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Renewable Heat Incentive - Explained 05 March 2014
Renewable Heat Incentive - Explained
05 March 2014
Who we are....
•Not for profit
•Independent
•Mission led•Established 10 years
•Work with the sustainable
energy industry and decision
makers
5:00pm - Registration and coffee
5:30pm – The domestic Renewable Heat Incentive
5:50pm – How the RHI fits with Green Deal and MCS
6:20pm – Guide to applying for RHI
6:50pm – How SWEC can help
7:10pm – Questions, networking
7:30pm – Close
Who we are....
Independent
Not for profit
Centre of expertise
Since 2003www.regensw.co.uk
•Not for profit
•Independent
•Mission led•Established 10 years
•Work with the sustainable
energy industry and decision
makers
• 3 year, EU funded
• Completing late 2014
• 410 business assists
• 12 hours of support or equivalent
• £8m project (£4m ERDF)
What is the programme?
Source: South west renewable energy manifesto 2013
Renewable energy in the south west has
seen strong growth…
Source: South west renewable energy manifesto 2013
…but we’re currently not on track to meet our
2020 target. Potentially we could.
Source: The Future of heating – DECC, March 2013
Here we are..
So how is the UK doing with decarbonising?
So how is the UK doing with decarbonising?
Infogram Source: Graham ScuttSource: National Renewables Statistics (DUKES) 2012
So how is the UK doing with decarbonising?
Why does heat matter?
Source: The Future of heating – DECC, March 2013
• Nearly half of final energy demand in UK goes on heating stuff
• This costs a lot. Some £20bn/yr is spent on heating stuff
• Last June the UK produced 2% of its heat renewably
• Must increase to 12% by 2020
Why does heat matter?
Why does heat matter?
Source: The Future of heating: a strategic framework – DECC, March 2013
Why does heat matter?Why does heat matter?
Source: The Future of heating: a strategic framework – DECC, March 2013
Why does heat matter?Why does heat matter?
Why does heat matter?
Source: The Future of
heating: a strategic
framework – DECC,
March 2013
Why does heat matter?Why does heat matter?
RHI is primarily focused on space and water heating.
Process heat has been slower to engage
Exactly where is this heat going?
Source: The
Future of
heating – DECC,
March 2013
Why does heat matter?Where is all this heat demand?
So heat is important for targets and
bills. What was the plan?
RHI: Non Domestic
RHPP RHI: Domestic
Why does heat matter?So heat is important for targets and bills.
What is the plan*?
2011 2012 2013 2014 2015 2020 2030 2040
PRM: EPC E or above
ECO
Green Deal
Feed in Tariff
* As far as planning over 40 years is possible in the UK energy landscape…
Smart meters
Financing the Renewable Heat
Incentive
What is the programme?What the non-domestic RHI is intended to do
for consumers
12% IRR20 years of support*
Source: Improving Support, increasing uptake DECC 2013
Taxable (in a business
capacity)
Source: Regen SW
What the non-domestic RHI is intended to do
for consumers -Tariffs
Small biomass (0-199kW)*
Med biomass (200-999kW)*
Tier one: 8.6 Tier two: 2.2
Tier one: 5.0 Tier two: 2.1
It was fairly simple…
…Now more complicated for some technologies, as the initial tariff will depend which side of 21 Jan 2013 the installation was commissioned:
Straightforward for small and medium biomass though (p/kWh):
* Tier break is at 1314 hours – a typical heating season
What the non-domestic RHI is intended to do
for consumers -Tariffs
It was fairly simple…
…Now more complicated for some technologies, as the initial tariff will depend which side of 21 Jan 2013 the installation was commissioned:
More complex for GSHP, large biomass and solar thermal (p/kWh):
Source: Improving Support, increasing uptake DECC 2013
What the non-domestic RHI is intended to do
for consumers -Tariffs
It was fairly simple…
…Now more complicated for some technologies, as the initial tariff will depend which side of 21 Jan 2013 the installation was commissioned:
Plus, some new technologies entering the scheme (p/kWh):
Source: Improving Support, increasing uptake DECC 2013
What is the programme?
