News
28/07/2010 | The Renewable Heat Incentive
Demand for heat dominates energy use in the UK and is responsible for 47% of the UKs Carbon Emissions.
The scheme, known as the Renewable Heat Incentive, offers long-term, fixed payments
based on the type & size of installation.
How will the RHI work?
The RHI will pay a fixed amount per year to those who install renewable heat equipment, such as biomass boilers. Payments will be made either on the exact amount of heat produced, or on the amount it is anticipated the installation will provide. The former requires the heat production to be metered (this can easily be done, just as electricity and gas are metered). The latter pays according to an estimated or 'deemed' output which is assessed at the start of the appliacation process, based on a property's heating & domestic hot water requirements. Good levels of insulation etc will be assumed and on smaller installations below 45kW it is unlikely that fossil fuel boilers will be allowed to remain as part of the installation.
The payment will be fixed and will last between for 15 years in the case of biomass.
What Payment Rates are Proposed and what technologies qualify?
The payments under the RHI should result in a 12% rate of return.
Tariff Levels for Renewable Heat Incentive:
Up to 45kW = 9 pence per kWh
Medium Installations 45kW-500kW 6.5 pence per kWh
It does not apply to domestic woodburning stoves or open fires.
How much renewable heat will the RHI deliver and who pays?
The UKs renewable heat industry currently makes up just 0.6% of the UKs heat market. Under our European renewable energy target of 15% renewable energy by 2020, the RHI proposals launched today anticipate delivering 12% of the UKs heat from renewables by 2020. Electricity is expected to contribute around 30% and transport biofuels 10%.
The UK faces the most challenging renewable energy target in Europe and cannot afford delays.
It is proposed that the scheme will be paid for either through general taxation or by raising a levy from sales of gas and other fuels used for heating. This will be consulted upon.
Fuel poverty is concentrated in rural off-grid areas, meaning that these homes stand to benefit most from a far greater choice in affordable heating sources.
For the first time, the RHI will offer a comprehensive framework of support for renewable heat in the UK. This is urgently needed as heat is the biggest use of energy in the UK, supplied predominantly by fossil gas. Heat accounts for 47% of the UKs CO2 emissions. Across Europe the UK has the lowest contribution of renewable heat of all EU countries except Malta (on zero). By comparison over half of Swedens heat energy is supplied by renewables. The EU average is over 10%. (Eurostat).
The UK may have made little progress on renewable heat so far, but the RHI proposals are an exciting world first. Such tariff payments are not developed in other countries, and are strongly supported by the UK renewable industry and heat users. The policy should for the first time give a long-term stable framework, giving the industry confidence to expand so that renewable heat becomes a mainstream option for all types of heating requirement.
Many UK benefits of a strong RHI
Renewable heat means greater energy security for the UK at a time when a business-as-usual scenario will leave the UK dependent on imports for 80% of its natural gas requirement by 2020. The UKs entire Renewable Energy Strategy, covering heat, electricity and transport is estimated to reduce fossil gas imports by 20-30% by 2020. Renewable heat will play a major role in this reduction. The technologies involved are proven and available, and in most cases have been used for many years. The great diversity of renewable heat technologies means that renewable heat can work in almost any situation, making it an attractive option for the 2 million homes off the gas grid, where heating options are more limited and more expensive.
Renewable heat avoids emissions associated with the generation of heat energy from fossil fuels. Organic waste streams offer the greatest environmental benefit of all renewables by transforming problematic wastes that can give off methane if left untreated, into energy1 , including heat.
The increasing demand for sustainable woodfuel will also provide an incentive for active investment and management of UK woodlands, allowing for greater biodiversity.
Ambient technologies like solar thermal are already popular and make up the great majority of micro renewable installations in the UK today. The RHI will make these technologies more affordable, bringing down costs over time.
How will RHI be financed:
Money to pay for the scheme will either be raised from a levy on sales of gas and other fossil fuels used for heating or from general taxation. This is yet to be decided, but this will not delay introduction of the scheme.
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