DECC PRESS RELEASE ON RHI
September 24, 2012
Progress on support for renewable heat hots up today with the publication of three consultations on the Coalition’s Renewable Heat Incentive scheme (RHI). The RHI, the first of its kind in the world, was launched for the non domestic sector in November last year, with a scheme for householders intended to open in Summer 2013.

Renewable Heat Incentive for householders

Proposals on long term support for householders who install renewable heating kit such as biomass boilers, heat pumps and solar thermal in their homes across the nation have been published for consultation today. The RHI for householders, to be managed by Ofgem, is aimed at any householder looking to replace their current heating with renewable heating kit or householders who have installed any such technology since 15 July 2009. It is intended that householders will get paid for the heat expected to be produced by their installed technology.

Key proposals in the consultation include:
- Indicative tariff ranges for air source heat pumps (6.9-11.5p/kWh), biomass boilers (5.2-8.7p/kWh), ground source heat pumps (12.5-17.3p/kWh) and solar thermal technologies (17.3p/kWh) that are MCS certified and meet relevant required standards
- Payments for householders over seven years for each kWh of heat produced for the expected lifetime of the renewable technology and based on deemed heat usage
- Tariff levels set to provide a better return for householders living off the gas grid
- Budget management system similar to one introduced for the Feed-in Tariffs scheme
- Minimum energy efficiency requirements based on Green Deal assessments
Energy and Climate Change Minister Greg Barker said:

“We need to revolutionise the way we heat our homes and businesses and move away from expensive fossil fuels, not only to cut carbon but to help meet our renewables targets and save money on bills.
“Our proposals aim to encourage even more uptake of clean green heating in industry and in our businesses. We have also set out our views on long term support for those who invest in low carbon kit in their homes and we look forward to hearing your thoughts.”

The closing date for this consultation is 7 December 2012.

There is already cash available for renewable heat for householders under the Renewable Heat Premium Payment (RHPP) scheme, set to run until March 2013. The Department for Energy and Climate Change (DECC) has recently announced the winners of the RHPP Social Landlord Phase 2 ‘Top up’ competition and confirmed the list of community groups through to the next stage of the RHPP communities competition.

Renewable Heat Incentive for commercial, industrial and community customers

DECC has today published two consultations on expanding the RHI scheme for commercial, industrial and community customers to increase uptake of renewable heating kit in this sector.

The first consultation looks at the broader expansion of the scheme and closes on 7 December 2012. The second consultation focuses on air to water heat pumps and energy from waste and closes on 18 October 2012.

Key proposals to expand the scheme include:
- Inclusion of heating only Air to Air heat pumps with a proposed tariff of 0.97p/kWh for all sizes of installation
- Inclusion of Air to Water heat pumps with a proposed tariff of 1.7p/kWh for all sizes of installation
- Inclusion of biomass direct air heaters with a proposed tariff of 2.1p/kWh under 1MW and 1p/kWh over 1MW
- Extension of biogas combustion tariffs to installations over 200kW
- Introduction of a specific tariff for heat from biomass CHP of a proposed 4.1pkWh
- Introduction of bioliquid CHP tariff of 4.1p/kWh
- Increased tariff for deep geothermal installations from 3.4 p/kWh to 5p/kWh
- Increased range of waste feedstocks eligible for support
- Minimum energy efficiency requirements for district heating, commercial and industrial space and water heating
- Continuation of exclusion of reversible Air to Air heat pumps from the scheme
DECC will be running a number of events across the country to provide opportunities to ask questions about the consultations and feed in ideas. Further details on these events, including how to register, will be published on the DECC website shortly.
Category: News

RHI LATEST NEWS FROM DECC – NON DOMESTIC

September 24, 2012

Non-domestic RHI

The Non-Domestic RHI Scheme supports renewable heat installations in business, industry and the public sector as well as district heating schemes. It has been open for applications since November 2011.

The Non-Domestic RHI Scheme currently supports the following technologies:

biomass
heat pumps – ground source, water source and deep geothermal
all solar thermal collectors
bio-methane and biogas

RHI payments are made to the owner of the heat installation over a 20 year period and tariff levels have been calculated to bridge the financial gap between the cost of conventional and renewable heat systems. The scheme is administered by Ofgem. More information is on the Ofgem: Renewable Heat Incentive (RHI)[External link] web page. The current tariffs for the Non-Domestic RHI technologies are in the table below:

Tariff name	Eligible technology	Eligible sizes	Tariff level (p/kWh)
Small biomass	Solid biomass including solid biomass contained in municipal solid waste (incl. CHP)	Less than 200 kWth	8.3 (tier 1)
Small biomass		Less than 200 kWth	2.1 (tier 2)
Medium biomass		200 kWth and above; less than 1,000 kWth	5.1 (tier 1)
Medium biomass		200 kWth and above; less than 1,000 kWth	2.1 (tier 2)
Large biomass		1,000 kWth and above	1.0
Small heat pumps	Ground-source heat pumps; water source heat pumps; deep geothermal 100 kWth and above	Less than 100 kWth	4.7
Heat pumps		100 kWth and above	3.4
All solar thermal collectors	Solar thermal collectors	Less than 200 kWth	8.9
Biomethane and biogas combustion	Biomethane injection and biogas combustion, except from landfill gas	Biomethane all scales, biogas combustion, except from landfill gas	7.1

Since the scheme opened in 2011 DECC has run two consultations on changes to the scheme in relation to integrating budget management into the scheme, introducing new air quality and biomass sustainability standards and making improvements to respons to the initial months of the scheme being operational. They can be found in the Consultations area of this site.

