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Renewable heat incentive - the latest news

Posted by Howard Johns on 30 November 2010 at 1:05 pm

A policy document on the renewable heat incentive should be out by the end of the year. Room for negotiation around design and tariff levels is pretty much over and DECC will be seeking technical standards approval for the renewable heat incentive in January.

The good response to the consultation by industry means that some cost and other technical assumptions have changed (eg. efficiency of equipment and lifetimes) in calculating the tariffs.

The announced level of spend of £860m represents a 20% cut in the total level of subsidy and covers the period up to 2014/15. It was the result of lots of hard work on behalf of ministers and the DECC team, and is very pleasing considering the challenging fiscal climate.

The renewable heat incentive seeks to meet two key objectives: it is primarily designed to meet the renewables target (heat is to contribute roughly 73TWhs by 2020, which is around 12% of all heat), as well as making a significant contribution towards our carbon targets.  

It is also very important that the public are supportive of the renewable heat incentive and there is a good level of consumer engagement. 

Air source heat pumps (ASHP) – there will be a tariff for the domestic sector. Non-domestic air source heat pumps  will not be included in 2011. Air to water and air to air heat pumps (which are difficult to meter) will not be included initially. Hopefully this will change in 2012 when the metering issue can be worked out – or a suitable deeming measure can be formulated.

Solar thermal – in terms of £/MWh this is the most expensive heat technology.  However, DECC has pushed for solar thermal to be included. Now the questions are at what level and how many installations will be supported. Greg Barker is supportive of the technology being included.

Standards – the technologies will be governed by MCS (for below 45kW) or equivalent (which includes solar keymark). Deeming will be carried out through Energy Performance Certificates (EPC). MCS governing bodies are aware that there are limitations with SAP (the procedure for energy rating buildings), and this will need to be worked on. However, a review may not happen before the scheme launch. The EPC will have some extra information on insulation and renewable heat.

DECC is aware that solar thermal is not related to building efficiency and that the minimum required building envelope standards may not apply. Minimum building efficiency standards will apply before you can receive the RHI for heating technologies.

DECC will try to avoid a stop-start situation (for all technologies) in the management of what is a limited fund. It is considering how best to control costs across the funding period to ensure that they do not experience runaway costs for any technology. It may be that this will be a degression method similar to the feed-in tariff.

They are keen to give installations of a technology that generates both heating and hot water a 12% ROI – to cover the risk being taken by the householder in adopting the new technology. However, this decision will be taken by Ministers.

The regulations underpinning the scheme will have to be approved in both Houses of Parliament as well as Scotland before launch and the scheme will be managed by Ofgem E-Serve (the delivery arm of Ofgem). 

So, there we go. Progress is being made, and we should know where it is going in time for Christmas. Marvellous! Announcements on the 24th perhaps......!

This report is based on a policy meeting the author had with DECC.

About the author: Howard Johns is the founder and MD of Southern Solar Ltd and a director of the Solar Trade Association.

If you have a question about anything in the above blog, please ask it in the comments section below.

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Comments

4 comments - read them below or add one

Barry Johnston

Barry JohnstonComment left on: 20 December 2010 at 5:17 pm

This is generally great news but unfortunately the Great British Taxpayer probably stands to be swindled of £31M under the Renewable Heat Incentive.

Why? Due to some serious energy accounting loopholes in the RHI. This huge sum (estimated to total £270 per solar water heating installation over 20 years) will be knowingly overpaid by DECC to users of mains pumped "low carbon" solar water heating systems, even though these trechnologies are far less sustainable than zero carbon systems which use solar electric (PV) powered pumps.

Of course I have an interest to declare: as a solar supplier, the only solar water heating technology which my customers use is zero carbon.  But all readers may share our concern concerned that so much RHI money could, in fact be better spent on subsidising real green energy creation rather than on subsidising the consumption of mains electricity.

To subsidise energy which does not actually exist is a strange thing to do.

The cause of this energy fraud is "industry self-regulation" whereby the dominant older mains pumped technologies simply vote to allow themselves not to deduct the mains electrical energy use of their pumps and solar controllers etc! In other words, old solar will be alllowed to claim gross thermal energy performance rather than net (ie thermal-electrical) performance, which would make more sense.

Two separate studies (EST and DTI) have put the typical electrical energy use of solar water heating at around 75 kWh per year. This parasitic consumption negates about 8% of the energy saving and 20% of the climate change benefits of a typical domestic solar water heating system which displaces mains gas.

We have, of course, asked DECC to close this loophole as a matter of urgency. So far DECC as not replied and I have written in more detail about this topic elsewhere on the web and on youtube.

DECC surely needs to start out with a more accurate funding formula for RHI! Surely the sum £31m would be better spent in funding real energy, not non-existent energy. After all, to fund net energy (ie real energy) would allow even more really effective solar heating installations to be fitted and would incentivise a move towards zero carbon solar heating.

 I'm dreaming of a green Christmas...

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Cathy Debenham

Cathy DebenhamComment left on: 6 December 2010 at 11:37 am

We'll find out for sure when we see the detail, but it is likely that anyone who installed technologies that  are covered by the scheme and installed by an MCS accredited installer since 15 July 2009 will be eligible to receive the renewable heat incentive (RHI).

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Guardian Systems Ltd

Guardian Systems LtdComment left on: 5 December 2010 at 1:18 pm

RHI: Is this only applicable for installations FROM 20th October 2010?

If so,seems very unfair for customers who have had Thermal installed this year. And the length of time taken for RHI to be decided.

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global-energy-systems-fy8-5aq

Global Energy SystemsComment left on: 1 December 2010 at 11:27 am

Excellent article but not sure whether domestic ASHP are in RHI next year or not?

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