Source: REA analysis of 2013 spending review
How the RHI is intended to perform (1)
2011/12 2012/13 2013/14 2014/15 2015/16£56 million £133 million £251 million £424 million £430 million
These figures are the total budget released from treasury for the RHI. That’s DOMESTIC, RHPP and Non DOMESTIC
1. This budget comes out of general taxation. It is not a ‘green levy’ or part of the recent ‘Green crap’ episode
2. Anything not spent in any one financial year goes back to treasury
3. DECCs intention was for RHI to be open until 2021, but no budget fixed yet after 2016
What is the programme?
Source: Ofgem
How the RHI is intended to perform (2)
2011/12 2012/13 2013/14 2014/15 2015/16£56 million £133 million £251 million £424 million £430 million
What is the programme?
Source: Data from DECC
How the RHI is intended to perform (2)
0
10
20
30
40
50
60
70
0
50
100
150
200
250
300
350
400
450
500
01
/11
/20
11
01
/01
/20
12
01
/03
/20
12
01
/05
/20
12
01
/07
/20
12
01
/09
/20
12
01
/11
/20
12
01
/01
/20
13
01
/03
/20
13
01
/05
/20
13
01
/07
/20
13
01
/09
/20
13
01
/11
/20
13
RHI Applications: as of Jan 2014
Accredited installed capacity (MW)
Number of full applications
Number of accreditations
What is the programme?How the RHI is intended to perform (3)
2011/12 2012/13 2013/14 2014/15 2015/16£56 million £133 million £251 million £424 million £430 million
So there is currently a huge underspend with RHI….
……But within the RHI there far more biomass being installed than anything else
Source: Ofgem
What is the programme?Expected spend vs actual spend
Source: Improving Support, increasing uptake DECC 2013
What is the programme?Expected spend vs actual spend
Source: Improving Support, increasing uptake DECC 2013
What is the programme?Expected spend vs actual spend
Source: Improving Support, increasing uptake DECC 2013
Degressions
Tariff review 2014+
What is the programme?Degressions: automatic brake
Source: Improving Support, increasing uptake DECC 2013
Indispensable guide to degression
1.Reviewed every 3 months
2. Possible degression only if deployment is >50% of forecast
3. If ‘this 50% trigger is hit, then technologies deploying at
150% (120% for <1MW biomass) of forecast receive a
5% tariff degression
4. Reductions apply for new applications from 1 month later
Source: Improving Support, increasing uptake DECC 2013
What is the programme?Degressions: activity to date
Source: Improving Support, increasing uptake DECC 2013
The point of degressions is twofold:
1. To protect the budget overall
2. To be transparent and help inspire confidence to investors
More detail:• DECC release monthly statistics about deployment here• Degression assessments happen every 3 months• If there is a degression, there is 1 month’s notice• They are NOT retrospective• The date of accreditation will dictate the tariff• Domestic RHI has degressions too, but it’s own triggers
What is the programme?Degressions: activity to date
Source: Improving Support, increasing uptake DECC 2013
New trigger levels and budgets are proposed to be adopted for the next degressiongateway in April 2014.
Degression dates for non-domestic RHI
01 June 2013 (01 July activation – there was no degression)
01 Sept 2013 (01 October activation – there was a 5% degression for med biomass)
01 December 2013 (01 January activation – there was no degression)
01 March 2014 (01 April activation – ??????)
Click here to see the proposed trigger budgets, but they are subject to change.
