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