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The Non-Domestic Renewable Heat Incentive (RHI) is an environmental programme which provides financial incentives to increase the uptake of renewable heating technologies by businesses and not-for-profit organisations. Eligible systems receive quarterly payments over 20 years depending on their heat output. Payments begin to accrue from the date of accreditation. Both air source and ground source heat pumps can apply for RHI payments. For air source heat pumps the current tariff is 2.61 p/kWh and ground source heat pumps can receive 9.09 p/kWh.
The Government regularly reviews the cost effectiveness and performance of its policies including the RHI. Following public consultations, the Department of Business Energy and Industrial Strategy laid the new regulations on 7th February and the new eligibility criteria and policies are due to come into effect in the Spring. The changes, when approved, will apply to new applicants and to existing ones who amend their capacity.
The regulations will introduce a number of changes to eligible heat uses. The Government will remove wood-fuel drying as an eligible heat use other than where the renewable heat installation is replacing a fossil fuel heat source. The drying, cleaning or processing of waste will no longer be an eligible heat use. Finally, the eligibility of swimming pools will be tightened so that only pools that are used for a municipal or commercial purpose can receive support. The Government’s response to the consultation on eligible heat uses can be found here: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/679244/RHI_Eligible_Heat_Use_Government_Response.pdf
A new policy to allow applicants to secure a tariff rate before their installation is commissioned and fully accredited on the RHI. The tariff guarantees policy will be applicable to large plants. For Ground and Water Source Heat Pumps, this means the system must be above 100kWth. Ofgem’s guide to tariff guarantees can be found here: https://www.ofgem.gov.uk/system/files/docs/2018/02/guide_to_tariff_guarantees_final_version_14.02.2018.pdf
The regulations will introduce payments shared ground loops. Applications for a system where a ground loop is connected to two or more heat pumps will be classified as a shared ground loop system. Payments for a shared ground loop system will be based on the deemed score of the property, as is the case in the Domestic RHI scheme. Ofgem have produced a guide to shared ground loops which can be found here: https://www.ofgem.gov.uk/system/files/docs/2018/02/easy_guide_to_shared_ground_loops_final_version_7_feb_18.pdf
More details on the changes to the non-domestic regulations can be found on the BEIS and Ofgem websites.
NIBE Industrier is acquiring Alfa Laval’s business for district heating/cooling systems and hot water systems for commercial use. The products were previously sold under the well-known Cetetherm and Uranus brands which now will be used again.
The business acquired has around 60 employees in Sweden (primarily in Ronneby), France, Russia, the Czech Republic, Finland, the United Kingdom and Slovakia. Sales were approximately SEK 300 million in 2017, with positive operating margin.
“The acquisition gives NIBE Climate Solutions additional high-quality products with good business opportunities, and it generates synergies with NIBE’s heat pumps,” says Gerteric Lindquist, CEO of NIBE Industrier. “We also find it both valuable and positive that both management and other employees will remain in post in the NIBE Group.”
“This business has indeed improved throughout last year,” says Tom Erixon, President and CEO of the Alfa Laval Group. ”However we concluded that it would have even better opportunities to develop under the ownership of the NIBE Group. NIBE Group is a solid player with a dedicated focus on the HVAC industry – and the heat exchanger systems will be a valuable complement to their current portfolio”.
The acquisition is expected to be consolidated into the NIBE Climate Solutions business area as of 31 May 2018. The purchase price is not specified because the acquired business will constitute a small part of the NIBE Group.
Between 2001 and 2010, there were on average 144,000 new homes completed annually, this is 100,000 fewer than in the 1970s, yet the population has risen[i]. The Government is committed to building 225,000 to 275,000 more homes per year to keep up with population growth. As we build more homes we must also build energy efficient homes. Whilst new homes are generally more efficient than existing homes, it is widely accepted that they are not what is needed to meet our carbon budgets.