Changes to the degression regime are subject to parliamentary approval, spring 2014 but many triggers are lower than in the current regulations
What is the programme?Degressions: activity to date
Source: Improving Support, increasing uptake DECC 2013
What is the programme?Degressions: activity to date
Source: Improving Support, increasing uptake DECC 2013
What is the programme?Degressions: activity to date
Source: Improving Support, increasing uptake DECC 2013
The domestic Renewable Heat
Incentive
What it is
•Not for profit
•Independent
•Mission led•Established 10 years
•Work with the sustainable
energy industry and decision
makers
• Financial support to help domestic systems be a similar price to fossil fuel
• Planned to open in ‘Spring 2014’ (likely April 1st)
• Limited to Microgeneration Certification Scheme (Under 45kWth – 70kW system)
• MUST have had a Green Deal Assessment of the property
• Budgeted until 2016, but planned for until 2021 (new applications that is)
• Phased applications from RHPP supported installations (RHPP DEDUCTED)
• Has its own system of quarterly degressions
• Like the non-domestic RHI, it is index linked
• There are minimum energy efficiency standards to examine
• Installations that have been fully funded by a public sector grant are ineligible
• Open to ‘legacy’ installations, commissioned after 15 July 2009 (and eligible)
• Tariff is for 7 years
It is a scheme aimed at homes. So somewhere that pays council tax(or is exempted for some reason)
But first, who can benefit from support?
Source: Energy Saving Trust
Private landlord
Owner Occupier
Registered Provider
Self-builder
Third party owner of the heating system
Buildings with RH installed from new
Legacy installations (installed between 15 July 2009 and when the scheme launches) can still apply to the scheme – exempt from the air quality requirements
So d-RHI or nd-RHI?
Non-Dom!Dom!
Non-Dom!Non
Dom!
It depends!
What it is
• Financial support to help domestic systems be a similar price to fossil fuel
Source: Energy Saving Trust
ASHP Biomass GSHP Solar thermal
Tariff (p/kWh renewable heat)
7.3 12.2 18.8 19.2
Biomass boilers(Solid, non-FF biomass only)
Biomass pellet stoves with a back boiler
Over the 7 years, these tariffs are designed to bring investing in renewables to the same level as fossil fuel heat generators. It is, in effect, a boiler replacement scheme.
What it is
• Financial support to help domestic systems be a similar price to fossil fuel
Source: www.gov.co.uk
ASHP Biomass GSHP Solar thermal
Tariff (p/kWh renewable heat)
7.3 12.2 18.8 19.2
What it is
• Financial support to help domestic systems be a similar price to fossil fuel
Source: www.gov.co.uk
ASHP Biomass GSHP Solar thermal
Tariff (p/kWh renewable heat)
7.3 12.2 18.8 19.2
Example:
22154 kWh annual heating demand
- 1179 benefit from loft top up
- 4535 cavity fill
19232 kWh potential heating demand
What it is
• Financial support to help domestic systems be a similar price to fossil fuel
Source: www.gov.co.uk
ASHP Biomass GSHP Solar thermal
Tariff (p/kWh renewable heat)
7.3 12.2 18.8 19.2
Example:
19232 kWh @ 12.2p/kWh
£2346.30
7 years @ 2346.3 = £16424
[Minus fuel costs, maintenance]
Cost for domestic boiler installed?
How is Renewable Heat Premium Payment getting on?
• Nearly 24,000 vouchers issued
Source: DECC RHI Statistics
3,841
3,392
8,685
7,737
RHPP Vouchers issued since 2011
Ground or Water Source Heat Pump Biomass Boiler Air Source Heat Pump Solar Thermal
How is Renewable Heat Premium Payment getting on?
• Nearly 24,000 vouchers issued
Source: DECC RHI Statistics
2492
1960
1613
855
879
806
903
313
254
1615
1120
Redeemed RHPP vouchers by location
South West South East East of England West Midlands
North West Yorkshire and the Humber East Midlands North East
London Scotland Wales
What it is
Source:Draft d-RHI legislation:
• Financial support to help domestic systems be a similar price to fossil fuel
• Planned to open in ‘Spring 2014’ (likely April 1st)
• Limited to Microgeneration Certification Scheme (Under 45kWth – 70kW system)
Some domestic properties are big. Can they have >45kWth systems supported by domestic RHI?
Yes. Up to 70kW
OK. So can I perhaps have 2 x 45kWth boilers and apply twice?
No. But could have 2x35kW
Hmm. Can I put a technology in a second home?
Yes, but must have a meter.
Can I use a third party to pay for my plant?
