Pathways to 40% Carbon Reductions by 2020: The impact of Feed-in Tariffs and the Renewable Heat Incentive on the economic performance of eligible technologies

SR Allen, Jo Southernwood, Chris Dunham

Research output: Book/ReportCommissioned report

Abstract

In 2009, Carbon Descent was commissioned by Friends of the Earth to deliver evidence-based scenarios for the reduction of carbon dioxide emissions by 40% (relative to 2006 emissions) by 2020 across a representative range of local authorities in England.

Carbon Descent’s in-house software tool, VantagePoint, was used to model carbon-reduction scenarios for the county of Hampshire (excluding Southampton and Portsmouth), the London Borough of Tower Hamlets, and the unitary authority of Middlesbrough. Carbon-reduction measures relating to the three sectors of housing, decentralised energy supply and transport were modelled as separate scenarios (non-domestic energy efficiency and non-domestic renewable energy were not prioritised for inclusion because they were considered less susceptible to local authority influence). Selected measures from these individual scenarios were then taken to form a combined scenario for each authority covering the energy system at the local level.

The resulting report, Pathways to 40% Carbon Reductions by 2020i, demonstrated that each of the three local authorities can meet the 40% reduction target by 2020 through action and investment across the three identified policy areas. The different characteristics of each authority meant that different measures are appropriate in each case, and the economic performance of the three scenarios varied correspondingly. Domestic microgeneration technologies were generally found to perform negatively in economic terms out to 2030, as measured by net present values (NPVs). The relatively large application of domestic microgeneration for Hampshire was a major cause of Hampshire’s negative overall NPV in 2030, which contrasted with positive NPVs for Tower Hamlets and Middlesbrough (whose scenarios used less or no domestic microgeneration, respectively). The report indicated, however, that the advent of Feed-in Tariffs (FITs) in 2010 and the Renewable Heat Incentive (RHI) in 2011 could significantly change the economic performance of domestic microgenerators and other eligible technologies.

This study updates the previous report by assessing the impact of FITs and the RHI on the NPV of any eligible technology considered in the original modelling worki. Across all three combined scenarios these technologies are domestic solar photovoltaic (PV) systems, domestic solar thermal (water heating) systems, domestic ground-source heat pumps (GSHPs), and biomass CHP. The methodology and assumptions applied for each technology are described in the following sections, before updated NPV results for each scenario and associated conclusions are presented.
Original languageEnglish
Place of PublicationLondon
PublisherCarbon Descent
Commissioning bodyFriends of the Earth
Number of pages7
Publication statusPublished - May 2010

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