The Renewable Heat Incentive

As part of the European Galileo Project you can become a Renewable Heat Incentive industry expert by completing the RHI Expert Pathway Certificate. Successful participants of the RHI Pathway gain the internationally recognised Galileo Master Certificate and the RHI Expert Certificate. Courses available as part of the RHI expert learning pathway include Biomass, Combined Heat and Power, Heat Pumps and Solar Water Heating.

Background

The UK has made a legal commitment to meeting 15% of “energy demand from renewable sources by 2020” (Gov.UKa, 2013). As part of which, the Renewable Heat Incentive [RHI], “the world’s first long-term financial support programme for renewable heat”, is part of government policy to increase the amount of energy generated from renewable sources (Gov.UKb, 2013).

How the Renewable Heat Incentive works

In order to increase the proportion of heat generated from renewable sources in the UK participants receive payments for generating and using renewable energy to heat their buildings. The RHI, which forms the principle scheme of government heating strategy, was launched in November 2011 for the non-domestic sector providing payments to businesses, industry and public sector organisations  (Gov.UKa, 2013). This existing scheme will be extended to cover additional technologies and final policy details for a domestic scheme for individual households is expected this summer with payment schemes from next spring (Gov.UKa, 2013). The non-domestic RHI scheme: is designed to aid industry, businesses and the public sector install renewable heat systems [such as ground and water source heat pumps and biomass installations] as well as heat networks (Gov.UKc, 2013). Participants receive payments every 3 months over a 20 year period, the amount they receive depending on the type of technology they install, the energy producing capacity of the installation and the amount of energy consumed by the user (Gov.UKd, 2013). There are also regulations about eligibility for the scheme such as the type of business [i.e. not private homes], the source of funding for the installation and heating types that can be used (Gov.UKe, 2013). The Domestic RHI scheme: will serve to provide funding for domestic consumers wishing to replace their current heating system with a supported renewable heat technology or who have installed one since the 15th of July 2009 (Gov.UKb, 2013). It is also likely to be used in conjunction with ‘Green Deal’ legislation where recipients would also have to have installed “thermal energy efficiency measures” in order to be able to apply (Gov.UKb, 2013).

Criticisms of the scheme

There are concerns that delays in implementing domestic RHI legislation are damaging investment in the renewable heat sector and will compromise the effectiveness of the scheme (Nichols, 2013). It has also been alleged that ambiguities about government legislation and tariffs due to these delays will mean that a number of renewable heat companies risk going out of business, further compromising the scheme’s effectiveness (H & V News, 2011).  Criticisms have also been made of some of the technologies receiving subsidies via government tariffs such as large scale biomass plants (Peake, 2012 ). They have been criticised for their potential ecological impacts as they may not yield significant reductions in CO2 emissions compared to fossil fuels (Peake, 2012 ) and may come from unsustainable sources (Harrabin, 2013). It has been advocated that instead there should be greater focus on smaller-scale biomass plants that burn waste wood rather than large scale plants which currently may receive greater funding (Blake, 2013).

RHI in the context of wider energy policy

The RHI has been developed, in conjunction with other legislation, to reduce the UK’s carbon emissions, increase national energy security and reduce fuel poverty (Gov.UKf, 2013). However, the complexities of delivering reform to a highly decentralised energy market with a variety of stakeholder groups, budgetary constraints and short legislative time horizons act as constraining factors limiting policy maker’s options. For example, there appears to be support for the use of large scale biomass for power [as well as heat] generation in spite of potential ecological issues with it as a fuel. One objective of current government legislation is to reduce carbon emissions from electricity production in the UK. In order for this to be done effectively, sufficient ‘baseload’ (Energy Dictionary, 2013) energy capacity must be maintained on the National Grid in order to guarantee continuity of electricity supply to businesses and households. Baseload power for a grid can be provided from a number of energy sources such as various fossil fuels, nuclear power, hydroelectricity or biomass plants (Foss, 2012). However, these power plants need to be able to provide substantial amounts of electricity on a reliable basis over long time periods which many renewable sources [such as wind or solar] are unable to do at present (Foss, 2012). UK government policy is promoting a variety of technologies to reduce carbon emissions and increase energy security in a cost effective way (Gov.UKg, 2013). Biomass can provide a highly cost-effective means of rapidly reducing the use of fossil fuels to meet legal obligations by converting or partially converting existing power plants for their use such as ‘Drax’ coal power station in North Yorkshire, the largest power station in the UK (Harrabin, 2012).