Our new homes too often do not meet the performance standards, and this means that consumers are not getting what they expect from a newly built home. Buyers believe they are getting an affordable, highly efficient home but all too often homes are leaky, fossil fuel dependent, poor quality and not fit for the future. Despite us having the technology and solutions to build to EPC Band A and zero carbon standards. This is something that Lord Deben, Chair of the Committee on Climate Change is keen to address. Only one in five new homes are rated Energy Performance Band C. Given that the average existing home is EPC band D and the Government has an aspiration to bring all homes up to Band C as a minimum standard, this is a shocking statistic. House builders must step up to ensure that new homes meet higher standards to deliver high levels of fabric efficiency and future proof properties for low carbon heat.
Building inefficient homes does not enable low temperature heating systems but instead creates properties that remain reliant on fossil fuels and will need costly retrofits in the future. To meet our carbon budgets, emissions from buildings will need to be close to zero carbon by 2050. The government has recognised this and has stated that we “need to avoid new homes needing to be retrofitted later and ensure that they can all accommodate low carbon heating. This could involve all new homes off the gas grid from the mid-2020s being heated by a low carbon system such as a heat pump.”[ii]
My question to the government and to house builders would be if this low carbon heat future can be achieved today, why aren’t we delivering it?
The Government is concerned about the cost of improving the requirements for new homes, but the cost of not taking action is greater. The cost would include higher energy bills for consumers, the need to retrofit renewable heating systems and insulation in these new homes in the future, and the damage to the environment of emitting avoidable carbon emissions. It is important to recognise that the cost of living in a future-proofed home will also be reduced, making them more affordable and comfortable for homeowners today and in the future. Moreover, there is a plethora of demonstration projects across the country that show that it is possible to build low carbon, affordable housing; both in terms of market value and living costs.
Renewable ready homes need low temperature ready heat emitters, high thermal insulation to reduce demand, and smart technologies given the role they will play in a more connected future world. Once a home has been built to this standard, the additional cost of installing a low carbon heating system is reduced significantly as many of the ancillary costs have been met. In addition, the cost of installing a heat pump at new build stage is lower than the cost of installing it as a retrofit at a later date due to economies of scale and availability of skilled labour on site.
I believe that if we are to lower the cost of transitioning to renewable heat, meet our carbon budgets and build affordable, future-proofed homes; a renewable ready standard should mean installing renewable technologies today, making low carbon homes the norm rather than a novelty.
Read Phil Hurley's Blog
[i] National Audit Office (2017) Key facts Housing in England: overview https://www.nao.org.uk/wp-content/uploads/2017/01/Housing-in-England-overview.pdf
[ii] BEIS (2017) Clean Growth Strategy https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/651916/BEIS_The_Clean_Growth_online_12.10.17.pdf
On Monday 5th March, NIBE Energy Systems exhibited at ‘Energy Innovation Exhibition – Looking to the Future’ which was organised by the Sustainable Energy Association and the All-Party Parliamentary Group for Renewable and Sustainable Energy (PRASEG). The event aimed to raise awareness of and showcase innovative, energy saving and low carbon technologies within Parliament.
We presented our new, renewable exhaust air heat pumps to Parliamentarians and Peers across the political spectrum, including the Minister of State for Energy and Clean Growth. This new generation of heat pumps provides heating, hot water, ventilation and heat recovery for homes. It is particularly well suited to new homes with consumers being able to easily schedule their heating and hot water requirements for each day of the week, ensuring a comfortable indoor climate. The heat pump is also smart grid ready and is able to respond to pricing signals, reducing the strain on the grid and saving consumers money.
Prior to her keynote address the Minister spoke to us about the F730 integrated heat pump and proudly told the delegates that she would be taking home a Molly the Moose from the NIBE stand.
The Minister highlighted the Government’s ambition to get homes off the gas grid, in particular, off fossil fuels and the importance of innovation in tackling climate change and the role that new technologies will play in cutting emissions. She stated that we do not yet know what the most affordable technologies will be and that the Department for Business Energy and Industrial Strategy is investing heavily in innovation to drive decarbonisation.
