Schedule 16 NEW SCHEDULE 25 TO BE ADDED INTO THE 2018 REGULATIONS

“SCHEDULE 25

ENERGY EFFICIENCY REQUIREMENTS FOR SPECIFIED ACTIVITIES

Regulation 6(1)

PART 1

Scope and Interpretation

Scope and interpretation

1.

(1)

This schedule applies to a specified activity.

(2)

Paragraphs 2 and 3 apply for the interpretation of—

(a)

this schedule,

(b)

the definition of a specified activity.

Interpretation: specified activity

2.

(1)

A “specified activity” means a regulated activity—

(a)

first carried on, or carried on at a plant or installation that was substantially refurbished, after 30 October 2014, and

(b)

included in sub-paragraph (2) and meeting the condition in sub-paragraph (3), or included in sub-paragraph (4), subject to the exemptions in paragraph 3 of this schedule.

(2)

The activities are—

(a)

operating a large combustion plant,

(b)

waste incineration or waste co-incineration at a waste incineration plant or waste co-incineration plant,

(c)

operating a medium combustion plant,

(d)

burning any fuel in combustion plants which generate electricity on the same site with an aggregated rated thermal input of 1 MW or more as described in paragraph 1 of Chapter 1 of Part 3 of schedule 26.

(3)

The condition is that the activities in sub-paragraph (2) must—

(a)

generate electricity and have a rated thermal input exceeding 20 MW, or

(b)

where more than one activity in sub-paragraph (2) is operated in the same place, the activities must have a total rated thermal input exceeding 20 MW.

(4)

An industrial emissions activity or other emissions activity with a rated thermal input exceeding 20 MW, which—

(a)

generates waste heat at a useful temperature level, or

(b)

forms part of a new or existing district heating or cooling network.

Specified activity: exemptions

3.

(1)

A specified activity does not include—

(a)

peak load and back-up electricity generating installations which operate or are planned to operate under 1,500 operating hours per year as a rolling average over a period of five years,

(b)

installations that need to be located close to a geological storage site for which a licence has been granted under section 18 of the Energy Act 2008^f1,

(c)

except where the installation or plant forms part of a new or existing district heating and cooling network, the activities in paragraph 2(2) of this schedule carried on at an individual installation or plant, with any of the following—

(i)

available waste heat of 100 kilowatts or less,

(ii)

available waste heat—

(aa)

greater than 100 kilowatts as hot water or steam, where there is no hot water heat demand greater than 100 kilowatts within the search radius from the source installation as set out in Table 1, located within the connection distance from the centre of the source installation, or

(bb)

greater than 500 kilowatts as steam where there is no steam-based heat demand greater than 500 kilowatts within the search radius from the centre of the installation as set out in Table 1, located within the connection distance from the centre of the source installation,

(iii)

a heat demand of—

(aa)

100 kilowatts or less for a hot water heat demand,

(bb)

500 kilowatts or less for a steam-based heat demand,

(iv)

a hot water heat demand greater than 100 kilowatts, with no source of available waste heat greater than 100 kilowatts within the search radius from the centre of the demand installation as set out in Table 1, located within the connection distance from the centre of the demand installation, or

(v)

a steam-based heat demand greater than 500 kilowatts, with no source of steam-based waste heat greater than 500 kilowatts within the search radius from the centre of the installation as set out in Table 1, located within the connection distance from the centre of the demand installation,

(2)

Where this schedule does not apply to an activity as a result of sub-paragraph (1)(a) or (c), SEPA must take appropriate steps to verify that the exemption criteria are met.

(3)

For the purposes of this paragraph—

• “connection distance” means—

  1. (a)

     in the case of a hot water link, the thermal capacity in kilowatts of the source or demand, which is smaller, multiplied by 0.0038,

  2. (b)

     in the case of steam heat link, the thermal capacity in kilowatts of the source or demand, which is smaller, multiplied by 0.0012,

  expressed in kilometres,

• “substantially refurbished” means a refurbishment whose cost exceeds 50% of the investment cost for a new comparable unit.