Future prospects

The non-domestic RHI is relatively young legislation and the domestic RHI legislation has yet to be finalised so it would be very early to offer firm pronouncements on its effectiveness or future prospects. There still appear to be some preliminary ambiguities about tariffs, and legislation has yet to be formalised for domestic RHI legislation. However, there is provision for regular review of spending and a commitment to long term provision of subsidies to increase the proportion of renewable heating as part of the national mix (Gov.UKb, 2013). Provided that clarity is given with regards to tariffs, and legislation for the domestic market is put forward in the near future, there should be minimal disruption to the renewable heat industry. There may also be a substantial increase in the proportion of the UK’s heat generated from renewable sources. However, there are some specific policies pursued by government that seem unlikely to be changed even if other policies could provide better results ecologically due to the complex nature of the energy market and structural commitments that are required for implementing change to such a large system.

Opportunities for individuals and companies

The UK has legally binding carbon reduction targets meaning that strong government support is very likely to remain for the RHI scheme. There is also a large potential market of customers providing good conditions for growth in relevant renewable technology industries that can provide a range of job opportunities at a number of stages in the supply chain.

As part of the European Galileo Project, you can become a Renewable Heat Incentive industry expert by completing the RHI Expert Pathway Certificate. Successful participants of the RHI Pathway gain the internationally recognised Galileo Master Certificate and the RHI Expert Certificate.Courses available as part of the RHI expert learning pathway include Biomass, Combined Heat and Power (CHP), Heat Pumps and Solar Water Heating.

Bibliography

Blake, A., 2013. Biogas excluded from RHI tariff review. [Online] Available at: http://www.resource.uk.com/article/UK/Biogas_excluded_RHI_tariff_review-2901#.UbdGZkCces9 [Accessed 11 06 2013]. Energy Dictionary, 2013. baseload, base load, baseload demand. [Online] Available at: http://www.energyvortex.com/energydictionary/baseload__base_load__baseload_demand.html [Accessed 11 06 2013]. Foss, N., 2012. Renewable Energy: The Vision And A Dose Of Reality. [Online] Available at: http://theautomaticearth.com/Energy/renewable-energy-the-vision-and-a-dose-of-reality.html [Accessed 11 06 2013]. Gov.UKa, 2013. Policy: Increasing the use of low-carbon technologies – Policy: Issue. [Online] Available at: https://www.gov.uk/government/policies/increasing-the-use-of-low-carbon-technologies [Accessed 11 06 2013]. Gov.UKb, 2013. Policy: Increasing the use of low-carbon technologies – Supporting detail: Renewable Heat Incentive (RHI). [Online] Gov.UKc, 2013. Guide: Renewable Heat Incentive – Part 1: Overvew. [Online] Available at: https://www.gov.uk/renewableheatincentive [Accessed 11 06 2013]. Gov.UKd, 2013. Guide: Renewable Heat Incentive – Part 2: What you’ll get. [Online] Available at: https://www.gov.uk/renewableheatincentive/what-youll-get [Accessed 11 06 2013]. Gov.UKe, 2013. Guide: Renewable Heat Incentive – Part 3: Eligibility. [Online] Available at: https://www.gov.uk/renewableheatincentive/eligibility [Accessed 11 06 2013]. Gov.UKf, 2013. Series: Energy Bill – Decarbonisation. [Online] Available at: https://www.gov.uk/government/organisations/department-of-energy-climate-change/series/energy-bill#decarbonisation [Accessed 11 06 2013]. Gov.UKg, 2013. Policy: Increasing the use of low carbon technologies. [Online] Available at: https://www.gov.uk/government/policies/increasing-the-use-of-low-carbon-technologies [Accessed 11 06 2013]. H & V News, 2011. Government criticism follows insolvency. [Online] Available at: http://www.hvnplus.co.uk/news/government-criticism-follows-insolvency/8612178.article [Accessed 11 06 2013]. Harrabin, R., 2012. Drax power station to burn wood and biomass. [Online] Available at: http://www.bbc.co.uk/news/science-environment-20269615 [Accessed 11 06 2013]. Harrabin, R., 2013. Renewable energy: Burning US trees in UK power stations. [Online] Available at: http://www.bbc.co.uk/news/science-environment-22630815 [Accessed 11 06 2013]. Nichols, W., 2013. Green heating scheme delayed again until spring 2014: Government set to announce further details of renewable heat incentive subsidy later this year. [Online] Available at: http://www.guardian.co.uk/environment/2013/mar/27/green-heating-scheme-delayed-again-rhi [Accessed 11 06 2013]. Peake, L., 2012 . Biomass ‘dirtier’ than coal, according to new report. [Online] Available at: http://www.resource.uk.com/article/UK/Biomass_039dirtier039_coal_according_new_report-2429#.UbcVSECces8 [Accessed 11 06 2013]. Written by Cora Moran for the REI