The cross-party commitment to meeting our climate change targets was clear, with the Minister emphasising that we were the first country in the world to pass a Climate Change Act and that do to that cross party support was key. The Shadow Minister Alan Whitehead MP shared her enthusiasm, highlighting the enormous amount of progress that has been made to date and the significant role innovation will play as we move forward. He did however, stress that there is a lot still to do, particularly in terms of heat.
Phil Hurley, Managing Director of NIBE Energy Systems said “The event was a great way for us to showcase our new innovative technologies to MPs and members of the House of Lords, many of whom were keen to find out more about the role heat pumps could play in our energy future. There is no silver bullet to solve the decarbonisation challenge but the technologies that were on display at the exhibition offer opportunities to lower emissions, reduce bills and improve households comfort. Collectively, we can work towards a cleaner, greener future.”
NIBE has reached an agreement to acquire 70% of the outstanding shares in Hemi Heating AB. NIBE has an option to acquire the remaining 30% of Hemi Heating´s outstanding shares at a later time.
Hemi Heating produces heating jackets, heating tents, heating cables, heater fans and several different temperature control options. Hemi Heating have a strong foothold in the science and research segment and have delivered to CERN, MAX4 and a number of universities. As most producers of heating jackets Hemi Heating also produces products for the semiconductor industry.
The company was founded in 1991, has 36 employees, a turnover of about MSEK 20 and a profit level around 15%. Hemi Heating has an 80% ownership in a Chinese company and 16 of the 36 employees are employed in the Chinese company. The local management owns the remaining 20% of the Chinese subsidiary.
Production takes place in Södertälje, Sweden and in Guiyang, China.
Hemi Heating will become part of NIBE Element and will legally be a subsidiary to Backer BHV. The current management/owners Henry and Kerstin Kvael will continue to run the company.
NIBE reports another successful year and shows a significant increase in both sales and profit in the company’s 2017 year-end report
“For NIBE, 2017 was a strong year and the intermediate target of achieving sales of 20 billion by 2020 now feels very close. As soon as we pass the 20 billion sales target, the next milestone will be 40 billion,” says Gerteric Lindquist, CEO of NIBE.
“The year was characterized by good demand, resulting in high production rates, continued high acquisition intensity, especially in North America, and several good signs that our product range based on intelligent, sustainable, fossil-free climate control solutions is highly appreciated.”
“All business areas are growing and taking a bigger share of their markets, thus strengthening their international presence.”
“We have a timely product programme and business philosophy. Our profitability is stable, we are well-prepared for further acquisitions and are geographically widespread, which creates stability. As always, there are many uncertainties in the outside world, but we are still cautiously positive on 2018,” says Lindquist.
The demand for renewable heating solutions for our homes continues to gather pace with an ever increasing number of homeowners exploring the options available to them.
In order to support this growth in demand, and to ensure all areas of the market are catered for, leading manufacturer NIBE has added a new smaller model to it extensive range which will support new build and smaller properties.
“It is important that we opened up the availability of our products to a wider range of homeowners and developers so that properties with a smaller heating loads are able to reap the benefits of renewable heating solutions too,” said Robin Adderley sales director NIBE Energy Systems. “Enabling more people to enjoy the benefits of such systems, both financially and environmentally, is a very positive step towards delivering more choice for homeowners as to how they provide heating and hot water for their homes.”
The F2040- 6kW joins the F2040 family of heat pumps which has been previously offered in 8, 12 and 16kW. The new, smaller heat pump offers the same product features as the established larger units such as compatibility with the VVM320 Indoor Module and SMO range of controllers. The F2040 is also a ideal size for complementing other energy sources for hybrid solutions and can be docked with an existing system such as an oil or gas boiler.
“Hybrid systems are becoming increasingly common applications for heat pumps, with the heat pump being incorporated into existing energy sources with great effect,” said Robin. “ It is an investment that brings considerable economic, energy and environmental benefits and one which we look forward to seeing more installations in the coming months and years.”
Like the larger models in the series, the NIBE F2040-6 heat pumps offer a high heating capacity from the inverter driven compressor and can operate down to -20°C ambient.