We will be consulting on proposals for expanding the existing scheme to include additional technologies, later in September 2012.

The timetable for delivering the changes to the Non-domestic scheme can be found on the Delivery timeline web page.

Budget management for the RHI

It is essential that the RHI is financially sustainable and that deployment of renewable heat continues to be good value for money to the taxpayer. The RHI is funded directly from Government spend and has been assigned annual budgets for the four years of this Spending Review period. Budgets were set based on the estimated trajectory of growth needed to achieve 2020 renewables targets. Further information on what we are doing to ensure we stay within budgets for the non-domestic RHI can be found on the Budget management web page.

In June 2012 we announced a stand-by mechanism for budget management that would suspend the RHI to new entrants until the next financial year should estimated spending reach a level where the budget could be breached. This will be in place until March 2013 when it will be replaced by a more sophisticated, long term mechanism.

Non-Domestic Scheme uptake and spend

To provide greater transparency and certainty for potential scheme applicants, members and investors, we committed to provide a weekly forecast of estimated spend for the 2012/13 financial year (based on applications received to date). This information will enable everyone with an interest to monitor the progress towards the trigger point which would activate the Stand-by Mechanism.

Category: News

RHI – LATEST NEWS FROM DECC
September 24, 2012

Renewable Heat Incentive: proposals for a domestic scheme

We are consulting on proposals for a subsidy scheme aimed at helping households replace their existing fossil fuel-based heating systems with renewable-based ones. Broadly speaking, we are proposing to support the installation of Microgeneration Certification Scheme (or equivalent) certified ground and air source heat pumps, biomass boilers and solar thermal panels. Our lead proposal is that the subsidy would be provided through tariff based payments over a seven year period. Payments would be made 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 renewable technology installed. We are inviting views on what alternatives approaches to support might also be appropriate and on our current methodology and assumptions that form the basis of the indicative tariff ranges that we are presenting.

As part of our core proposal, RHI payments would start after the renewable heating system had been installed. Householders would therefore need to finance the upfront installation costs themselves through personal funds or a loan. The tariffs we propose take into account the additional costs of installation and running the renewable system and non-financial barriers (such as disruption in the home). They also build in compensation on the additional upfront installation costs of 7.5% to cover the cost of financing.

The scheme will be for individual domestic properties and is open to all. We are proposing that, provided their properties meet certain energy efficiency criteria (meaning a key interaction with the Green Deal), owner-occupiers and private landlords would be eligible, together with householders who have installed renewable heating systems since 15 July 2009 , including those who received the Renewable Heat Premium Payment. We are also considering having bespoke tariffs for the registered social landlord and new build sectors, recognising their potential contribution to the roll-out of renewable heat, but taking into account the possible lower installation-related and other costs they might benefit from.

We propose introducing 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.

Category: News

Government providing certainty for FIT and RHI

July 21, 2012

Feed-in Tariffs

The final package of changes to the FITs scheme has been announced by the Department of Energy and Climate Change (DECC) today, following consultation in February this year. This is part of a comprehensive review designed to ensure value for money for the consumer and long term certainty for those who choose to invest.

The changes will affect tariffs for all newly eligible FITs technologies from 1 December 2012 onwards. Changes to solar tariffs, which have already been announced, will take place from 1 August 2012.

A degression mechanism will be introduced for Anaerobic Digestion (AD), wind and hydro from April 2014 in line with uptake of these technologies. Tariffs will be published two months before the degression date and will be based on publicly-available data. Decisions on the degression mechanism for solar were outlined in the Government response published on 24 May 2012.

Energy and Climate Change Minister Greg Barker said:

“I want to provide long term certainty for those choosing to invest in all forms of small scale green electricity generation, not just solar, and our changes to FITs will do just that.

“As well reducing tariffs over time for AD, hydro and small scale wind in line with uptake, we are introducing tariff guarantees for all technologies, great news for projects with long lead in times like hydro power.

“We are also planning to remove the energy efficiency requirement for community and school solar projects in recognition of the hard to treat nature of community buildings often involved in such schemes, and the educational benefits that they can bring. These types of projects will also be able to get tariff guarantees for installations of any size, making it easier for communities to get involved in clean green local energy generation.”

Dave Sowden, Chief Executive of the Micropower Council said:

“We welcome what is broadly a very positive set of proposals that should bring greater confidence to investors and customers. In particular the decision to increase the export tariff, the clarification of cost controls for microCHP, the community proposals and the decision not to extend energy efficiency requirements beyond PV are welcome developments.

