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Britain Publishes Spreadsheet Used to Calculate Precedent-Setting Home Heat Tariffs

The mid-July press release from Britain’s Department of Energy & Climate Change announcing the launch of long awaited feed-in tariffs for residential heating system was fairly straightforward. The press release explained what the tariffs were for, how much would be paid, and for how long.

Yet for North Americans, the understated press release was significant on several grounds.

First, the announcement was made by Greg Barker, Minister of State at the Department of Energy & Climate Change (DECC) and a Conservative MP. That Barker is a Conservative MP in a Conservative government would alone be noteworthy in both a U.S. and Canadian political context where renewable energy policy is so polarized that it’s nearly unthinkable a national conservative figure would issue such a statement.

Second, the announcement described a precedent-setting application of feed-in tariffs to home heating — the world’s first. Moreover, the program includes the heat generated by solar thermal (hot-water) systems.

Britain has pioneered feed-in tariffs for heat and has been successfully using FITs for commercial heating since the fall of 2011. See New British and Malaysian FIT Programs Launch.

This contrasts markedly with Ontario, Canada where the province stubbornly refused to adapt its popular Feed-in Tariff program to pay for commercial and residential heat, arguing that it would be “too complex” to do so.

Elsewhere in North America, where old Imperial measures, such as British Thermal Units (Btu), still dominate the discussion of heat, policymakers can’t imagine how one would even go about setting feed-in tariffs for heat. After all, heat is not electricity and is not sold in kilowatt-hours in the US.

Nevertheless, the British didn’t find the challenges insurmountable.

But what was most striking in the press release was a long list of documents that form the public record of the process used to determine the tariffs, including the spreadsheet used to calculate the tariffs: Spreadsheet with calculations used to derive tariffs for the Domestic RHI Scheme.

To the casual observer finding a public-domain spreadsheet may seem insignificant. It’s not, however. While tariff setting is a political act, it is also a technical one based on various assumptions and calculations of what price is needed to be both fair and effective. Thus, spreadsheets are the tool policymakers use to determine a tariff — or justify a tariff they’ve chose for political reasons.

DECC’s multi-tab, 1.3 mb spreadsheet is in a downloadable format and includes investment cost and heat generation assumptions used to calculate Renewable Heat Incentives for residential use. And in a further effort at transparency, DECC’s spreadsheet includes a full explanation of how each column of data was used to arrive at the proposed tariffs.

Again, this contrasts with most regulatory proceedings in North America where parties to the quasi-legal process must often sign Non-Disclosure Agreements (NDAs), effectively applying “Top Secret” stamps to discussions in the economic and public policy arena.

Ontario, for example, has consistently refused to divulge the spreadsheet used to calculate the province’s feed-in tariffs without more than a cursory explanation that the calculations are “proprietary” That is, they are a “trade secret”. This is particularly odd in light of DECC's actions in Britain. Ontario’s parliamentary and regulatory system follows British practice and both Canada and Britain share the same Queen as the head of state. Despite this, Ontario finds calculations of publicly administered feed-in tariffs secret while Britain does not.

It need not always be so. Nova Scotia, another Canadian province, posts the spreadsheets its consultant uses to calculate the province’s Community Feed-in Tariffs (ComFITs) and its upcoming Tidal feed-in tariffs.

Britain’s feed-in tariffs for residential heat are precedent-setting not only for what they are, but also for the transparent manner in which they were derived.

Lead image: Parliament via Shutterstock

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