Despite delays to policies and changes within Government, for me 2017 demonstrated a growing consensus on climate change, sustainable energy and a commitment to a cleaner future. On the Global stage, the UN Climate Change Conference sent a common message that co-ordinated action is needed to get on track towards the Paris Climate Change Agreement despite Donald Trump’s withdrawal. In the UK, the political parties united on the need to address climate change, improve the efficiency of existing buildings and build more homes.
Renewables beat fossil fuels on a number of fronts throughout 2017. Over the year, a host of different renewable energy records were broken. This included the first full day since the Industrial Revolution without coal power, the most electricity produced from solar power, and the most wind power produced in a day. We have the fourth cleanest power system in Europe and our emissions from the power sector keep falling. To meet our carbon targets, the Committee on Climate Change has said we must also decarbonise our homes. It’s a tough nut to crack with many options still on the table but the uncertainty around how we decarbonise our homes should not be a reason for inaction.
The fifth carbon budget was agreed in June 2016, however the plan to achieve these targets got caught up in politics and as such was delayed, amended and redrafted as Ministers changed and departments merged. Throughout 2017, I saw multiple predictions, speculations and guestimates for its publication date and its content. Towards the end of the year, the Department for Business Energy and Industrial Strategy provided some stability and certainty for the industry by publishing its Clean Growth Strategy. The Strategy, which was discussed in my blog from October, signifies a clear shift in Government’s thinking and a commitment to sustainable growth and addressing climate change across the economy. The highlight for me was a commitment to phase out high carbon fossil fuels for off grid heating in the 2020s. This could signify the Kodak moment for fossil fuel heating.
The Committee on Climate Change recently assessed the Clean Growth Strategy. In the report, Lord Deben says that the Strategy “has changed the tone surrounding consideration of emissions reduction in the UK” and “recognised the essential contribution of the low carbon transition to the economy as a whole”. The Committee welcome its publication but stress that whilst some new policies were announced, detailed policies and measures to meet the targets are not set out and the gaps in meeting the carbon budgets remain. The committee calls for “urgent policy development”.
2018 therefore looks to be a year full of opportunities to develop new policies and shape the future landscape for renewables. For organisations involved in delivering clean, green energy to households and businesses, the Government’s commitments to phase out carbon intensive fossil fuel heating and ensure that homes are future-proofed are ones which stand out in particular. Whilst the commitment to phase out fossil fuels is clear, how the government plans to achieve it is not.
The Committee on Climate Change estimate that by 2030, 2.5 million heat pumps need to be installed in homes but to achieve this a clear focused strategy must be developed. They recommend that the Renewable Heat Incentive is urgently retargeted towards heat pumps to support this increase in installations. There are many options to support the transition to low carbon energy and over 2018, NIBE will continue to work with Government officials and industry professionals to bridge the gap between current policy and what is needed for us to meet out climate change targets.
The last year has proven that renewable energy can and will play a significant role in our future energy mix, however policy and clear commitments are needed to provide the certainty to grow in the market and further decarbonise our homes and buildings. This means that 2018 will be a busy one for the renewable energy sector and for Government as we strive to reduce our impact on the environment and build a more sustainable future. Despite the unprecedented global turbulence and political change, I feel positive moving into 2018. One way or another, the future ahead will be cleaner and greener even if the pathway alters slightly along the way.
NIBE has reached an agreement to acquire 60% of the outstanding shares in BriskHeat Corporation. NIBE has also agreed to acquire the remaining 40% of BriskHeat´s outstanding shares at a later time. BriskHeat, of Columbus, Ohio, will become part of NIBE Element North America.
BriskHeat is the world´s largest cloth heating jacket manufacturer, providing flexible surface heating elements, controls and accessories for a variety of end markets, mainly for the semiconductor industry, but also for the composite, petrochemical, plastics and consumer product industries.
