Joint Evaluation of the Scottish Biomass Support Scheme and the Renewable Hydrogen and Fuel Cell Support Scheme

DescriptionThe purpose of this evaluation was to assess the strategic outcomes and impacts of the Scottish Biomass Support Scheme (SBSS) and the Renewable Hydrogen & Fuel Cell Support Scheme (RHFCSS). Both of these grant schemes were initiated by the Scottish Government in 2006 with financial expenditure required by end of March 2008.
ISBN
Official Print Publication Date
Website Publication DateDecember 15, 2009

The full report is available in pdf format

The case studies are also available in pdf format

Social Research

Research Findings

No. ELL/000/074

Joint Evaluation of the Scottish Biomass Support Scheme and the Renewable Hydrogen and Fuel Cell Support Scheme

Colin McNaught, AEA

The purpose of this evaluation was to assess the strategic outcomes and impacts of the Scottish Biomass Support Scheme (SBSS) and the Renewable Hydrogen & Fuel Cell Support Scheme (RHFCSS). Both of these grant schemes were initiated by the Scottish Government in 2006 with financial expenditure required by end of March 2008.

Main Findings

  • Overall the SBSS achieved significant success against a set of objectives that were relevant and realistic for the technology and the capability of the sector in Scotland.
  • The SBSS has made a lasting impact on the biomass sector in Scotland, increasing the wood fuel supply that will be needed for the expansion of the sector.
  • The SBSS has helped increase capacity, output and CO2 savings of small to medium scale biomass projects - creating a set of reference projects across Scotland and across a range of applications.
  • The impacts of the SBSS were adversely affected by the short timetable that applicants had to prepare and implement their projects. This affected project quality and hence outcomes. The short timetable also meant that the supply chain had difficulty in gearing up to this increase and then coping with the drop in activity when the grant funded projects had been completed.
  • Overall the RHFCSS achieved limited significant success against a set of objectives that were highly ambitious for a technology that has significant risks and uncertainties.
  • The impacts of the RHFCSS were adversely affected by the short timetable that applicants had to prepare for and implement their projects. This is a particular issue for projects that have higher technical risk and require additional time and resources to solve.
  • Problems with equipment in the RHFCSS projects meant that several of the demonstration projects have yet to fully show their potential. Resolving these problems has been more difficult because of two aspects of the grant scheme. Firstly, to claim the grant before the end of the RHFCSS meant that suppliers were paid before the equipment was fully operational. Secondly the grant scheme cannot offer additional funding to resolve technical problems. These are important issues to incorporate in the design of any future support schemes for this sector.
  • These two schemes funded two very different types of energy technology. Biomass is an established technology, but has not been widely adopted in Scotland. Hydrogen and Fuel Cells are an emerging technology and have not yet been widely adopted in any country. So while these two funding schemes ran at the same time, the evaluation results are not comparable due to the very different nature of the two technologies and their readiness for practical application.

Scheme Overview

Scottish Biomass Support Scheme (SBSS)

  • SBSS funding of £7.5 million was initially available, this was extended to £10.5 million. Applications were of three types:
  • Installations: 40 per cent of additional costs (relative to alternative heating systems) eligible for installation grants towards eligible kit, pipe-work and boiler plant (up to 50% for SMEs).
  • Infrastructure: Up to 40 per cent funding for capital infrastructure that is directly related to developing the wood-fuel/biomass supply chain (up to 50% for SMEs).
  • Producer group: Up to 100 per cent funding for set up costs.

The strategic aims of the SBSS were:

  • The strategic transformation of the wood-fuel sector.
  • Supporting rural economies by creating sustainable green jobs.
  • Contributing towards renewable energy targets.
  • Maximising carbon savings.

In addition, projects supported were intended to:

  • Create a market for biomass heating and CHP equipment and services.
  • Where possible alleviate fuel poverty.

Grants of £6 million were drawn down by 77 projects, comprising: 55 boiler projects, 19 supply chain projects and 3 other projects.

Both schemes were run over a very short period which led to a number of difficulties. The time table was set by public sector funding requirements, requiring the expenditure to be claimed by March 2008.

The timescales were stated in the application packs, which emphasised that deliverability would be a key factor in assessing projects. This was also highlighted while projects were being implemented. While applicants were very positive about their ability to deliver within these tight timescales, in some cases the reality was very different.

Evaluation Methodology

This evaluation drew upon:

  • Scheme documentation: Application forms, guidance notes, monitoring reports etc.
  • Interviews and site visits with 14 grant recipients (7 from both the SBSS and RHFCSS schemes).
  • Interviews with other stakeholders.
  • An e-mail survey of SBSS grant recipients.
  • Relevant sector reports.
  • AEA analysis of the quantified and qualitative data collected.
Renewable Hydrogen & Fuel Cells Support Scheme (RHFCSS)

A total of £1.5 million was available for the RHFCSS, applications were of two types:

  • Capital or R&D: e.g. hydrogen refuelling station, fuel cells or hydrogen into domestic heating systems, integration of hydrogen technology with other renewables in an off-grid situation.
  • Seed Funding: Collaboration or partnership development for strategic projects e.g. lighthouse projects.

