Renewable Heat Incentive - Regensw

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Renewable Heat Incentive (RHI) Options and opportunities for industry

Patrick Allcorn

April 2014

Renewable Heat Incentive Options and opportunities for industry

Three good reasons to choose renewable heat… 1. From this Spring, every building will be able to get an incentive if it goes renewable – the RHI is a reality 2. Government has allowed for significant growth year on year in renewable heat demand in domestic and non domestic properties 3. Customers like renewable heat

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Renewable Heat Incentive

Renewable Heat Incentive Options and opportunities for industry

Customer satisfaction •

85% satisfied with new installation



80% found installation process easy



60% believe RHT easier to use



Majority think installation has added value to their property

Initial data from RHPP evaluation

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Renewable Heat Incentive

Renewable Heat Incentive Options and opportunities for industry

Heat is an issue for the UK • 47% of UK energy use is in respect of heat and the UK spends around £32bn on heat across our economy • Around 1/3 of UK’s carbon emissions come from energy used to produce heat • Under EU Renewable Energy Directive 2009 we have a binding commitment to increase renewable energy use to 15% by 2020 Legally binding targets mean that the scheme is here – once in the scheme full payment is guaranteed Incentivise roll out of renewable heat systems

Prepare for mass rollout in 2020s Build sustainable supply chains

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Renewable Heat Incentive

Improve performance

Reduce costs

Reduce barriers to uptake

Renewable Heat Incentive Options and opportunities for industry

Which scheme is right for me? Domestic

Non-domestic

Property must have domestic EPC - single Commercial, industrial, public domestic dwelling. sector and not for profit Eligibility

Home owners, social and private landlords and self builders (not new build)

Third party owners not yet eligible

Multiple homes (including District Heating) – no exclusion for new build properties

Payment period

Payments made over 7 years (to compensate for 20 years of benefits)

Payments made over 20 years

Measuring usage

Deemed renewable heat output (metered if back up system or second home)

Eligible heat use is metered on actual generation or use

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Renewable Heat Incentive

Renewable Heat Incentive Options and opportunities for industry

Where it can get complicated • Some property types thought of as domestic may not have a domestic EPC Temporary building (e.g. – park home or caravan) Care home Mixed use site (e.g. business run from home, flat within shop)

Bed & breakfast

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Renewable Heat Incentive

Hall of residence

Renewable Heat Incentive Options and opportunities for industry

Is the domestic RHI for me? • Available for households on and off the gas grid – those without mains gas have the most potential to save on fuel bills and decrease carbon emissions

Payments per kWh

12.2p

Biomass only boilers

12.2p

7.3p

18.8p

19.2p

Biomass pellet stoves with integrated boilers

Air source heat pumps Ground source heat pumps

Solar thermal panels - flat plate / evacuated tube only* *Solar PV-T eligible for FiTs, but not domestic RHI at present

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Renewable Heat Incentive

Eligible solar thermal panels only provide hot water Only one space heating system per property Can apply for solar thermal for hot water AND a space heating system Metering for second homes & homes retaining secondary heating options

Renewable Heat Incentive Options and opportunities for industry

What to do before applying • Renewable heating systems work best in well insulated home. Talk to an installer about your options and check advice with Ofgem website What type of system might be right for your property

To apply you must have a green deal assessment carried out for the property Only exemptions are for those who build their own homes incorporating renewable heating system

You must install loft and cavity wall insulation if recommended in Green Deal Advice Report If it is not possible to do this, evidence must be submitted to Ofgem as part of application

Get an updated EPC to verify loft and cavity wall insulation has been installed

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Renewable Heat Incentive

Renewable Heat Incentive Options and opportunities for industry

For those intending to apply • Only the owner of an eligible heating system can apply. Requirements are: Renewable heating system and the installer must be MCS certified

Must have had system installed on or after 15th July 2009

All of the heating system must be new – i.e. not used before commissioning date

If system installed on / after launch date, must apply within 12 months of commissioning

Public grants (not ECO, Green Deal or loans) deducted from RHI payments over 7 years

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Renewable Heat Incentive

Renewable Heat Incentive Options and opportunities for industry

Proof for application process • Installer will register system on MCS database and provide certificate. System owner must complete online application process and supply: MCS certificate (or equivalent) number

EPC number

Green Deal Advice Report number

Declarations, personal information and bank details for payment In some circumstances more info will be needed, such as second homes & homes retaining fossil fuel heating options

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Renewable Heat Incentive

Renewable Heat Incentive Options and opportunities for industry

Some people in the domestic scheme must be metered Metering is required where you have: • A renewable heating system installed alongside a fossil fuel space heating system (e.g. an oil boiler) or another renewable system • A heating system combining a heat pump with a fossil fuel system like a gas boiler (i.e. a hybrid system) • A biomass heating system that is not designed to heat the whole property

• A heating system installed in a domestic property that is occupied for less than half the year (e.g. a second home) Metering is never required for solar thermal systems 11