Founded in 1949, BriskHeat has about 650 employees, annual sales of $39 MUSD and an operating margin above 15%. BriskHeat will continue to run its operations and support its global customer base from its Columbus, Ohio and Vietnam production locations as well as from its sales and warehouse facilities in Taiwan, China and the Netherlands.
“BriskHeat represents another key step in our strategy to become the leading electric heating supplier worldwide; this time in the important and growing Semiconductor Industry, says Gerteric Lindquist, CEO of NIBE.
“Here BriskHeat has an important and growing global customer base with both the manufacturers of semiconductor equipment (OEMs) and the actual manufacturers of semiconductors themselves. BriskHeat´s presence in this and other end markets, combined with NIBE Element´s worldwide manufacturing footprint and engineering activities will provide for significant synergies and growth opportunities going forward”.
“It is also reassuring”, says Gerteric Lindquist, “that BriskHeat´s current management, headed by Mr. Domenic Federico, will continue to run the Company”.
BriskHeat will be consolidated into NIBE Element North America effective January 1, 2018.
The purchase price is not specified because the acquired business will only constitute a small part of the NIBE Group.
Friday 23rd February marked Fuel Poverty Awareness day, during which organisations and individuals across the country highlighted the challenges faced by families unable to afford even the most basic of living essentials; heat. As the UK continues to experience one of the harshest winters for several years, the impact of cold, inefficient and expensive to run homes can be devastating. A recent report by E3G found that the UK ranks second from bottom in terms of excess winter deaths, when the heating season length is taken into account, with only Ireland performing worse. The majority of these deaths are linked to the avoidable circumstance of living in a cold home.
NIBE Energy Systems believes that everyone should have access to clean, affordable and reliable heat. Renewables are the only real energy-secure future proof solution to heating our homes, however encouraging consumers to switch to low carbon solutions can be challenging. To understand the barriers, in co-ordination with the Department of Business Energy and Industrial Strategy, we asked our installers what they thought the barriers to heat pump uptake were. Almost 140 people responded to the survey, of which 43% highlighted cost as a significant barrier for heat pump deployment. A key theme throughout the responses was the fall in oil price over the last couple of years and consumers relying on low oil prices to heat their homes. Respondents stated that “oil is seen as the cheaper option” and that “oil seems to be favoured while oil prices are currently so low”.
Whilst the low oil price over the three years has provided some rest bite for off-grid households, since August the oil price has rebounded, and prices have risen. Prices peaked to those seen in 2014, with the average price for a litre of heating oil increasing by 24% between November 2016 and November 2017. This price volatility makes it increasingly difficult for households to budget for their energy requirements and it can leave households opting to not use their heating when prices unexpectedly rise, particularly in the winter months. For households at risk of fuel poverty, this unpredictability can be devastating.
Switching these homes to clean, renewable heating systems is a quick win in terms of reducing carbon emissions, lowering fuel bills and improving comfort. As part of the Clean Growth Strategy, the Government has committed to phasing out high carbon fossil fuels in off grid homes during the 2020s. This will help to lower emissions from buildings, which currently represent almost 40% of the UK’s total greenhouse gas emissions. Moreover, households switching away from fossil fuels, can realise substantial energy cost savings.
Air Source Heat Pumps (ASHPs) provide heating with significantly reduced running costs compared to fossil fuels because of the high energy conversion efficiencies that can be achieved. Using the department for Business, Energy and Industrial Strategy’s central oil price scenarios, switching to an ASHP would lower the cost of heating for an average detached house by 9%. These calculations do not include the financial support consumers could receive from the Government’s Renewable Heat Incentive and do not account for the difficulty in predicting and preparing for oil price fluctuations.
The need to move away from fossil fuels is clear from an environmental perspective and for homes not connected to the gas grid, significant savings can be made through the adoption of renewable heating systems. Fuel poverty is multifaceted and like decarbonising our homes, there is no silver bullet, however the Government’s commitment to phase out high carbon fossil fuels is a step in the right direction for households struggling to afford to heat their homes.
 House of Commons Library (2018) Briefing Paper Energy Prices
 Oil price comparison site Boilerjuice.com