larger

� Away from potential shading obstacles such as

trees (3.5 times height)

� Planning permission will usually be required

� Summer on site electricity demand ideal

Approximately 7.5 sq m of usable roof space required per kWp

Solar pv rooftop array returnsExample 8kW Array on 72 sq m usable roof

� Generation

� Estimated annual electricity production (kWh) 7,120

� Electricity price saving (kWh) £0.10

� Feed in Tariff £0.361� Estimated present annual revenue

£3,282

� Estimated present operating margin £3,182

� Estimated Pre Construction Costs � Planning £500

� Technical design £1,000� Appeal (if required) £0� Ecological Assessments £0

� Grid Studies £0� Total £1,500

� Estimated Construction Costs

� Grid Connection £0� Array components £28,000 � Infrastructure £0

� Total £28,000

� Return � Straight Return 10.8%

* This model assumes all of the electricity is used on site, south facing, 20 degree pitch

Ground Mounted Arrays – troubled times!

� Solar parks or farms

� Commercial scale >500kW

� 3ha – 15ha of land take

� Flat or south facing and well screened

� 11kv line or 33kv substation required

� Most developers seeking 3MW+ near 33kv infrastructure

� Option and lease market on hold

� Rents £1000 - £2000 per acre RPI linked for 25 year term

Ground Mounted ArrayExample of projected returns 5MW Scheme (12ha)� Generation

� Estimated annual electricity production (kWh) 4,860,000

� Wholesale Export price (kWh) £0.03

� Feed in Tariff £0.293 (pre review rate)

� LEC Price £0.00496

� Estimated present annual revenue £1,591,542

� Estimated present operating margin £1,422,347

� Estimated Pre Construction Costs

� Planning £40,000� Technical design £15,000

� Appeal (if required) £0� Ecological Assessments £10,000� Grid Studies £10,000

� Total £75,000

� Estimated Construction Costs

� Grid Connection £600,000� Array components £10,214,571� Infrastructure £805,000

� Total £11,619,571

� Return � Straight Return 12.2% (pre review

rate)

Anaerobic Digestion – how does AD work?

Courtesy of Biogas Nord UK

AD key requirements and output

� Regular and reliable source of substrate

� Sufficient land to receive digestate

� Access to a good road network

� Accessible electrical grid connection

� Upwards of 10% return on successful plants

� Electricity sales

� ROC OR FiT support

� Gate fees

� Nitrogen benefits

Hydropower 96 kW example

� A “low head” scheme located in North Wales

� The proposed scheme is to be located at the upper of multiple weirs with a 2.5m head feeding two Archimedes screw turbines side by side

� Recommendation from the Environment Agency secured for 70% of the water above hands off flow for winter months and 50% for thesummer months

� The full load output of the turbine will be 96kW

HydropowerExample of projected returns from 96kW example� Generation

� Estimated annual electricity production (kWh) 292,231

� Wholesale Export price (kWh) £0.03

� Feed in Tariff £0.178� Estimated annual revenue £60,784

� Estimated present operating margin £52,784

� Estimated Pre Construction Costs � Planning & licensing £10,000� Technical design £5,000

� Appeal (if required) £0� Ecological Assessments £5,000

� Grid Studies £2,000� Total £22,000

� Estimated Construction Costs

� Grid Connection £92,700� Mechanical Hydro £90,710� Civil Hydro £122,490

� Total £305,900

� Return � Straight Return 16.1%

FiT review

� Confirmed at the Spending Review, the FiT review will determine how the efficiency of FITs will be improved to deliver £40 million of savings, around 10%, in 2014/15

� The review is in 2 phases:

April 2012 - comprehensive and as set out when the FIT scheme started, will consider all aspects of the scheme

Current fast track review - large scale solar pv and AD this has a 6 May deadline for consultation with 1 August 2011 implementation

Forthcoming Renewable Heat Incentive (RHI)

� Final details of the RHI announced in March by DECC� Commence July 2011� Support for a range of technologies and fuel uses including solid and

gaseous biomass, solar thermal, ground and water source heat-pumps, on-site biogas, deep geothermal, energy from waste and injection ofbiomethane into the grid

� RHI will have scheduled 4 yearly reviews starting in 2014 and being implemented in 2015!?

� Phased implementation� Phase 1 - targeting large emitters in the non domestic sector which will

include the industrial and commercial sectors, not for profit organisations and communities

� As part of the first phase the Government will also introduce the Renewable Heat Premium Payments (RHPP) in July 2011 for the domestic sector, having ring fenced £15M which they will use to make premium payments to households who install renewable heating

� Phase 2 of the RHI will include long-term support for the domestic sector which will be introduced in 2012

How Carter Jonas can assist

� Initial site assessments/screening (WindPro, HyrdaA,GIS)

� Feasibility studies

� Financial Modelling

� Advice on equipment and procurement

� Initial grid investigations and negotiations, aviation consultation

� Planning

� Procurement

� Valuation/due diligence/brokerage

Thank you for your time

Any questions?

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