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Renewable heat incentive - thoughts on deeming, SAP, equity and accuracy

Posted by Linn Rafferty on 9 March 2011 at 3:59 pm

According to the briefing prepared by the REA (the Renewable Energy Association), the long awaited proposals for the Renewable Heat Incentive are expected this week. Following slowly on from the FIT (feed-in tariff), the renewable heat incentive is expected to apply the long-term tariff approach of the feed-in tariff to heat generated from renewables, such as biomass.

The REA say that this is a world first that other countries may wish to emulate. It will give the industry confidence to develop within a long-term stable framework – just what all players in the energy efficiency industry always ask for. So what’s not to like?

Early adopters

Well, like the feed-in tariff, there’s the question of the unkind treatment of early adopters – those who had already installed the technology prior to the start of the programme, and who therefore miss out. To alleviate this to an extent, the Government has previously stated that those who installed systems after 15 July 2009, the date the Government's Renewable Energy Strategy was published, will be able to claim RHI payments as long as the scheme's conditions are met. Of course, as we don’t yet know the conditions, complying with them might be difficult – but we live in hope!

Deeming

Secondly, the incentive has been criticised as encouraging waste. The argument goes that if people are paid per unit of fuel used for using renewable fuel, they will simply “burn” more and let the heat go to waste. For this reason, at least at the domestic and small business level, the proposal is that the RHI will be paid for a “deemed” amount, rather than the actual amount of fuel used.

I understand that the deeming will be done using SAP and RdSAP, which are the official methods used to produce Energy Performance Certificates for new homes and existing homes respectively. These methods have both been updated from the 2005 to the 2009 versions – SAP last October, with RdSAP now being prepared for use from mid April. Both include the facility to calculate the annual demand for space heating and water heating, ie the heat to be provided by the heating system, and this has been done in preparation for the renewable heat incentive.

The benefits of accuracy

Well, how else could this have been achieved? Apparently, before this approach was chosen, there was discussion over whether a simple “look up” table could be used, giving a rough estimate of the heating requirements for properties in different categories.

In terms of how accurately the heating requirements are deemed, using SAP & RdSAP is a vast improvement on this. It provides a much more accurate estimate, based on standard occupancy and assuming a reasonable level of insulation, of the heat requirement for the property in question.

The RHI can then be paid at a fixed annual amount, helping the recipient to budget, as they know in advance what payment they’ll receive. What’s more, this approach also helps to distribute the funds fairly, on the basis of what the property needs, not what the occupier uses. Finally, the payment assumes a basic level of energy efficiency (loft insulation at 150 mm and cavity filled walls, if cavities are present). This means that for cavity wall properties there is no incentive to leave the property un-insulated in order to burn more fuel and receive a higher payment.

Rural areas

The renewable heat incentive should be well-received in rural areas. The supported heating technologies (believed to include biomass, anaerobic digestion, biomethane, heat pumps and deep geothermal) are generally very suitable for rural properties, and so rural communities should gain particular benefit from the RHI.

There are around 2 million homes with no connection to mains gas, and the fuel options open to such homes are generally more expensive than gas, leading to a high prevalence of fuel poverty in rural areas.

Unfortunately, there is a slight mismatch here - the same rural properties that will benefit from the RHI don’t generally have cavity walls. For them, the calculation of the heat requirement will be undertaken assuming loft insulation is present, but the solid walls will stay as they are (which will almost always mean uninsulated). This will mean that solid wall properties will gain a higher level of RHI support than similar properties with a cavity wall.

Fair or not?

Is this an unfair subsidy, or a fair reflection of the extra costs of living in the countryside? I’m sure there could be arguments on both sides: some see rural dwellers as struggling country-folk deserving subsidy, and others see them as 4-wheel-vehicle driving fuel-wasters who have chosen to live in the countryside and therefore brought it all on themselves. You can choose your own viewpoint on this!

We want answers!

Of course, there are a lot of questions awaiting answers, including how the client (the householder) will obtain their SAP/RdSAP assessment to provide the RHI calculation. In all, the renewable heat incentive represents a big step forward for the renewable heat industry, and I’m hoping that the proposals that are expected this week will provide the answers so we can soon take that step.

About the author: @linniR is a consultant, a freelance writer and a Domestic Energy Assessor accredited with the NHER scheme, and she enjoys all three.  She tweets regularly on issues relating to energy efficiency and renewables and provides consultancy, especially in relation to training needs.

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

jtec-energy-performance-nn46da

JTec Energy PerformanceComment left on: 10 March 2011 at 11:40 am

Well, what a disappointment!  Apart from the press statement about the premium payment for homes to fill the gap until the Incentive starts for them, there is almost no information about how it will work for homes.  We are told that there will be eligibility criteria to qualify for this payment, including a well insulated home based on its energy performance certificate and agreeing to give feedback on how the equipment performs, but not much else.  It seems we have to wait until May for more details!  shame.

Darryl - I am not aware of their reasoning for choosing 150mm rather than 270-300, although it's fair to say that increasing a loft's insulation from 150 to 300 is not as effective at reducing heat loss than increasing it from zero to 150.  Perhaps they were considering this?

Deeming based on solid wall insulation, yes there is an argument in favour of this but I presume this was rejected. They may have thought that if SWI, which can cost up to £10k, was a prerequisite for the scheme, this would have seriously compromised the take-up of the RHI in such properties.

Trawsnewid - thank you for your comment about installers carrying out the calculations.  The press release states that eligibility will include "a well insulated home based on its energy performance certificate" and only accredited assessors may produce one of these.  Should we expect MCS installers to qualify and become accredited, so they can produce the EPC?

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jtec-energy-performance-nn46da

JTec Energy PerformanceComment left on: 10 March 2011 at 10:18 am

DECC has now published its press release giving information about the RHI tariffs, at 

http://www.decc.gov.uk/en/content/cms/news/PN2011_023/PN2011_023.aspx

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teifi-energy-group-sa39-9bx

Teifi Energy GroupComment left on: 10 March 2011 at 9:53 am

Linn - SAP calcs have to be performed by the MCS installer.

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darrylcroft

darrylcroftComment left on: 10 March 2011 at 9:35 am

Interesting post Linn.  A couple of questions:

- with the Government hoping for all lofts to be fully insulated, is there a good reason for the deeming to be based on an assumed 150mm of loft insulation, rather than the recommended 270-300mm?

- when the Green Deal comes into force late-2012, access to affordable/financable solid wall insulation should be greatly improved.  Is there an argument for deeming based on solid wall insulation at this point, to help reduce the amount of heat required (and improve efficiency of heat pumps etc)?

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