Yes. No. Errr……
What it is
Source:DECC Domestic RHI: The first step…
• Financial support to help domestic systems be a similar price to fossil fuel
• Planned to open in ‘Spring 2014’ (likely April 1st)
• Limited to Microgeneration Certification Scheme (Under 45kWth – up to 70kW system)
Not all pieces of equipment on the MCS database are eligible for the RHI.
There is going to be definitive list of eligible kit, but it doesn’t exist yet.
What it is
• Financial support to help domestic systems be a similar price to fossil fuel
• Planned to open in ‘Spring 2014’ (likely April 1st)
• Limited to Microgeneration Certification Scheme (Under 45kWth)
• MUST have had a Green Deal Assessment of the property
The Green Deal Assessment is there for two reasons, and must be completed before making the application:1. To check the energy efficiency of the property2. Produces the EPC which ‘deems’ the payments received
In reality, each property will need its loft and cavity insulated where it is possible to do so. Points for RH installers:1. Understand the loft and cavity market – timescales are key2. Good network of GDA’s to conduct the assessments3. R4R can help identify your supply chain
What it is
• Financial support to help domestic systems be a similar price to fossil fuel
• Planned to open in ‘Spring 2014’ (likely April 1st)
• Limited to Microgeneration Certification Scheme (Under 45kWth)
• MUST have had a Green Deal Assessment of the property (and loft insulation to 250mm/cavity wall fill where applicable)
Y N
So how does the EPC/GDA thing work?
Identifies loft and Cavity work that is ‘Green Tick’?
Green Deal Assessment done
Y N
EPC is lodged
Apply
Green Deal?
Get work done Get work done
Source: Clarification note
Get updated EPC
Apply
GDP notifies assessor
GDA lodges new EPC
£ £
£
Apply
What about energy efficiency?
Green Deal
ECO
1. Open to any business, homeowner or tenant2. a loan secured against the electricity meter3. 45 measures eligible4. Must satisfy the ‘golden rule’5. Repaid from energy savings through the electricity bill
1. Three Streams2. Carbon Emissions reduction obligation – hard to treat homes3. Carbon Saving Community obligation – domestic users in
areas of low income4. Home heating cost reduction obligation – affordable Warmth
low income and vulnerable householdsClear that since planned changes to ECO where announced in December, there will be a refocusing of effort on loft and cavity wall (cheaper measures)
Degressions?
Developments with the non domestic
Renewable Heat Incentive
The RHI overall is underperforming
DECC and Ofgem looking to encourage growth: Just 7% growth in
renewable heat in 2012
Series of fairly significant changes brought in since Sept 2013 and throughout 2014
Despite strong south west performance!
Source: DECC RHI Statistics
570
297
295
251 239
216
204
112
23
523
187
Dec 2013 RHI accreditations by location
South West West Midlands Yorkshire and the Humber North West
South East East Midlands East of England North East
London Scotland Wales
Changes to the non-domestic RHI
Change #1
New technologies are eligible from Spring 2014:
• Air-water heat pumps• CHP (gets its own tariff)• Biogas (wider tariff bands)• Deep Geothermal (gets its
own tariff)NOT biomass direct air heating
Updated Ofgem guidelinesVol.1 Eligibility requirementsVol.2 Ongoing obligations (changes to the installations, meter readings etc
Changes to the non-domestic RHI
Change #2
No minimum energy efficiency criteria are being introduced to non-domestic RHI at this time
Updated Ofgem guidelinesVol.1 Eligibility requirementsVol.2 Ongoing obligations (changes to the installations, meter readings etc
Changes to the non-domestic RHI
Change #3 Some tariffs are being increased to encourage uptake:• Large biomass• Solar thermal
Other tariffs are being changed to make them more reflective of the market:• GSHP – changes to a tiered system
Updated Ofgem guidelinesVol.1 Eligibility requirementsVol.2 Ongoing obligations (changes to the installations, meter readings etc
Changes to the non-domestic RHI
Change #4
Covered earlier – but may make degressions more likely in popular technologies
Updated Ofgem guidelinesVol.1 Eligibility requirementsVol.2 Ongoing obligations (changes to the installations, meter readings etc
Changes to the non-domestic RHI
Change #5
We’ll cover this in more depth later
Updated Ofgem guidelinesVol.1 Eligibility requirementsVol.2 Ongoing obligations (changes to the installations, meter readings etc
Changes to the non-domestic RHI
Change #6
Plant receiving RHI support can now be relocated and then sold, retaining existing tariff and duration
Updated Ofgem guidelinesVol.1 Eligibility requirementsVol.2 Ongoing obligations (changes to the installations, meter readings etc
Changes to the non-domestic RHI
Change #7
Now you can get RHI support for carrying out a commercial drying/cleaning process –outside of a fully enclosed building.
