DECC issued a consultation on the Renewable Heat Incentive (RHI) on 1 February 201016. The consultation sets out DECC's proposed approach to providing financial support that encourages individuals, communities and businesses to switch from using fossil fuel for heating, to renewable heat technologies and sources. The consultation closed on 26 April 2010 and the RHI is planned to come into operation in April 2011. It is intended to be available until at least 2020. The RHI is designed to bring forward the contribution of renewable heat towards the target of 15% of the UK's overall energy consumption to come from renewable sources by 2020. The RHI will operate across England, Scotland and Wales.
The RHI will provide support for a range of renewable heat technologies, including air and ground-source heat pumps (and other geothermal energy), solar thermal, biomass boilers, renewable combined heat and power, use of biogas and bioliquids and the injection of biomethane into the natural gas grid. RHI will only support generation of 'useful heat' ie heat that is used for: space heating, water heating, cooking, low and high temperature industrial processes, drying and separating. Heat used for thermal power generation, i.e. generating electricity, will not be eligible for RHI support.
DECC propose that eligible energy sources (which includes the biomass part of municipal and industrial waste and biogas) will be supported whether they are standalone installations or part of a wider district heating network, and that combined heat and power (CHP) will be eligible for the same tariffs for its useful renewable heat output as dedicated heat installations. They do not propose to require the CHPQA standard under the RHI.
DECC propose that, in general, only the installation of new equipment will be eligible for the incentive. Under transitional arrangements installations built after 15 July 2009 but before the introduction of the RHI will be eligible. New installations would also be eligible where they replace existing installations, but refurbishment, repair or conversion of equipment would not create any RHI entitlement beyond that which was in place before such works were carried out. Any increase in capacity will be eligible for RHI support as if it were a new. However DECC are open to views as to the types of situations that should be defined as new or replacement installations on the one hand or refurbishment, repair or conversion on the other hand.
RHI Operation
Renewable heat systems greater than 45kW will be required to register and seek accreditation directly from Ofgem, in a manner similar to the Renewables Obligation (RO) system.
DECC proposed tariffs are set out in the consultation. The main one of interest is that, for solid biomass CHP and heat only >500kW, installations will receive the same tariff (ranging between 1.6 - 2.5p per kWh). The consultation document asks for evidence for the right level of incentive in this range to bring forward renewable heat, including in the form of CHP, while minimising costs to consumers. Because of the ROC uplift for the electricity produced by biomass CHP biomass boilers and CHP receive the same RHI tariff for their renewable heat output.
How the RHI entitlement will be worked out:
For mixed fuel except in the case of municipal waste, the RHI will require the use of separate boilers (with a dedicated boiler for the renewable fuel), and RHI support will be paid on the metered useful heat output from the renewable fuel boiler.
Where the plant is used to generate heat from municipal waste, DECC's proposed approach follows the principles of the ROO2009. In line with the RO, DECC propose that, subject to establishing sufficient evidence for Ofgem that the fossil fuel content is unlikely to exceed 50% and that the municipal waste has not been subject to any process before being used that is likely to have materially increased that proportion, generators can agree with Ofgem that 50% of the full RHI biomass tariff be paid.
District heating
DECC say that district heating may in certain cases be the only viable option for delivering renewable heat. In these "hard to treat cases" it may be physically impossible or disproportionately expensive to install individual renewable heating as a result of e.g. space constraints in tower block apartments or particularly dense urban areas. DECC are considering whether to provide an uplift to the proposed RHI tariffs based on district heating networks supporting hard to treat properties (Note: this is an uplift to the RHI rather than a the 0.5 ROC uplift that is available to CHP plants). DECC do not have sufficient evidence to propose any such uplift and have asked for evidence.
DECC propose that any district heating uplift may only be available where the network is built simultaneously with the installation of boiler eligible for the main RHI tariff. Where a network already existed, the uplift would only be available if the network is extended with or after the installation of the eligible boiler, and in this case all calculations will be based on the part of the network's heat output that serves the customers connected through the extension.
DECC have proposed that for CHP above 5MW:
• For CHP stations installed after the publication of the Renewable Energy Strategy, they will offer a one-off choice to claim RO + the 0.5 ROC uplift, or RO + RHI tariff. Once a station has become accredited under the RHI as well, it will not be possible to reverse this decision.
• This transitional arrangement would be available for new installations completed before the review of the Renewables Obligation in 2013.
• Operators of such CHP stations could decide between RO+ uplift and RO+RHI at any point between the start of RHI in 2011 and 2013.
• Once the choice is made, stations will be "grandfathered" on this basis.
• After 2013 the RO uplift will no longer be available for new installations, and all new CHP stations will be able only to claim the basic RO tariff + RHI.
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16 http://www.decc.gov.uk/en/content/cms/consultations/rhi/rhi.aspx