1. Renewable Heat Incentive Andrej Miller RHI team Department of Energy and Climate Change

2. In 2009 the European Energy Directive sets target for UK to achieve 15% of energy consumption from renewable sources by 2020. Heat production is responsible for around half of the final energy demand of UK and just under half of all UK’s carbon emissions. Heat and cooling represents close to half of UK final energy demand and nearly half of emissions UK energy consumption (2008) Renewable Heat Incentive What and Why?

3. To meet the Energy Directive target the UK needs to increase the amount of energy generated from renewable sources. We aim to increase this to 12% by 2020 from less than 2% now. This will also make a large contribution to UK’s carbon targets – 80% reduction by 2050 and set of sub-targets (carbon budgets) before then. In order to achieve this we need to switch from carbon intensive fossil fuels such as heating oil, and even reduce our use of other fossil fuels like gas. Renewable Heat Incentive What and Why?

4. Renewable Heat Incentive RHI is a long term revenue stream rather than a one-off grant – intended to provide stability for long-term investment. The first element of the scheme covers non-domestic heat users such as industry, businesses, and the public sector. This was launched in November 2011. Consists of 20 years of payments (adjusted for inflation) to compensate for: –Extra capital and operating costs of renewable heating compared to a fossil fuel alternative –Additional barrier and financial cost; and –Provide a 12% rate of return on capital Basics of the non domestic scheme

5. –Ground and water source heat pumps (one tariff) –Solid biomass all scales –Biogas combustion <200kW (AD, sewage gas, gasification and pyrolisis) –Biomethane injection –Solar thermal <200kW –Geothermal (GSHP tariff) –Energy from municipal solid waste (adjusted biomass tariff) –CHP (support on the basis of heat only technology) Renewable Heat Incentive Initial technologies supported

6. Renewable Heat Incentive RHI is administered by Ofgem E-Serve – all applications go to them Quarterly payments to heating equipment owner based on heat generated and used in a building Currently only support metered heat delivered via a liquid or steam Installations up to 45kWth capacity have to be MCS (Microgeneration Certification Scheme) Equipment has to be new Installations commissioned since 15 July 2009 could be eligible Reporting on biomass sustainability for large installations Heat pumps with a coefficient of performance of 2.9 Basics of the non domestic scheme

7. The offer: tariffs Levels of support Tariff nameEligible technologyEligible sizes Tariff rate (pence/ kWh) Tariff duration (Years) Support calculation Small biomass Solid biomass; Municipal Solid Waste (incl. CHP) Less than 200 kWth Tier 1: 8.3 20 Metering Tier 1 applies annually up to the Tier Break, Tier 2 above the Tier Break. The Tier Break is: installed capacity x 1,314 peak load hours, i.e.: kWth x 1,314 Tier 2: 2.1 Medium biomass 200 kWth and above; less than 1,000 kWth Tier 1: 5.1 Tier 2: 2.1 Large biomass 1,000 kWth and above 1Metering Small ground source Ground-source heat pumps; Water-source heat pumps; deep geothermal Less than 100 kWth4.7 20Metering Large ground source 100 kWth and above3.4 Solar thermal Less than 200 kWth8.920Metering Biomethane Biomethane injection and biogas combustion, except from landfill gas Biomethane all scales, biogas combustion less than 200 kWth 7.120Metering

8. Inclusion of single domestic installations Cost control (e.g. automatic degression) to keep within annual budgets Consideration of further technologies –Direct air heating (furnaces, kilns, ovens etc) –Air source heat pumps –Bioliquids And of dedicated tariffs for –CHP –Deep geothermal –Solar thermal and biogas combustion >200kW Emissions limits for biomass boilers Will announce timing before end of the month Renewable Heat Incentive Future changes

9. Renewable Heat Incentive Around 500 applications and 60 accreditations The majority are biomass (around 90%) At least one application from all supported technologies apart from geothermal Generally incomplete applications leading to lengthy process Metering is a particular problem Operation so far

10. Further information www.decc.gov.uk/rhi full details of the scheme including supporting documentationwww.decc.gov.uk/rhi Detailed Ofgem guidance also available on www.ofgem.gov.uk – search for RHI www.ofgem.gov.uk Ofgem call centre: 0845 200 2122 Ofgem enquiry line: RHI.Enquiry@ofgem.gov.ukRHI.Enquiry@ofgem.gov.uk