Updated Ofgem guidelinesVol.1 Eligibility requirementsVol.2 Ongoing obligations (changes to the installations, meter readings etc
Changes to the non-domestic RHI
Change #8 – already implemented
Take a deep breath…
Metering placement guidance
New metering regime since 24 Sept 2013
Needing lots of meters identified as a key ‘barrier’ to growth
Old requirements:
m
m
m
• Generation to be metered and demand to be metered. No losses included in RHI
New metering regime since 24 Sept 2013
Needing lots of meters identified as a key ‘barrier’ to growth
NEW requirements:
m
• Only generation needs to be metered if there are no ineligible demands
So what happens with the pipe losses?
NEW requirements:
m
• Only generation needs to be metered if there are no ineligible demands
• Losses in inter-building pipework still need to be assessed• Any system with external pipework needs to fill out a heat loss
spreadsheet
So what happens with the pipe losses?
NEW requirements:
So filling out the heat loss spreadsheet is now the first step. It gets uploaded as part of the application
Download it here.
It’s relatively painful.
The outcome will be a %losses of heat to outside.
So what happens with the pipe losses?
NEW requirements:
So filling out the heat loss spreadsheet is now the first step. It gets uploaded as part of the application
Download it here.
It’s relatively painful.
The outcome will be a %losses of heat to outside.
If the losses as identified by the heat loss spreadsheet are less than
3% they can be ignored.
That’s right, ignored.
3% losses or less are within the accuracy range of the approved
heat meters.
Losses from piperuns of less than 10m* should be disregarded
anyway
So what happens with the pipe losses?
NEW requirements:
So filling out the heat loss spreadsheet is now the first step. It gets uploaded as part of the application
Download it here.
It’s relatively painful.
The outcome will be a %losses of heat to outside.
If the losses as identified by the heat loss spreadsheet are less than
3% they can be ignored.
That’s right, ignored.
3% losses or less are within the accuracy range of the approved
heat meters.
Losses from piperuns of less than 10m* should be disregarded
anyway
*Properly insulated.For purposes of disregarding losses, all pipework must be classed as
‘properly insulated’.
Currently, due to the regulations used buried pipework cannot be classed as ‘properly insulated’
Ofgem and DECC are looking at this – means that any underground pipework (<10m or not) needs the full heat loss spreadsheet filled in.
rom
Biomass sustainability requirements
& the application process
Biomass boilers require a fuel – more checks
Ofgem needs to be clear that biomass used in RHI supported boilers is sourced sustainably
From Autumn 2014, all biomass will have to be sourced from an approved list
DECC out to tender currently for an organisation to run this Businesses can evidence their supply chain and join the list £? List due to be up and running by the spring Still unsure about the role of reselling pellets
Those supplying from their own estate are automatically considered sustainable
Fuels produce emissions – more checks
Ofgem are increasingly looking to enforce emissions standards on applications. This has raised an issue on how fuels are tested and evidenced
Related to MCS: not all MCS equipment satisfies the emissions limits set for RHI
Boilers that could use fuels with moisture content above what they were tested with risk being rejected by Ofgem
Boiler that could use fossil fuels (and still operate adequately) are ineligible. This includes dual fuel boilers
Stoves with back boilers are eligible, but water loop must be metered
Understanding Emissions
All Non domestic biomass boilers applications since 24th Sept 2013 must comply with the emission limits
Domestic installation applications made between 15 July 2009 and nd-RHI launch do NOT have to comply with the emission limits
Domestic installation applications made from launch date must comply with the emission limits
For RHI emission certificates, the maximum permitted emissions are 30 grams per gigajoule (g/GJ) net heat input for PM and 150 g/GJ for NOx (expressed as NO2)
Application process
Applications are managed and accredited by Ofgem. 100% online.