“We will continue to monitor progress of the technologies supported by FITs with a view to maintaining constructive dialogue with DECC to inform further developments to the scheme.”

Paul Thompson, Head of Policy at the Renewable Energy Association said:

“These decisions demonstrate that DECC has listened carefully to industry concerns, and should restore certainty to the sub-5MW sector. We particularly welcome the support for community schemes and the improvements to the cost control mechanism. The introduction of tariff guarantees for projects at a relatively early stage is also very helpful, and we look forward to a similar approach being extended to the Renewable Heat Incentive.”

New tariffs for non-PV FITs technologies

Technology	Band (kW)	Current generation tariffs (p/kWh)	Consultation tariffs from Oct 2012 (p/kWh, 2012 prices)	Final tariffs from 1 Dec 2012 (p/kWh, 2012 prices)	Community energy tariff (see explanation in paragraphs 148-151)
Hydro	=15	21.9	21	21	21
	>15-=100	19.6	19.7	19.6	19.6
	>100-=500	12.1	12.1	15.5	15.5
	>500-=2000	12.1	12.1	12.1	12.1
	>2000-=5000	4.9	4.5(2.2 from April 2013)	4.48	4.48
Wind	=1.5	35.8	21	21	21
	>1.5-=15	28	21	21	21
	>15-=100	25.4	21	21	21
	>100-=500	20.6	17.5	17.5	17.5
	>500-=1500	10.4	9.5	9.5	9.5
	>1500-=5000	4.9	4.5 (4.1 from April 2013)	4.48	4.48
AD	=250	14.7	14.7	14.7	14.7
	>250-=500	13.6	13.7	13.6	13.6
	>500-=5000<>	9.9	9	8.96	8.96
microCHP	=2	10.5	12.5	12.5	12.5

DECC is introducing a system of preliminary accreditation so all AD and hydro installations and larger wind and PV installations (over 50 kW) will be able to know before construction that they will be accredited. It will also provide certainty over tariffs for six months to two years depending on the technology. This means that if a developer gets their project up and running within the tariff guarantee timescale, they will get the tariff that applied at the time they applied for preliminary accreditation.

A system of advance tariff guarantees will also be available to non-domestic community energy PV projects up to 50 kW. A new hydro band for 100-500kW installations will also be introduced to ensure developers are incentivised to design their project at the most appropriate size.

“Community” FITs projects will be defined on the basis of existing tax law and community schemes will be exempt from the energy efficiency requirement (level D) introduced for solar from 1st April this year. Schools will also be exempt from the energy efficiency requirement even where they do not meet the definition of community scheme. Changes will take effect from 1 December, subject to Parliamentary and state aid clearance.

Renewable Heat Incentive

DECC has also today set out proposals to improve the performance and manage the future budget of the non-domestic Renewable Heat Incentive (RHI) scheme, providing greater certainty to the market.

To ensure the RHI budget is managed effectively, DECC is proposing to introduce a flexible degression based system. Under this system tariffs would be reduced for new applicants if uptake approaches pre-determined trigger points. Tests to see whether degression is needed would take place quarterly, and if a tariff reduction is needed, one month’s notice would be given. Progress towards the trigger points for each technology and the scheme overall would be monitored throughout the year and data published monthly.

Energy and Climate Change Minister Greg Barker said:

“The Coalition is fully committed to driving forward investment in renewable heat, and our proposals will make sure we provide the right support for the industry.

“We want to continue helping renewable heat to grow and flourish, providing long term certainty for those who choose to invest in it.”

DECC has set out plans to introduce greater environmental sustainability into the RHI through the inclusion of standards on Biomass sustainability (in line with the UK Bioenergy strategy published in April 2012) and a clear process for how the air quality regime will work. DECC is also looking to simplify the metering arrangements for the RHI, reducing the administrative burden on participants and taking views on the scheme from existing applicants into account.

Notes for editors

The Feed-in Tariffs (FITs) scheme provides a subsidy, paid for by all consumers through their energy bills, enabling small scale renewable and low carbon technologies to compete against higher carbon forms of electricity generation.
The Government response to the FITs consultation can be found on the Consultation on Comprehensive Review Phase 2B: Tariffs for non-PV technologies and scheme administration issues web page.
The RHI, launched in November last year, is the first of its kind in the world. The scheme provides long term support for renewable heat technologies like heat pumps, biomass boilers and solar thermal panels.
The RHI consultation documents can be found on the Renewable Heat Incentive: providing certainty and improving performance web page. The consultation closes on 14 September 2012.
DECC consulted on a stand-by mechanism for budget management in March which will take effect this summer and is intended to be in place until the longer term budget management comes into effect.
Budget management proposals will be extended to the additional technologies brought into the non domestic RHI. These additional technologies will be subject of consultation in September.
DECC will consult on support for householders in September with an aim to launch the scheme in summer 2013. Proposals for how to manage the budget for householder’s support will form part of the September consultation.
DECC will continue to assess the workings of the RHI scheme and is proposing to review the scheme in 2014 to ensure tariffs for new applicants are still providing value for money.