Renewable Heat Incentive (RHI) First Contact

The Renewable Heat Incentive (RHI) for domestic properties was supposed to be in place in time to work in tandem with the Green Deal. The consultation for it launched today, two weeks before the supposed start of the Green Deal. DECC must work harder.

This RHI is planned to be available by Summer 2013, which means that any properties treated under ECO or Green Deal or both in the interim will need to ensure that any renewable systems installed at the same time are MCS certified and are one of the qualifying systems.

The purpose of the RHI is to help the UK to meet its EU obligation on renewable energy (15% by 2020) and to do for heating systems what the Feed-in-Tariff did for the Photovoltaic industry. (No! Not s***w it up. Get it going!) This is to be achieved by giving a tariff for heating systems that are fuelled by low carbon fuels.

To make the RHI work in tandem with the Green Deal, all the measures that can be funded by the Green Deal should be carried out first. These measures are indicated by a green tick on the EPC. This opens up the possibility of Green Deal providers installing some RHI kit in return for the RHI Tariff.

The tariff will primarily aim at moving the 3 million homes off the gas grid onto lower carbon systems such as Air Source Heat Pumps, biomass boilers, ground source heat pumps and solar thermal systems.

All homes that have had MCS certified systems since 15th July 2009 will be eligible unless they were part funded by Govt, in which case they are not.

The RHI payment goes to the owner of the system, so landlords get the benefit.

Second homes are excluded from the scheme.

The biomass fuel will need to come from an approved supplier on an approved supplier list so that the sustainability of the fuel source can be guaranteed.

Only one system per property is supported, but the supported system is deemed to supply the entire hot water demand.

ASHP’s need to have a Coefficient of Performance (COP) of 2.5 or greater to qualify.

Anyone aiming to apply for the RHI will need to carry out a Green Deal Assessment, and carry out the measures that are self-financing under the Golden Rule. Then get a revised EPC and demonstrate to Ofgem that they have done the work required before they can get the subsidy. The qualifying system can be installed at the same time as the improvement measures. If the green tick measures cannot be installed for technical or other reasons then Ofgem can still provide RHI payments provided sufficient evidence is supplied to them. Green Deal finance and RHI payments can be arranged for the same installation.

Solid Wall insulation may be excluded from the ‘green tick’ measures because of other barriers to delivery, at least in the first years of the RHI.

This is what a Green Tick looks like.

 

Tariffs are aimed at funding the difference in costs between a normal boiler replacement and one that is low carbon, not the entire cost of the replacement.

The tariff is designed to pay for twenty years of heat generation over the first seven years.

The tariff is based on the cost of funding offshore wind. Therefore this subsidy costs no more that offshore wind turbines. This results in a subsidy of

  • 17.3p/kwh for solar thermal
  • 12.5-17.3 for GSHP
  • 6.9-11.5 for ASHP
  • 5.2-8.7 for biomass

Social landlords will not be eligible for the full tariff, the consultation asks for responses as to what level it should be set at for landlords.

The amount of heat used will be deemed rather than metered. The deemed figure will be set by the installer.

Summing Up

Lots to consider here. But the basic scheme looks workable, reasonably well engaged with other policies and affordable. This should mean that it is possible to start and remain without the constant reviewing of the tariff that has plagued the FiT and damaged the departments reputation so badly.

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