Application process is nominally aimed at the installation owner to complete, with support and evidence from installer
All evidence to be in .PDF format (excepting the heat loss questionnaire)
Evidence needed as part of the application includes:
Application process - evidence
Schematic, showing building boundaries (A3 or less – PDF of course) MCS/Commissioning certificate Emissions certificate (if biomass boiler) Letter of authority (authorised to apply to the scheme from the business) Heat generator manual/warranty Fuel specification (if biomass boiler) Photographs. Lots of photographs: site, heat meters (showing MID
accuracy), nameplates, heat demand Heat loss spreadsheet (if outdoor pipework) Ideally the pipework insulation specification Evidence of property type (council tax, business rates) – not always
necessary, but you need to know the detail and be prepared to evidence. Independent metering report (over 1MW or classed as ‘multiple’) ID and bank details form
ND-RHI Application process - requirements
Buildings must be fully enclosed (process heat can be delivered outside but must still be within a fully enclosed ‘structure’)
Genuine non-domestic demand All heat losses accounted for (including external pipework) Under 45kWth – must be MCS Backup permitted but must be declared and accounted for
(this refers only to physically connected plant)
ND-RHI Application process
System is commissioned
Application submitted to Ofgem
Level 1 Checks
Level 2 Checks
Level 3 Checks
Application accredited
Basic location and eligibility checks
ND-RHI Application process
System is commissioned
Application submitted to Ofgem
Level 1 Checks
Level 2 Checks
Level 3 Checks
Application accredited
Most detailed checks concerning technical appraisal
and assessment of the supplied evidence
ND-RHI Application process
System is commissioned
Application submitted to Ofgem
Level 1 Checks
Level 2 Checks
Level 3 Checks
Application accredited
Final checks – normally no more questions for the applicant by this stage
ND-RHI Application process
System is commissioned
Application submitted to Ofgem
Level 1 Checks
Level 2 Checks
Level 3 Checks
Application accredited
Can be as little as 6 weeks –more often it is
ND-RHI Application process
System is commissioned
Application submitted to Ofgem
Level 1 Checks
Level 2 Checks
Level 3 Checks
Application accredited
Accreditation date is the ‘Date
Application process
Can’t overstate the importance of getting these right…
Application process
Can’t overstate the importance of getting these right…
Application process
Details, details details.
Photographs, schematics and descriptive text MUST match.
Particularly important with the IRMA – over 10% were found to have errors
Application process
Application process
Application process – things to consider
Which parts of the building are eligible?
Application process – things to consider
What’s wrong with this?
Application process
Application process - tips
• Application has descriptive elements – ensure all building labels and distances etc match with the schematic
• Schematic should have all main pieces of equipment present and the building boundaries – not every valve and pipe bend
• Have all evidence converted to PDF before you start. Photos need to be converted to PDF too – ideally with associated descriptive text
• Ofgem read through entire application and check basic elements are present and match – do the same
• Getting all evidence in the format Ofgem require and agreeing can save weeks in the application process
Application process - tips
Quite a basic interface. Will time you out fairly quickly
Use the guide to applyingAlways click ‘next’ after filling out the blanks on the page. Clicking ‘previous’ will lose your
changesIf three months elapses with now activity on the application, it will be removedDomestic RHI is likely to be a similar process
– possibly slightly more straightforward
Where to find out more…
• Application has descriptive elements – ensure all building
• DECC will be on-hand to answer questions on RHI at Renewable Energy Marketplace, 8 April, Westpoint Arena
• Regen SW webpages on Renewable Heat
