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  • July 12, 2013 - Renewable Heat Incentive Updated - Solar Thermal to have Heavy Support - The Government have today released the Renewable Heat Incentive: The first step to transforming the way we heat our homes. If you are looking to buy a SolarTwin System contact Genfit. "the scheme will be open to anyone in these groups who installed... More →
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News: Half baked RHI news announcement: Thurs 10 March 2011

Filed under: Latest News

Solar RHI news: Thursday 10 March 2011.

(Hundreds of pages of official RHI documents on the DECC website, here).

RHI news good for consumers? On first impressions, a modest boost in consumer interest from today’s low levels is expected. This is because a cash subsidy (of £300 for solar thermal installations) will be payable, rather like past cash payment grant schemes. Until this cash payment is formally implemented in July 2011, Solar Twin Ltd will be offering a £300 discount off all retail thermal installations, in lieu of this payment, which is called the RHI Premium. Then in Autumn 2012 consumers are expected to get an as-yet unspecified RHI tariff payment, probably for 20 years.

RHI news good for business? Yes, to a degree. This is because it is being introduced in two phases. The first phase is for businesss users of renewable heat. It starts almost immediately and will deliver subsidies to non-domestic renewable heating installations. However the subsidy for solar heating is modest, at 8.5 pence per unit of energy (kWh) Domestic (consumer) installations will (and won’t – see later) have to wait.

RHI reaction from industry = a bit of a fiasco! Anger, rage and disbelief is the reaction from solar companies in response to the slow-footedness and half-heartedness news of today’s Renewable Heat Incentive (RHI) announcement. Things are running late for domestic customers partly due to industry leaders delivering regulatory self-service – at the consumers’ expense.

RHI reaction within industry = velvet revolution? Will the rank and file membership of the Solar Trade Association now kick out its tarnished top brass for their self-interested blocking of essential changes to the vital regulatory substructure of the RHI? Some overdue resignations (to marked by gongs and awards) are now awaited with bated breath.

Here’s what is great news on the RHI and what is less great…

Great news about the RHI news announcement

– It is not stone dead. As a solar thermal supplier involved mainly with domestic customers, I would give it 2 marks out of 10. (But 8/10 if I were in commercial ground source heat pumps.)

– Backdating is reconfirmed. The Government has reaffirmed its commitment to honour access to RHI support for any installations after 15 July 2009. This makes sure that some early adopters do not lose out.

Less great news about the RHI news announcement.

– Domestic consumers will have to keep on waiting patiently for the RHI. The domestic solar thermal market may remain quiet or, we hope, grow at least gradually for another 18 months or so. What are the blockers in the regulatory substructure? There are several for domestic users. For example there are no clear ways of predicting “deeming” system performance and not even any subsidy rates given. Another cause is the long standing legionella safety cover-up. Also there are deep-rooted and long-term cock-ups at the very heart of the UK regulatory establishment. By adopting a two-speed implementation, with business getting a head start, the announcement FAILS to include domestic users of renewable heat until 2012. This is a two year delay on its original plans. A full system of RHI payments will not be available to households until October 2012 with tariff rates to be consulted upon later this year.

– Is the RHI good news at least for non-domestic business? No. The tariff is a mere 8.5 p per kWh, half what was originally proposed. Installations costs have certainly not halved in this time so what on earth has happened? Plus all solar thermal non-domestic systems will need to be metered. But metering adds about £300 to the installation cost, uses electricity and costs money to administer and read. This low tariff and metering (instead of deeming) requirement of all non-domestic installations means that small solar installations of 1-5 solar collectors will be uneconomic. This is a kick in the teeth for small businesses which want solar thermal.

– Is there scope for performance fraud and for overclaiming under the RHI? Yes plenty. In fact performance fraud is built in to the system. Here’s how… Instead of the subsidy being based on (A – B) energy calculations, where A is the heat energy delivered and B is the electrical energy used to run pumps etc required to get the system to work, it is paid on A alone. DECC appear to have been astoundingly stupid in letting this blatant fraud go through. The taxpayer should ONLY be paying for net energy (Heat – Electrical) not gross heat energy! Millions of pounds will be now spent on subsidising energy which does not actually exist. How utterly absurd! This potential for fraud affects mains pumped solar thermal (to some degree) and heat pumps (a lot.)

– No immediate carbon saving from installing most heat pumps under RHI. The use of heat pumps in properties which would otherwise be using mains gas delivers minimal net carbon saving benefit. Their use should be constrained to homes which are off the gas grid until the grid becomes more “decarbonised”. This pointlessness is rather funny, particularly in the context that earlier this week the government published its carbon strategy document!

– There is also an hungry and unhealthy emphasis on biomass in the RHI. Is it is a recipe for starvation? Perhaps. Are there safeguards to prevent the diversion of agricultural land into biomass production? None at all. Will there be an epidemic of asthma and lung disease as a consequence? Are there adequate air quality safeguards for people living near large wood fuelled installations? This remains to be seen.

– Even the date on the DECC RHI document is wrong (instead of 2011 it says 2010 – the year the RHI was SUPPOSED to start).

Some other features of the RHI announcement.

– DECC has only announced RHI tariff details for industrial and commercial sectors for all of the technologies initially eligible. Key points of interest include

– All tariffs are less than the RHI tariff levels consulted upon, despite Government stating that they remain aimed at a 12% return (with the exception of solar thermal which is 5%). This is likely to be due to a combination of revised, more conservative cost estimates

– £860m of spending will be allocated to the RHI to 2014/15. This means annual payments will gradually rise to around £420 million in 2014-15, starting from a base of approximately £60 million in the first year. So things will start small.

