How important reforms to the Renewable Heat Incentive will affect homeowners
Posted by Sam Tonge on 13 February 2018 at 11:10 am
The Renewable Heat Incentive (RHI) is a scheme designed to pay microgenerators for heat produced from their renewable sources of energy. Open to home and business owners (known retrospectively as the domestic and non-domestic RHI), the switch to greener heating systems via the scheme is designed to help the UK reduce its carbon emissions and meet its renewable energy targets.
Many of you will already be aware that March 2016 saw a Government consultation begin on changes to the Domestic Renewable Heat Incentive (RHI) scheme. The first round of changes to the scheme occurred on 20 September 2017 which we covered at the time in our blog.
As of 7 February 2018, the Department for Business, Energy and Industrial Strategy (BEIS) have now published the second round of regulations which cover plans to reform aspects of both the Domestic and Non-Domestic Renewable Heat Incentive (RHI) schemes.
Here at YouGen, we look primarily at the changes being proposed to the domestic RHI and explore how the changes to the scheme could affect homeowners. These reforms are now undergoing consultation by Parliament for a period of six to eight weeks (times are indicative and subject to Parliamentary time).
- Mandatory ‘metering for performance’ for heat pumps.
As was to be expected, all new applications for the Domestic RHI scheme will be required to have electricity metering arrangements installed alongside their air or ground source heat pump.
Options can either be electricity meters, on-board electricity meters, or a metering and monitoring service package (MMSP).
This development is aimed to help households monitor the performance of their heat pump and to provide a better understanding of the heat pump system’s initial electricity usage.
- New metering and monitoring service package (MMSP) payment schedules and enforcement powers.
New MMSP registrations on or after the date the second stage of new regulations come into effect will be able to get a lump sum payment alongside their first Domestic RHI payment, and a maximum of up to seven years of quarterly MMSP payments.
For heat pumps, this will be a single lump sum payment of £805, and MMSP payments of £115 per year (£28.75 every three months).
For biomass pellet boilers, this will be a single lump sum payment of £700, and MMSP payments of £100 per year (£25.00 every three months).
If you’ve successfully registered for MMSP before the new regulations are due to come into force, find out more about what this means for you.
- Changing the degression rules as part of extending the RHI’s budget management mechanism until the end of 2020/21.
Degression refers to the lowering of tariff rates on new applications if uptake of the scheme is higher than anticipated. The current rules can allow degression to occur, even when there has only been limited growth. BEIS plans to introduce a new rule to ensure growth is always taken into account, meaning degression will no longer be able to occur when the number of accreditations for a particular technology has slowed down.
- Assignment of rights (due to come into force later on 27 June 2018).
Last but certainly not least, BEIS is introducing an option to help householders access finance to overcome the barrier of the upfront cost of a renewable heating system. This is called assignment of rights, where households can assign their rights to RHI payments to investors.
Although expensive to install, renewable heat technologies in the right properties can prove a desirable and potentially lucrative investment opportunity through the RHI payments and savings on fuel costs.
Some final thoughts
So what should we make of these reforms? The Anaerobic Digestion and Bioresources Association (ADBA) have issued a press release welcoming the draft legislation, which it says will ‘give a vital boost to the production of green gas in the UK’.
Homeowners with heat pumps will arguably find an electricity meter to be a useful asset in monitoring and understanding its electricity consumption to determine its overall effectiveness. The revision of degression rules is also most likely to be welcomed, with a stronger link between growth of technology accreditations and tariff rates arguably providing a much more open and fair alternative to the current system.
These reforms are now undergoing consultation, meaning they are subject to parliamentary scrutiny and approval. Only time will tell whether the regulations currently being proposed by BEIS will remain the same in their final, approved form.
About the author: Sam joined YouGen in 2017 as a Project Officer, after having achieved a BSc (Hons) degree in Geography from Royal Holloway, University of London.
He is passionate about renewable energy and sustainability and has undertaken a variety of placements focused in these areas.
Sam coordinates the YouGen blog, newsletter and recommendation service on behalf of installers, as well as driving the platform forward through an active social media presence.
If you have a question about anything in the above blog, please ask it in the comments section below.
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