  TABLE 1

  Search radius

  Installation type	Thermal Capacity of heat source/demand	Search radius (kilometres), measured from the centre of the installation
  Hot water demand	>100 kilowatts and <3.9 megawatts	0.0038 x H, where H = thermal capacity in kilowatts
  	≥3.9 megawatts	15
  Steam demand	>500 kilowatts and <12.5 megawatts	0.0012 x H, where H = thermal capacity in kilowatts
  	≥ 12.5 megawatts	15
  Waste heat source (hot water or steam)	>100 kilowatts and <3.9 megawatts	0.0038 x H = thermal capacity in kilowatts
  	≥3.9 megawatts	15

Interpretation: general

4.

In this schedule—

• “cogeneration” means the simultaneous generation in one process of thermal energy and electrical or mechanical energy,

• “cogeneration unit” means a unit that is able to operate in cogeneration mode,

• “cost-benefit analysis” means a cost-benefit analysis carried out in accordance with paragraph 7 of this schedule,

• “economically justifiable demand” means a demand that does not exceed the needs for heating or cooling and which would otherwise be satisfied at market conditions by energy generation processes other than cogeneration,

• “electricity from cogeneration” means electricity generated in a process linked to the production of useful heat and calculated in accordance with the methodology in this schedule,

• “energy” means all forms of energy products, combustible fuels, heat, renewable energy, electricity, or any other form of energy,

• “energy savings” means an amount of saved energy determined by measuring and/or estimating consumption before and after implementation of an energy efficiency improvement measure, whilst ensuring normalisation for external conditions that affect energy consumption,

• “micro-cogeneration unit” means a cogeneration unit with a maximum capacity below 50 kW_e,

• “overall efficiency” means the annual sum of electricity and mechanical energy production and useful heat output divided by the fuel input used for heat produced in a cogeneration process and gross electricity and mechanical energy production,

• “power to heat ratio” means the ratio of electricity from cogeneration to useful heat when operating in full cogeneration mode using operational data of the specific unit,

• “refurbishment” does not include the fitting of equipment to capture carbon dioxide produced by a combustion installation for the purposes of geological storage,

• “small-scale cogeneration unit” means a cogeneration unit with installed capacity below 1 MW_,

• “unit” means any boilers, furnaces, turbines or compression ignition engines forming part of an installation which added together have a rated thermal input of more than 20 megawatts.

Interpretation: high-efficiency cogeneration

5.

In this schedule, “high efficiency cogeneration” means cogeneration meeting the criteria in sub-paragraph (a) whilst using one of the cogeneration technologies in sub-paragraph (b)—

(a)

the criteria are—

(i)

cogeneration production from cogeneration units must provide primary energy savings calculated in accordance with paragraphs 9, 10 and 11 of this schedule of at least 10% compared with the references for separate production of heat and electricity, or

(ii)

production from small-scale and micro-cogeneration units providing primary energy savings where SEPA determines that they qualify as high-efficiency cogeneration,

(b)

the cogeneration technologies are—

(i)

combined cycle gas turbine with heat recovery,

(ii)

steam back pressure turbine,

(iii)

steam condensing extraction turbine,

(iv)

gas turbine with heat recovery,

(v)

internal combustion engine,

(vi)

microturbines,

(vii)

stirling engines,

(viii)

fuel cells,

(ix)

steam engines,

(x)

organic Rankine cycles,

(xi)

any other types of technology or combination of technologies comprising cogeneration.

PART 2

Amendment of common framework provisions

Cost-benefit analysis

6.

(1)

An application for an authorisation for a specified activity must include a cost-benefit analysis unless sub-paragraph (2) applies.

(2)

This sub-paragraph applies where a comprehensive national assessment and any associated cost-benefit analysis has demonstrated that a site-specific cost-benefit analysis is unlikely to be positive.

(3)

The cost-benefit analysis must be carried out in accordance with paragraph 7 of this schedule and must—

(a)

in the case of a specified activity included in paragraph 2(2) of this schedule, assess the costs and benefits of operating the installation or converting the installation to operate as a high-efficiency cogeneration installation,

(b)

in the case of a specified activity included in paragraph 2(4) of this schedule at an installation or plant which forms part of a new or existing district heating and cooling network, assess the costs and benefits of utilising the waste heat from nearby industrial installations,

(c)

in the case of a specified activity included in paragraph 2(4) of this schedule generating waste heat at a useful temperature, assess the costs and benefits of utilising the waste heat to satisfy economically justifiable demand, including through cogeneration, and of the connection of that installation to a district heating and cooling network.

(4)

A cost-benefit analysis may be prepared cooperatively by the authorised person for the specified activity and the operator of the heating and cooling network.

