1. Profit from Renewable Energy
Sustainable Business Network
Chewton Glen Hotel, 20 January 2011
Laurie Tennant, Engenius Limited

2. Since 01 April 2010 it has been possible to achieve good returns on
investment in generation of electricity from renewable resources,
thanks to Feed-in Tariffs which started on that date.
Qualifying Technologies:
•Wind
•Solar-electric
•Hydro-electric
•Biomass for electricity production
•Anaerobic Digestion for electricity production
•CHP and micro-CHP (the electricity content of Combined Heat
and Power) – including NG-fuelled
Non-qualifying Technologies:
•Tidal
•Wave
•Anything else eg landfill & sewage gas for generation, fuel cells
Feed-in Tariff

3. 5kW Wind Turbine

4. Solar-electric (PV) on school building

5. Anaerobic Digester

6. Micro-Hydro Turbine

7. The
Feed-in
Tariff
for
electricity
Technology Scale
2010-11 Tariff
p/kWh
Annual
change3
AD1
(electricity) <5MW 9.0 0
AD1
(CHP1
) <5MW 11.5 0
Biomass <50kW 9.0 0
Biomass 50kW-5MW 4.5 0
Biomass (CHP1
) <5MW 9.0 0
Hydro <10kW 17.0 0
Hydro 10–100kW 12.0 0
Hydro 100kW–1MW 8.5 0
Hydro 1-5MW 4.5 0
Micro-CHP1
<50KW [T.B.A in Autumn]
PV1
(New build2
) <4kW 31.0 - 7 %
PV1
(Retrofit2
) <4kW 36.5 - 7 %
PV1
4-10kW 31.0 - 7 %
PV1
10–100kW 28.0 - 7 %
PV1
100kW–5MW 26.0 - 7 %
PV1
(stand alone2
) <5MW 26.0 - 7 %
Wind <1.5kW 30.5 - 4 %
Wind 1.5–15kW 23.0 - 3 %
Wind 15–50kW 20.5 - 3 %
Wind 50–250kW 18.0 0
Wind 250–500kW 16.0 0
Wind 500kW–5MW 4.5 0
Existing RO1
sites <50kW 9.0 0
1
Abbreviations: AD=Anaerobic Digestion,
PV=Photovoltaic (solar), CHP=Combined
heat and power, RO=Renewables Obligation
2
The consultation document doesn’t define
these (but see below)
3
The annual 'degression' see question near
bottom of this page

8. On 01 June 2011 HMG will introduce a similar scheme in respect of
renewably-generated heat energy, called the Renewable Heat
Incentive. Details are not yet known but qualifying technologies are
expected to include:
• Bio-mass for heat generation
• Bio-fuels (for heat generation; probably not for traction)
• Anaerobic Digestion (gas for on-site heating and export as
bio-methane to the gas grid)
•Ground- and Air-source Heat Pumps
• Solar-thermal
• CHP and micro-CHP
(the heat content of Combined Heat and Power)
In almost every case the appropriate technology will be dictated by
local conditions (site, environment, commercial, ethical).
The Renewable Heat Incentive

9. Air-source Heat Pump
photo courtesy Mitsubishi Electric Co

10. Solar-thermalphoto courtesy New Homes directory

11. Ground-source Heat Pumpphoto courtesy Eco House Agent

12. The Renewable Heat Incentive

13. Grants for not-for-profit may be available through funds such as CSEP
and electricity companies, but LCBP funds will cease when the relevant
tariffs come into effect, or before if funding is exhausted.
For farmers, see: www.seeda.co.uk/rdpe
Soft loans are available in some circumstances from Carbon Trust;
private financiers have also entered the market eg Triodos Bank and
Bridgegreen. Commercial loans will be secured on revenue streams
arising from the tariffs. Many mortgage lenders are happy to add the cost
of microgeneration equipment to the loan.
Enhanced Capital Allowances do not apply unless equipment is on the
ECA list – electricity generation isn’t at present:
http://www.eca.gov.uk/
Funding

14. SBN Presentation, 8 Dec 2009, UKSA: Profit from Renewable Energy
All exclusive of VAT
Units Before FIT After FIT Before FIT After FIT
Gross Capital Cost £ 30,000 30,000 117,500 117,500
Equipment lifetime years 15 15 25 25
Tariff guarantee period years 20 25
Annual Maintenance (life ave) 8% 8% 1% 1%
Depreciation (straight-line) £ 2,000 2,000 4,700 4,700
Expected annual output MWh 20.0 20.0 20.0 20.0
Proportion exported 50% 50% 10% 10%
Amount Exported MWh 10.0 10.0 2.0 2.0
Imports avoided MWh 10.0 10.0 18.0 18.0
FIT Tariff £/MWh - 230 - 280
FIT credit £ - 4,600 - 5,600
Export Premium £ 600 500 120 100
Avoided cost of imports £ 900 900 1,620 1,620
Total Value of Generation £ 1,500 6,000 1,740 7,320
Add-back Corp Tax on deprcn £ 460 460 1,081 1,081
Annual maintenance (ave) £ 2,400- 2,400- 1,175- 1,175-
Net annual income £ 440- 4,060 1,646 7,226
Total lifetime income £ NA 60,900 41,150 180,650
Internal Rate of Return 6.7% 6.1%
Net Present Value £ 4,642 24,291
Payback period years 10.0 10.8
Based on:
Export Rate pre-FIT 6.00 p/kWh = 60.00 £/MWh
Export Rate post-FIT 5.00 p/kWh = 50.00 £/MWh
Import Rate 9.00 p/kWh = 90.00 £/MWh
Assumed real rise of Imp rate 10% pa
Marginal rate of Corp Tax 23%
Discount rate, ave over lifetime 5% pa © Engenius Limited 2009
WIND TURBINE, 10kWe PV ARRAY, 23.5kWp
Two
Examples

15. Tomorrow’s Energy Price?