Ms Karen Trant:

Yes, it should be on the screen in front of the Senator. The HE CHP certification process is designed to ensure that the plant meets the high efficiency criteria set out in legislation. The HE CHP process is defined on the basis of primary energy savings. Applicants are required to submit all relevant information to substantiate and support an application and to demonstrate qualification as HE CHP. It is important the applicant demonstrates that he or she meets the criteria. Applicants and applications will be certified based on available data. If a plant exists actual data will be used and if a plant is planned then projected data will be used to assess a planned plant certificate.

The HE CHP is used to replace heat generation from conventional fuels in a number of difference processes. These could include heating swimming pools or drying products such as woodchips and biomass. We have supplied a picture to the committee of a facility for milk drying. An economic justification must exist for the process in the absence of CHP. That is an important point. A primary energy saving must also exist to achieve HE CHP certification. What conventional fuel generation process is being replaced? Examples include oil, gas and diesel. In the case of a planned plant, the details I have referred to must be shown via the demonstration of an alternative case. That is a hypothetical business case demonstrating what will be in place in the absence of the HE CHP plant.

There are a number of components to the process. They are enshrined in the legislation and we have transposed them into domestic legislation and into our policy document. Three elements are involved. The first is useful heat where the applicant must demonstrate that there is an economically justifiable demand for heating or cooling, as the case may be. This is demonstrated in the case of a new plant by providing an alternative case. It must show that the business would be commercially viable in the absence of a CHP unit. The second factor involved is primary energy savings. If the applicant has demonstrated that the demand is a useful heat then he or she must demonstrate, via the alternative case, that there are primary energy savings. The CHP plant must have a PES of at least 10% to be certified as HE CHP. The third element examined is the technical detail. The CRU uses much granular technical data to assess the technical data and determine the level of subsidy that can be awarded.

We then examine the overall efficiency. There are different thresholds to demonstrate overall efficiency. Regarding Mayo Renewable Limited, the threshold must exceed 80% if it is to receive a 100% HE CHP certificate. If the overall efficiency is below 80%, then the amount of electrical energy output eligible for the HE CHP certificate is determined on the basis of the power to heat ratio. If that is not available, the legislation contains a default ratio and that is what would have been used in the case of Mayo Renewable Limited.

Turning to the certification process, we assess all applications on their own merits. It is a matter for the applicant to demonstrate, through the data provided to the CRU, that the plant qualifies for HE CHP. We assess all the documentation and information we receive. All planned certificates are issued and valid for five years. The certificate expires if the plant has not become operational in that time and a new application must be completed. Unlike planning applications, we do not have a mechanism whereby we extend the certificate.

Importantly, once the plant becomes operational, an audit is carried out 14 months after that date and the actual outputs from the plant are assessed. For a small number of existing plants, the CRU has changed the level of certification or issued no certification based on changes in the actual performance data of the plant when audited. Since 2012, the CRU has issued 113 HP CHP certificates. Of those, 79 have been for existing plants and 34 have been for planned plants. Some 20% of those 34 were for partial certificates. No planned plant has become operational or provided actual output data.

Regarding the application for Mayo Renewable Limited, I have outlined the timeline from when we received the application in May. We interacted with the company in June, July and August and we were ready in September 2018 to issue a decision. We then spoke to Mayo Renewable Limited before the recommendation was made to the commission for a final decision. It then asked for a postponement of that decision so that it could respond with further information. We agreed to that postponement.

In October 2018, we appointed new consultants because our existing tender contract had expired. We brought our new consultants on board and they again reassessed the application. In October and November, additional information was submitted by Mayo Renewable Limited and in March 2019, having exhausted that process, the CRU issued a decision. The decision was for a high efficiency combined heat and power certificate for 18%.

The application from Mayo Renewable Limited was made by a different legal entity from the application that was submitted in 2012, which was submitted by Mayo Renewable Power Limited. Mayo Renewable Limited submitted three alternative cases. The first is the one we used to assess the HE CHP certificate. It does not demonstrate that all of the proposed heat export is useful heat. Alternative case No. 1 presented by MRL in 2018 demonstrates that if the co-generation CHP plant was not built, it would still be economically justifiable to build but only if a higher efficiency dryer was used. In its actual business model, MRL proposed a lower temperature energy dryer.

Alternative case No. 2 presented by MRL was withdrawn because the application of the alternative case could not be assessed on a like-for-like basis. Alternative case No. 3, which was presented by MRL in 2018, used a data centre to try to demonstrate primary energy savings. We did not agree that a data centre meets the requirements for an energy generation process for the purposes of the assessment.