(5)

SEPA may require, by notice, that the cost-benefit analysis be prepared cooperatively with the operator of the heating and cooling network and a notice under this sub-paragraph is to be treated for the purposes of these Regulations as a notice issued under regulation 37.

Cost-benefit analysis: principles

7.

SEPA must ensure that a cost-benefit analysis under this schedule is conducted in accordance with the following principles—

(a)

where an electricity-only installation or plant, or an installation or plant without heat recovery is planned, a comparison must be made between the planned installations or plants, or the planned refurbishment and an equivalent installation or plant producing the same amount of electricity or process heat but recovering the waste heat and supplying heat through high-efficiency cogeneration and/or district heating and cooling networks,

(b)

within a given geographical boundary the assessment must take into account the planned installation or plant and any appropriate existing or potential heat demand points that could be supplied from it, taking into account rational possibilities (for example, technical feasibility and distance),

(c)

the system boundary set must include the planned installation or plant and the heat loads, such as building(s) and industrial process, within this system boundary the total cost of providing heat and power must be determined for both cases and compared,

(d)

heat loads must include existing heat loads, such as an existing installation or plant, or an existing district heating system, and also, in urban areas, the heat load and costs that would exist if a group of buildings or part of a city were provided with and/or connected into a new district heating network,

(e)

the cost-benefit analysis must be based on a description of the planned installation or plant and the comparison installation(s) or plants, covering electrical and thermal capacity, as applicable, fuel type, planned usage and the number of planned operating hours annually, location and electricity and thermal demand,

(f)

for the purpose of the comparison, the thermal energy demand and the types of heating and cooling used by the nearby heat demand points must be taken into account, the comparison must cover infrastructure related costs for the planned and comparison installation or plant,

(g)

cost-benefit analyses must include an economic analysis covering a financial analysis reflecting actual cash flow transactions from investing in and operating individual installations or plants,

(h)

projects with positive cost-benefit outcome are those where the sum of discounted benefits in the economic and financial analysis exceeds the sum of discounted costs (cost-benefit surplus),

(i)

SEPA must set guiding principles for the methodology, assumptions and time horizon for the economic analysis.

Determination of applications

8.

(1)

When considering an application for an authorisation, or a variation of an authorisation for a specified activity, SEPA must take into account—

(a)

the outcome of the cost-benefit analysis required by paragraph 6 of this schedule,

(b)

the outcome of any comprehensive national assessment carried out in compliance with Article 14(1) of Directive 2012/27/EU of the European Parliament and of the Council on energy efficiency^f2.

(2)

Where a cost-benefit analysis required in the case referred to in paragraph 6(4)(a) or (c) of this schedule shows that benefits exceed costs, SEPA must ensure that the authorisation includes conditions that will ensure the carrying on of the specified activity in a manner shown by that analysis to be cost beneficial.

(3)

 Where a cost-benefit analysis required in the case referred to in paragraph 6(4)(b) of this schedule shows that benefits exceed costs, SEPA must ensure that the authorisation includes conditions that will ensure the carrying on of the specified activity of the installation, in conjunction with the utilisation of the waste heat from nearby industrial installations or plants, in a manner shown by that analysis to be cost beneficial.

(4)

 Sub-paragraphs (2) and (3) do not apply if SEPA decides that there are imperative reasons of law, ownership or finance for them not to apply in respect of any application for or variation to an authorisation.

(5)

 SEPA must, in any case where it makes a decision in accordance with sub-paragraph (4), submit a reasoned notification of it to the Scottish Ministers within two months after the date of the decision.

General principles for the calculation of electricity from cogeneration

9.

(1)

Values used for the calculation of efficiency of cogeneration and primary energy savings for units other than micro-cogeneration units are to be determined on the basis of the expected or actual operation of the unit under normal conditions of use.

(2)

For micro-cogeneration units the calculation may be based on certified values.

(3)

Electricity production from cogeneration is to be considered equal to total annual electricity production of the unit measured at the outlet of the main generators for—

(a)

high efficiency cogeneration units falling under sub-heads (ii), (iv), (v), (vi), (vii) and (viii) in paragraph 5(b) of this schedule with an annual overall efficiency of at least 75%,

(b)

high efficiency cogeneration units falling under heads (i) and (iii) of paragraph 5(b) with an annual overall efficiency of at least 80 %.

