Industry leaders today welcomed the UK Government’s announcement of its world-first scheme to support renewable heating.
The Renewable Heat Incentive (RHI) covers a full range of renewable heating technologies in the residential, industrial, commercial and public sectors. In particular, the Government has protected a quarter of the first year’s budget to provide funding exclusively for households in the first 15 months of the scheme, and honoured the previous government’s commitment that all systems installed since 15 July 2009 will be eligible to receive incentive payments.
Dave Sowden, Chief Executive of the Micropower Council, said: “This scheme marks a world-first, long-term, commitment to a rapid growth in renewable heating with £860m of public funding in the first four years.
“We are delighted that the Government has largely shielded the residential sector’s early months of the scheme from the budget cuts brought about in the Comprehensive Spending Review, with a quarter of the first year’s funding being reserved exclusively for the household sector. This should provide confidence that this is a serious policy aimed at encouraging citizens to switch over to more sustainable home heating systems in their tens and hundreds of thousands in the early years, and subsequently, we hope, in their millions.
“There are still important details to follow of how the first 15 months’ residential sector first year payments will be distributed, and we will continue to work closely with the Government to ensure this happens in a way best designed to ensure long-term and sustainable growth for the industry”.
Lord Redesdale, Chairman of the Anaerobic Digestion and Biogas Association, also welcomed the announcement of the Renewable Heat Incentive, and said: "After months of work on the RHI, the Government’s decision is very welcome. It will allow the huge increase in AD promised in the Coalition Agreement to be realised - the level of the RHI is a huge vote of confidence in this new and growing industry.
"The decision underlines Ministers' commitment to AD, and has obviously involved a lot of complex work from civil servants to bring it to fruition - so I'd like to take this opportunity to thank them all.
"Moving forward, the Government now need to consider steps such as socialising the cost of gas grid connection to encourage the best use of biogas for meeting the UK's targets, including the huge increase in energy from waste through anaerobic digestion which the coalition promised."
The announced level is 6.5p/kWh for Biomethane injection to the grid, guaranteed for 20 years.
AD has the potential to provide over 40 TWh of energy, which would be enough to heat a city larger than Birmingham and is equivalent to 20% of the UK's domestic gas demand.
Charlotte Morton, ADBA's Chief Executive, said: "As independent studies have shown, upgrading biogas to biomethane for grid injection is the best way to maximise the contribution of the AD industry to mitigating greenhouse gas emissions and addressing energy security issues.
"I hope that the RHI will now make this viable for many projects, and that the AD industry will expand to play a significant role in the UK’s green energy mix."
And the UK's electrical contracting industry body NICEIC also welcomed the announcement.
“We are delighted that the Government has announced this major incentive for renewable heat,” said Emma McCarthy, NICEIC chief executive officer. “DECC believes 150,000 existing manufacturing, supply chain and installer jobs will be supported by the incentives and NICEIC believes any boost to the trade through promises such as this are vital in the current economic climate.”
“Renewable heat is a largely untapped resource and an important new green industry of the future,” says Secretary of State Chris Huhne. “This incentive is the first of its kind in the world. It’ll help the UK shift away from fossil fuel, reducing carbon emissions and encouraging innovation, jobs and growth in new advanced technologies.”
Philip Sellwood, Chief Executive, Energy Saving Trust, said he was pleased insulation would be an important factor towards RHI eligibility.
He added: “As we have seen with feed-in-tariffs, an attractive renewable heat incentive rate will be a real boost for householders and industry.
“We know from our heat pump trials that the performances of technologies were hugely variable because of a number of factors including installation and lack of understanding on how best to use the systems. That’s why monitoring is key. Only householders whose technology is performing equal to, or above, a minimum standard should be rewarded – that’s a real incentive.
"The fact that insulation levels are a key criteria for the RHI Premium Payment is good news. We know that laying the groundwork for a heat technology with basic energy efficiency is absolutely crucial in getting the best possible system efficiencies, bill and carbon savings from domestic installations."
The UK Green Building Council welcomed today's announcement but stressed that the scheme could be undermined if minimum energy efficiency standards were not applied to commercial buildings such as shops and offices. A minimum standard will be applied for homes.
The Renewable Heat Incentive (RHI) will support emerging technologies and businesses in the UK, strengthening security of supply by reducing dependence on fossil fuel heating and emissions.
Paul King, Chief Executive of the UK Green Building Council said: “The UK needs a step change in the amount of heat that is generated from renewable sources and the RHI has the potential to catalyse that step change.
“But for the RHI to give the taxpayer value for money and for it to make cost-effective, carbon sense, we need a reduction in energy demand as part of an RHI package. Encouragingly, this principle seems to have been enshrined for homes, where minimum energy efficiency standards will apply.
“However, it’s less clear whether similar rules will apply to commercial buildings such as shops and offices. We look to Ofgem to use their powers to ensure that profligate energy use is not rewarded.”
Juliet Davenport, CEO of renewable energy supplier Good Energy, said she had reservations about the detail of the announcement but was generally pleased.
She said: “As the only utility to have pioneered and delivered an RHI ourselves, Good Energy has worked hard to convince Government of the difference an RHI would make to improving the takeup of renewable heat technology and cutting the UK’s carbon emissions.
“We are pleased to see that the policy announced today applies to a wide range of technologies, and includes commercial and community as well as domestic schemes. However, we are concerned that the full scheme won’t start until October 2012, a lengthy gap which may spook potential investors, especially given the latest uncertainty around the Feed-in-Tariff.
