On the 20 September 2012, DECC published three consultations on the RHI scheme.  These are the key proposals within the consultations.

The changes are proposed to be implemented in summer 2013.

(1) RHI: Proposals for a Domestic Scheme

DECC are consulting on proposals for an RHI subsidy scheme which is designed to assist consumers replace their existing heating system with a renewable energy system. 

DECC propose that in order to be eligible for the domestic RHI scheme, technologies must be MCS (or equivalent scheme) certified and adhere to certain principles.

DECC are proposing that the following four core domestic renewable heating technologies will be eligible for the domestic RHI scheme:

  • air source heat pumps;
  • biomass boilers (it is worth noting that for this type of technology, fuel sustainability and air quality also need to be taken into account);
  • ground source heat pumps; and
  • solar thermal

DECC recognise that there are other MCS certified technology types available, however, they propose to exclude them from the domestic RHI scheme.  In particular DECC proposes to exclude above 45kWth scale installations from the scheme.

The RHI scheme will apply to any such technology that has been installed since the 15 July 2009 so long as they are MCS certified and meet all the required standards.  Consumers must have also installed measures identified with a green tick in an energy efficiency assessment. 

Second homes are excluded from the scheme.  Private landlords may benefit – however, DECC is seeking to determine how to ensure that the tenant gains a benefit also.  DECC are also considering having bespoke tariffs for the registered social landlord and new build sectors.

Payments would be made over a seven year period, on the basis of deemed amount of renewable heat generated, taking into account the circumstances of the property, with the rate paid varying according to the type of technology installed.

The proposed 7 year payment period is designed to pay for 20 years worth of heat.  However, DECC acknowledge that there is a risk that the consumer may wish to switch back to a fossil fuel system after the 7 years payment of the RHI has been made.  This is something DECC will be considering.

The maximum tariff DECC will pay is based on that for its marginal technology (offshore wind) which equates to a maximum tariff of 17.3p kWh when paid over a 7 year period.  DECC’s modelling suggests that solar thermal and some ground source heat pumps would require more than this, so these tariffs are effectively capped at 17.3p.

DECC are preparing a degression mechanism for budget control.

DECC are proposing to introduce the domestic RHI scheme in the summer of 2013 and for it to be run initially by Ofgem with a view to offering the role on competitive tender for the long-term.

To read the full consultation, click here.

(2) RHI: Expanding the non-domestic Scheme

The consultation seeks to expand the current non-domestic RHI scheme, by introducing new technologies including;

Air to air heat pumps (AAHP)

DECC suggest that they will support heating only AAHP, they estimate a tariff of 0.97p/kWh is appropriate for all installation sizes.

Biomass Direct Air Heating (BDAH)

Only BDAH specifically designed and installed to use biomass will be supported.  DECC are considering three options for measurement; meter the output, measure biomass input, or deem to estimate the heat load.  DECC propose a tariff of 2.1p/kWH sub 1MWth – 1MWth will be 1p/kWh or less.

Biogas Combustion over 200kW

DECC are considering introducing two bands above 200kW, one medium 200kW – 500kW, and large >500kW.  They have proposed tariffs based on existing support under the FITs and RO as a starting point.  Medium 200kW – 500kW is 5.9p/kWh and large 2.2p/kWh.  They are consulting on whether there should be a requirement for biogas systems to be CHPQA accredited.

Biomass and bioliquid CHP

DECC are proposing an increase from a tariff of 1p/kWh for biomass and an inclusion for bioliquid CHP with a tariff of 4.1p/kWh for both.  Installations applying for support will be required to meet CHPQA requirements.  They are proposing mechanisms to limit the use of bioliquids under the RHI and also considering a link to the RO.

Deep Geothermal

DECC are proposing a separate geothermal tariff of 5p/kWh, the heat has to be generated by naturally occurring energy located and extracted from at least 500 metres beneath the surface of the earth. This is greater than the ground source heat pump tariff which is set at a rate of 3.4p/kWh for installations above 100kW.

DECC are further considering introducing energy efficiency requirements by dividing applicants into three categories: (1) users of process heat, district heating, (2) commercial and industrial space and, (3) water heating.  No efficiency requirements are being proposed for process heat, and for district heating they are proposing to align with domestic RHI scheme, requiring applicants to meet a certain proportion of Green Deal ‘green tick’ energy efficiency levels.  For industrial and commercial, DECC propose to allow applicants the choice of a range of alternative methods to demonstrate their energy efficiency.

To read the full consultation, click here.

(3) Air to water heat pumps and energy from waste

The consultation seeks views on the Government’s plans to expand the current non-domestic RHI scheme to include Air to Water Heat Pumps and broaden the eligibility criteria for Energy from Waste.

Air to Water Heat Pumps (AWHP)

DECC propose to support AWHP at a tariff of 1.7p/kWh, they are considering banding support for the technology by installation capacity.

Energy and Waste (EFW)

DECC are expanding the coverage of waste to be consistent with RO.

To read the full consultation, click here.

The REA are holding an event on 22 October.  Key figures from DECC’s RHI team will go through the proposals in detail.  For more details and to register, click here.