(4)

For cogeneration units with an annual overall efficiency below that specified in sub-paragraph (3), cogeneration is to be calculated according to the following formula—

$$E_{CHP}=H_{CHP}\times C$$

(5)

In sub-paragraph (4)—

(a)

E_CHP is the amount of electricity from cogeneration,

(b)

C is the power to heat ratio,

(c)

H_CHP is the amount of useful heat from cogeneration, calculated for this purpose as total heat production minus any heat produced in separate boilers or by live steam extraction from the steam generator before the turbine.

(6)

Where actual power to heat ratio is not known for the high efficiency cogeneration units listed in Table 2, the default power to heat ratio values in Table 2 may be used where the calculated cogeneration electricity is less or equal to total electricity production of the unit—

Table 2

Type of Unit	Default power to heat ration, C
Combined cycle gas turbine with heat recovery	0.95
Steam back pressure turbine	0.45
Steam condensing extraction turbine	0.45
Gas turbine with heat recovery	0.55
Internal combustion engine	0.75

(7)

Where a share of the energy content of the fuel input to the cogeneration process is recovered in chemicals and recycled this share can be subtracted from the fuel input before calculating overall efficiency in sub-paragraphs (3) and (4).

(8)

SEPA may determine the power to heat ratio as the ratio of electricity to useful heat when operating in cogeneration mode at a lower capacity using operational data of the specific unit.

(9)

SEPA may use reporting periods other than annually for the purpose of calculating overall efficiency in sub-paragraphs (3) and (4).

Determining the efficiency of the cogeneration process

10.

(1)

Values used for calculation of efficiency of cogeneration and primary energy savings are to be determined on the basis of the expected or actual operation of the unit under normal conditions of use.

(2)

For the purposes of this schedule, high-efficiency cogeneration must fulfil the following criteria—

(a)

cogeneration production from cogeneration units must provide primary energy savings calculated according to sub-paragraph (3) of at least 10% compared with the references for separate production of heat and electricity,

(b)

production from small-scale and micro-cogeneration units providing primary energy savings may qualify as high-efficiency cogeneration where SEPA determines that they qualify as high-efficiency cogeneration.

(3)

Calculation of primary energy savings provided by cogeneration production other than by micro-cogeneration units, is to be calculated on the basis of the following formula—

$$PES=\left(1-\frac{1}{\frac{CHP H\mathrm{ŋ}}{Ref H\mathrm{ŋ}}\pm \frac{CHP E\mathrm{ŋ}}{Ref E\mathrm{ŋ}}}\right)\times 100\%$$

(4)

In sub-paragraph (3)—

(a)

“PES” is primary energy savings,

(b)

“CHP Hŋ” is the heat efficiency of the cogeneration production defined as annual useful heat output divided by the fuel input used to produce the sum of useful heat output and electricity from cogeneration,

(c)

“Ref Hη” is the efficiency reference value for separate heat production,

(d)

“CHP Eη” is the electrical efficiency of the cogeneration production defined as annual electricity from cogeneration divided by the fuel input used to produce the sum of useful heat output and electricity from cogeneration; where a cogeneration unit generates mechanical energy, the annual electricity from cogeneration may be increased by an additional element representing the amount of electricity, which is equivalent to that of mechanical energy,

(e)

“Ref Eη” is the efficiency reference value for separate electricity production.

(5)

SEPA may use reporting periods other than annually for the purpose of the calculation in sub-paragraph (3).

(6)

the calculation of primary energy savings for micro-cogeneration units may be based on certified data.

Calculation of efficiency reference values

11.

(1)

SEPA must determine harmonised efficiency reference values as a matrix of values differentiated by relevant factors and taking into account the principles in sub-paragraph (3).

(2)

The efficiency reference values for separate production of heat and electricity in accordance with the formula in paragraph 10(3) must establish the operating efficiency of the separate heat and electricity production that cogeneration is intended to substitute.

(3)

Efficiency reference values are to be calculated according to the following principles—

(a)

for cogeneration units the comparison with separate electricity production is to be based on the principle that the same fuel categories are compared,

(b)

each cogeneration unit is to be compared with the best available and economically justifiable technology for separate production of heat and electricity on the market in the year of construction of the cogeneration unit,

(c)

the efficiency reference values for cogeneration units older than 10 years of age are to be fixed on the reference values of units of 10 years of age,

(d)

the efficiency reference values for separate electricity production and heat production are to take into account the Scottish climate.”