Just over three weeks remain to respond to a consultation on ways in which the Renewable Heat Incentive (RHI) non-domestic scheme may be expanded to cover more technologies and the introduction of targeted energy efficiency requirements.  The consultation which applies to England, Scotland and Wales is due to close on 7 December 2012, with the government’s response expected in March 2013.  Those who are already within the scheme and not impacted by proposed extension of supported technologies should nevertheless consider the consultation given the proposals relating to the achievement of energy efficiency requirements in order to be eligible for RHI support. Those interested should respond to the consultation by completing an online questionnaire or by way of email to rhi@decc.gis.gov.uk.  Please click the link to the consultation page here.

New targeted technologies

The non domestic RHI scheme was introduced in November 2011 to facilitate the generation of 15% of energy from renewable sources by 2020 and assist the attainment of carbon reduction targets.  The RHI provides a payment for each kWh of renewable heat generated.  Following the first year of the scheme the government considers that new evidence has become available to trigger the inclusion of new technologies and tariff changes. 

The first new technology the consultation proposes to grant RHI support is heating only Air to Air Heat Pumps (“AAHP”).  They are particularly suited to buildings, such as schools and libraries that do not need the cooling function of Reversible AAHPs.  Reversible AAHPs have been excluded from the scheme on the grounds that the market for them is sufficiently well established.

The consultation also considers support for biomass direct air heaters, which is a more cost effective technology than biomass boilers, which are already supported. Support for biogas combustion is to be extended to units with a thermal capacity of over 200kW.  Two separate tariff bands may be introduced for installations between 200 and 500kW and a lower tariff for installations over 500kW.  Combined Heat and Power (CHP) is already supported, but the consultation aims to create specific tariffs for biomass and bioliquid CHP.  CHP installations must meet the Combined Heat and Power Quality Assurance requirements to be approved for RHI payments.

Deep geothermal heat (from depths of below 500m below ground) is currently supported, but the consultation suggests that a new higher tariff should be set to ensure adequate support of the technology.

Metering issues

Measuring the output/input of installations is essential in calculating RHI payments.  For many of the proposed technologies there is not a standard system of metering output.  In many cases, creating a standardised meter has been considered too expensive.  As a result, the consultation seeks views on the concept of “deeming” i.e. estimating the heat output in relation to the size of the building.

The introduction of energy efficiency requirements

Following the launch of the scheme the government considers that energy efficiency requirements run parallel with the aim of the RHI, as the overall aim is to reduce emissions and encourage energy efficient practices.  The consultation proposes introducing energy efficiency requirements distinguishing between RHI applicants by establishing three categories:-

  1. Users of process heat – no additional requirements are to be imposed. As the generation and use of heat is essential to their business, DECC considers that there is already a significant economic driver towards energy efficiency and they are likely to be subject to existing energy efficiency requirements, such as the EU Emissions Trading Scheme.
  2. District heating –economic drivers may not ensure energy efficiency.  The consultation proposes that applicants should have installed Green Deal “green tick” measures (ie those eligible for the Green Deal on the basis of their cost and relative energy efficiency benefits) under the Green Deal to demonstrate energy efficiency. However, some flexibility will be applied, as applicants cannot necessarily control all households or units that they heat directly.
  3. Commercial and industrial space and water heating – the proposal is to link the minimum standard required to a standard relative to the potential energy efficiency of the building. The approach of setting an absolute standard such as the example provided of an EPC “C” rating is rejected. The consultation proposes giving applicants a choice in how they demonstrate energy efficiency whether it is through Energy Performance Certificates, Display Energy Certificates or BREEAM or other means.  

The future of RHI

In addition to the consultation DECC is seeking participants’ evidence on the merits of including landfill gas and biopropane in the scheme and the tariffs for ground source heat pumps and large biomass (Over 1MW).  In addition, Solar Thermodynamic Panels and active solar air heating are outlined in the consultation as prospective technologies that may be introduced in the future.

Timescales

Following the government’s response to the consultation, subject to European State Aid Clearance, it is hoped that new support will be in place by summer 2013.  The first scheduled review of RHI will take place in 2014 with the aim of implementing the outcome of the review in 2015. Proposals for a domestic scheme are being consulted upon presently until 7 December 2012.

Juliet Chrispin