Renewable Heat Incentive

Renewable Heat Incentive Options and opportunities for industry

Payments based on meter readings Heat pumps

Biomass boilers/stoves

At least 1 heat meter & 1 electricity meter

At least one heat meter

Renewable heat = heat - electricity

Renewable heat = heat measured

Beware common pitfalls – make sure your installer uses the MCS guidance

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Renewable Heat Incentive







Renewable Heat Incentive Options and opportunities for industry

Quarterly payments in arrears for 7 years • Possible fuel bill savings in the first year, compared to the cost of running a new oil boiler:

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ASHP

Biomass

GSHP

Solar Thermal

• Between 10 and 35%

• Between 15 and 40%

• Between 25 and 40%

• Between £60£130

• If installed and operated properly

• Dependent on the price of wood fuel used

• If installed and operated properly

• Dependent on the amount of hot water used

Renewable Heat Incentive

Renewable Heat Incentive Options and opportunities for industry

Deployment and Degression • With a steady installation rate, budget management figures allow for deployment levels as follows (figures are an estimate – will vary according to house size and heat demand)

ASHP

Biomass

GSHP

Solar Thermal

15,000

2,000

2014/15

2,000

16,000

29,000

4,000

2015/16

4,000

19,000

• These are the initial trigger levels for a degression • Should these be reached the scheme will remain open • However, the tariffs will automatically reduce by 10% for new applicants after the degression • Existing applicants continue to receive the tariff level agreed on accreditation 14

Renewable Heat Incentive

Renewable Heat Incentive Options and opportunities for industry

Performance Payment on renewable heat only – in built performance incentive

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Product Standards MCS looking at improving standards

Eligibility Requirements Minimum SPF of 2.5 for heat pumps

Metering & Monitoring Additional payment for set packages

Metering for Evaluation All installations meter ready

Renewable Heat Incentive

Renewable Heat Incentive Options and opportunities for industry

Responsibilities of scheme participants • Condition of joining scheme is to abide by the rules, which include: Keeping heating system & metering equipment (if applicable) in good working order Informing Ofgem if: • Equipment breaks down and is not working while waiting for repairs • Property is sold (with the heating system in) – new owners can apply • Any changes made to heating system (e.g. – replacing part of system)

• Any changes to situation mean system needs to be metered • There are any changes in circumstances To continue to receive payments annual compliance declaration needs to be completed • Ofgem will carry out series of desktop and site audits to verify declarations are accurate – these are randomly chosen to anyone could be selected 16

Renewable Heat Incentive

Renewable Heat Incentive Options and opportunities for industry

Treatment of ‘Legacy’ applicants • For those who have already installed eligible systems, ‘Legacy’ applications will be staggered: Phase Months 1-3

Months 3-6

Months 6-12

Who can apply 

New applications



Legacy that was not part–funded by RHPP



New applications



Legacy that was not part–funded by RHPP



Legacy part funded by RHPP (applied for before 20th May 2013)



New applications



All legacy applications

Year 2 onwards  17

New applications only (within one year of commissioning date)

Renewable Heat Incentive

Renewable Heat Incentive Options and opportunities for industry

The Non-domestic RHI • Who is eligible for the non-domestic RHI?

District heating

Not-for-profit

Public sector

Commercial

Industrial

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Renewable Heat Incentive

Renewable Heat Incentive Options and opportunities for industry

Is the non-domestic RHI for me? • New and increased tariffs for some technologies, from spring 2014 AWHP Biogas – Small (200kW)*

7.2p

Biomass – Medium (200 – 999kW)*

7.2p

4.4p

10.0p

Ground/water source heat pumps*

Solar thermal ( 200 kW

Common issues with applications to date • Lack of fuel records • Meter component installed incorrectly • Heat losses not being measured appropriately

Can submit plans & evidence demonstrating that, once built, an installation would meet the eligibility criteria of the RHI scheme a form of ‘in principle’ agreement and may include conditions

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Renewable Heat Incentive

Is not a tariff guarantee – but eases the application process

• Boiler output higher than stated capacity Proper installation, operation and maintenance can make all the difference

Renewable Heat Incentive Options and opportunities for industry

What happens then? • Once you are accredited onto the scheme: Owner regularly submits meter readings and periodic data

Submit meter readings & periodic data to receive payments

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Ofgem makes regular financial incentive payments

Maintain & service equipment – keep a log & receipts

Renewable Heat Incentive

Owner is aware of their responsibilities to remain compliant with scheme & signs annual declaration

If biomass installation, start a fuel log and keep fuel receipts

Inform Ofgem of any changes to your installation

Ofgem selects installations for audits and inspections on an ongoing basis

Sign an annual declaration

Renewable Heat Incentive Options and opportunities for industry

For more information: Domestic

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Non-domestic

Pre-application enquiries by ESAS in England & Wales: 0300 123 1234

Ofgem deliver scheme

Or contact Home Energy Scotland: 0808 808 2282

Guidance on www.ofgem.gov.uk

Ofgem to deliver scheme – guidance will be available soon

RHI enquiry line: 0845 200 2122

Check www.ofgem.gov.uk

Email: [email protected]

Renewable Heat Incentive

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