The strategic aims of the scheme were:

  • Increase the use of hydrogen and fuel cell technology in order to promote a diverse supply.
  • Promote and develop off-grid generation from intermittent renewables.
  • Maximise economic benefits.
  • Increase carbon savings.

Grants of £1.065 million were offered to 7 projects, comprising: 5 demonstration projects, 2 R&D projects.

SBSS Evaluation Results

Strategic Aim: The strategic transformation of the Scottish Biomass wood-fuel sector market

Evaluation Outcome: The SBSS has created biomass fuel supply chain operators and fuel customers. During the short period that the scheme was operating - there was a transformation - due to the step change in activity levels. This transformation had positive as well as negative impacts.

Positive impacts include:

  • Increased fuel supply capacity.
  • Greater use of biomass fuel.
  • Greater experience in the biomass fuel supply chain and customer sectors.

Negative impacts include:

  • Feast then famine amongst equipment suppliers and installers.
  • Implementation problems due to the lack of time to develop projects.
Strategic Aim: Supporting rural economies by creating sustainable green jobs

Evaluation Outcome: Responses from the sample of 7 interviews and 11 e-mail questionnaires suggest creation of 25 new jobs. Scaling this up to the entire SBSS suggests 84 new jobs were created.

Strategic Aim: Contributing towards renewable energy targets

Evaluation Outcome: The SBSS has made a contribution towards the renewable heat target, increasing capacity by up to 16 MW, an increase of 7%.

Additional Aim: Maximising carbon savings

Outcome: CO2 savings are currently estimated at 10,545 tonnes pa, which should rise as the projects become fully operational to 18,497 tonnes pa.

Additional Aim: Create a market for biomass heating and CHP equipment and services

Outcome: Partly achieved - a significant number of SBSS projects were developed and/or installed by Scottish companies.

The short timeframe and scale of the market was in-sufficient to encourage development of Scottish based equipment suppliers.

Additional Aim: Where possible alleviate fuel poverty

Outcome: A small number of schemes use District Heating to serve a number of homes, e.g. as part of Housing Association developments.

These projects have taken longer to develop, due to the longer time needed to build the housing as well install the biomass projects. Hence the fuel poverty benefits are limited, but will increase as the houses are built and occupied.

Summary

Clearly the SBSS achieved success against most of these objectives. Key issues are:

  • Greater outcomes could have been delivered if more time had been available for the preparation and delivery of the projects.
  • Feast then famine market conditions which are not suited to the creation of a self sustaining equipment and installer supply chain.

RHFCSS Evaluation Results

Strategic Aim: Increase the use of hydrogen and fuel cell technology in Scotland in order to promote a diverse supply

Evaluation Outcome: The RHFCSS supported a notable increase in the number of hydrogen and fuel cell projects over a short period.

Not all of the projects are in full scale operation - so the full benefits and the full range of operational issues and solutions have not yet materialised.

Strategic Aim: Promote and develop off-grid generation from intermittent renewables

Evaluation Outcome: The projects included a range of renewable energy sources (wind, solar, biomass) and included conversion to hydrogen and storage to deal with intermittency issues.

Operational issues mean that some projects have yet to fully demonstrate the benefits of using hydrogen and renewable energy.

Including the requirement to fund renewable energy sources added to the cost and complexity of the demonstration projects. This tended to dilute the focus of project resources on the innovative hydrogen and fuel cell aspects.

Strategic Aim: Maximise economic benefits

Evaluation Outcome: To date the economic benefits are limited, 7 new jobs were created. The main benefit is practical know-how on operation of hydrogen and fuel cells. Some of the project participants have successfully exploited this know how to win new business.

Strategic Aim: Increase carbon savings

Evaluation Outcome: The demonstration projects have not operated for any extended period - as a result minimal CO2 savings have been achieved to date - however this will increase.

Summary

Clearly the RHFCSS achieved limited success against its strategic aims objectives. Key issues are:

  • A highly ambitious set of objectives was set for technologies that are at an early stage of development - with significant technical risks yet to be fully solved.
  • Short timescales to apply for, and implement, the projects affected the outcomes. This is an issue that is more important for emerging technologies where unforeseen difficulties are likely to arise.
  • These difficulties led to additional costs. As additional costs were not part of the funded project, these often cause an early end to the demonstration projects.
  • A lack of focus within the scope of the grant scheme - attempting to deliver world first projects with unrealistic timeframes and resources.
  • A young sector, largely SME based, with limited financial resources to back these projects.
  • Over optimism amongst applicants that the ambitious RHFCSS objectives and timescale could be met. As this was the first Scottish support scheme for the sector, and only one funding round was available, this optimism is understandable.