“Successful delivery will be essential to providing the certainty required to encourage households and communities to invest. We are concerned that excluding agents from supporting RHI customers will increase the volume of enquiries Ofgem will face, which may result in delays and confusion similar to those currently experienced by Feed-in Tariff customers.
“Also, we don’t understand why Ofgem cannot pay customers monthly – which is in the best interests of consumers.”
Sustainable Energy Advisor to Friends of the Earth Alan Simpson said: "An ambitious Renewable Heat Incentive will allow people to earn and save money by heating their homes and workplaces using clean energy.
"But there are serious concerns about the surge in the use of unsustainable biomass and incineration these proposals could encourage - the scheme must only promote genuinely green and sustainable sources of heat.
"Energy Minister Greg Barker has done well to resist pressure to delay the scheme for another year - this would have had a devastating effect on the renewable energy industry.
"The Government must now stop dithering over feed-in tariffs and kick-start the UK's green energy revolution - this will slash emissions and create tens of thousands of new jobs."
Graham Meeks, director of renewable and low-carbon energy trade body, the Combined Heat and Power Association (CHPA), welcomed today’s announcement.
He said: “This is an important step forward in opening up the opportunity to develop new renewable CHP plant, at a range of scales and in many new applications. With several major projects and a host of smaller plant in the pipeline, CHP has a major contribution to make towards national efforts to meet our renewables targets.
“By placing an explicit value on renewable heat supplies, we hope to see an end to the wasteful practices that see much of our precious bioenergy resources dumped into the atmosphere through cooling towers.
“The key to progress across the market lies in the value of the incentive. We welcome the Government’s commitment to CHP and the undertaking to look carefully at how the RHI and Renewables Obligation work together to mobilise renewable CHP across the market.
“This development also underlines the value of heat networks, delivering economies of scale for many renewable heating technologies and providing a route-to-market for the heat they produce. It is now vital that the Government places renewed focus on accelerating the development of this low-carbon infrastructure.”
Neil Schofield, head of Government and external affairs at Worcester, Bosch Group, said: “We welcome any initiative that attempts to bring the benefits of renewable heat generation to greater numbers of people, but today’s announcement focuses very firmly on the industrial, commercial and public sectors. There are a number of questions yet to be answered for the domestic sector which leaves the picture confused.
“The fact that mainstream households will not be able to access RHI until October 2012 has led the Government to try and bridge the gap with the RHI Premium Payment, but we will not get details on this until May 2011. My take on it is that there is going to be some sort of grant subsidy made available for those who want to install now.
“In particular, the information on payments is vague, as are the criteria by which a property will be deemed to be of sufficient standard to qualify for the RHI. My suspicion is that it will be Band D properties and above, but we need more information.
“The RHI, as it stands, appears to be focused on non-domestic heating, early adopters and those off the mains gas network, which leaves questions about how we will encourage mass uptake. In summation, whilst welcome, this does not feel like a game-changer.”
Graham Bartlett, managing director of Energy Solutions at E.ON, said: "We've already installed more than 2,000 heat pumps across the country, as well as offering solar heating and hot water systems. Today's announcement is an important step in developing the market for these new technologies just as the Feed-in Tariff has done for renewable electricity.
"Alongside that, it's absolutely vital that we start weaning ourselves off an over-reliance on gas boilers and on to more renewable systems like solar energy or heat pumps. This is even more important for off-grid homes who will need to move away from oil or coal-based heating systems. The key here is that customers need simple and consistent advice from Government and energy companies alike.
"Almost half of the UK's carbon emissions come from heating our homes and businesses and one of the main reasons for this is the frankly scandalous levels of waste through poor insulation. We agree with today's RHI announcement that there's really no point fitting new technologies without first making sure our buildings are a great deal more energy efficient."
John Dodds, Head of Renewables at Inenco, the UK’s largest energy & environment analyst, described the announcement as a much-needed catalyst for the renewables sector.
“The changes will make many of these projects much more viable as an investment,” he said. “The grandfathering over 20 years will give investors the reassurance they’ve been looking for to embark on a renewables project, secure in the knowledge that the subsidy will now be available over the long term.
“However, it’s still disappointing to see that the RHI doesn’t encourage AD plants to recover more heat from their gas engines for local heating projects. Ironically, it will probably be more economical to provide the heat from an on-site boiler by burning biogas, whilst the ‘waste’ heat from the engine is vented to the atmosphere.”
Tom Jordan, senior engineer and sustainability expert from Midlands-based Lorien Engineering Solutions, commented: “Following today’s announcement regarding the renewable heat incentive, we’re pleased to see a line in the sand drawn under the consultation.
“With the certainty of RHI timescales in place and the finalisation of the tariffs and bandings, those looking to move to renewable forms of heat generation, from domestic to industrial scales, now have confidence to move forward.
“RHI will underpin a surge in momentum for the green agenda providing a unique vehicle to stimulate uptake and growth in the green economy.”
Dr Lee Moroney, a lead analyst at the Renewable Energy Foundation, said: "The Government's emphasis on market learning, and on value for money, is a major improvement on previous designs, which were overly expensive and risk prone. There is now a real chance that public support in the overwhelmingly important heat sector will result in a future industry that is self-supporting not subsidy dependent."
Post a comment