– Businesses who install RHI eligible renewable heat in year 1 will benefit from quarterly payments for 20 years so the actual commitment by Government is much bigger than the £860 million reserved for this shorter time period.

– RHI tariffs will begin in July 2011 for the industrial/commercial sector and with applications and payments managed by Ofgem. Once in the scheme the level of support an installation will calculated on a metered basis, but tariff levels are fixed and adjusted annually with inflation.

– However, as with feed in tariffs the level of RHI support for new entrants will reduce over time.

– A full system of RHI payments will not be available to households until October 2012. Tariff rates to be consulted upon later this year.

– In the interim, one quarter of the first years budget, around £15million, is to be guaranteed for household installations through an up-front one-off payment to encourage early take-up which will be called the Renewable Heat Incentive Premium.

– For solar thermal this RHI premium will be worth £300 – less than past grant schemes and probably about the cost of fitting a mains powered heat meter. The sum is much bigger for other technologies.

– Those who take up an RHI Premium payment will have to allow additional monitoring of system performance, but will benefit from full access to ongoing annual RHI payments from October 2012.

– The RHI Premium will only be available to retro-fit existing homes. DECC will consider whether to include a tariff for new build homes for the 2012 phase.

By having much of its market, ie domestic installations, put into the RHI slow lane, it almost looks as if the leading trade body in the solar thermal industry, is being punished by DECC. What has the STA done to deserve this? Lots… The Solar Trade Asssociation (STA) now has to bear responsibility for delaying progress on the vital regulatory substructure of the RHI for domestic installations. For example the STA has abjectly failed to deal properly with legionella safety concerns (concerns which also affect heat pumps) by even reverting to threats against those (including ourselves) who want to raise safety standards. Its technical stooges have commandeered the content of state funded guidance material on solar heating with the effect of defining solar solar as “best practice”, this closing off opportunities for several innovations (ours included) to be properly recognised. Obstructing our attempts to make progress on amending defective regulatory documentation, STA members and fellow-travellers have sent in clever but misleading information and some have even employed blatant filibustering and progress-blocking tactics at crucial MCS technical committee level, triggering a constitutional crisis within MCS. Now even the resolution of this crisis, by the introduction of a revised constitution and new structures seems poised to be fails because it deliberately omit strong enough safeguards such as reference to CEN or BSI “standards for standards” and conflict of interest provisions in line with the Civil Service Management Code. Will the dead wood at the STA and the MCS now stand aside? Will these bodies open up to new ideas and transparency – and start to move the industry forward rather than indulge in stodgy professional foot-dragging at the consumers’ expense? Let’s hope so!

Additional RHI background notes:

This long-awaited enticement for UK residents to switch from conventional fossil fuel heating to renewables was hoped to work rather like the solar PV feed-in tariff, increasing the UK’s energy potential in the green sector.

Aiming to boost the adoption of renewable heat sources, the RHI claims to support:

  • heat pumps and deep geothermal
  • woodfuel burners and other forms of biomass
  • heat components of biomass CHP
  • liquid biofuel heating
  • anaerobic digestion, (biomethane)
  • green gas injection to the gas brid
  • solar thermal (solar water heating systems)

The Renewable Energy Association (REA), main UK renewables trade body, hopes the scheme will go live in June.

The Renewable Heat Incentive will offer annual subsidy payments phased over a decade or more to encourage the uptake of this wide range of technology, enabling the heating of homes, schools, public buildings and large offices/factories. The RHI will also help the UK to work towards the legally binding renewable energy target as well as carbon reduction targets as well as reducing the country’s dependence on imported natural gas.

The RHI will be paid out of general taxation, and anyone or any organisation who invests in eligible renewable heat technologies and who applies for support under the scheme will be eligible to benefit from the RHI provided that their chosen technology is accredited (by MCS or Solar Keymark) and installed by an accredited MCS installer.

The RHI will work by adopting tariff principles, offering a fixed payment for every kilowatt hour (kWh) of renewable heat generated over the lifetime of the tariff. The lifetime will vary from one technology to another. It currently applies to renewable heat installations of all sizes. Right now there is no upper limit – but in view of the Feed in Tariff fiasco over solar farms, where these were poised to gobble up all the funds and leave none for homeowners and others, it is possible that some technologies such as solar thermal may be constrained. In still have to read all the paperworrk!

Renewable heat can be measured using a heat meter, just like electricity; however metering may not be appropriate in smaller domestic installations where deeming is likely to be used instead (In this way a standard payment is made based on a government-specified estimate of the heat generated). Safeguards will also be needed to ensure people do not waste metered heat. The taxpayer will not want people to be subsidised for leaving their windows open in winter!

Socially, there are concerns about the RHI because the initial cost of installations is to be funded by private cash investments typically ranging between £2,000 and £20,000. This obviously excludes poorer homes. However the “Green Deal”, another planned programme, for 2012, aims to partially deflect this issue by allowing cost-effective measures such as loft insulation to be installed upfront and funded on a pay-as-you-go basis via the user’s bills. The Green Deal scheme will encompass cash-poor homes, but probably not renewables. As a non-renewable project it has been trialled by B&Q, who are a retail distributor of Solartwin solar water heating systems.

Heat is by definition locally generated: it is expensive and “lossy” to transport heat long distances. The RHI will therefore complement the development of local renewable power under the solar PV feed-in tariff.

At present, the UK’s heat is predominately supplied by fossil gas, which accounts for 47% of the country’s CO2 emissions. The UK’s renewable heat industry currently makes up just 1% of the UK’s heat market. The RHI is aimed at boosting this dismal percentage significantly.

Further analysis / details / comments / polemic on the RHI will be added as we get them. Barry.


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