RHI- Renewable Heat Incentive An Ofgem Presentation – October 2011 Time To Re-think Your Heat Generation Choices?

Plan of work Renewable Heat Incentive (RHI) – what is it? Levels of support provided by the RHI Which technologies qualify? What heat uses are eligible? What you need to know to apply How has the Guidance changed in the light of consultation

What is the RHI? A world-first financial incentive to promote the generation of renewable heat £860m for RHI over four years confirmed in CSR Scheme funded through taxation, not a levy Payments made quarterly over 20 year period on basis of metered heat generation (p/kWh) 2011: non-domestics only, with domestics included from 2012 Estimated 1m participants by 2020 Due to go live by 30th November 2011 Ofgem responsible for administration – DECC responsible for policy

Why do we need the RHI?

Which technologies will be supported? Solar thermal (below 200kWth) Solid biomass, e.g. wood chip Municipal Solid Waste Biogas (below 200kWth) Ground/water source heat pumps (not air) Geothermal Biomethane injection to the gas grid

The RHI tariff rates Generation Technology Scale (installation capacity) RHI tariff payment/kWh (p) Biomass –Small commercial (< 200kWth) 7.9/2.0p/kWh –Medium commercial (200kWth < 1MWth) 4.9/2.0p/kWh –Large commercial (>= 1MWth) 1.0p/kWh Heat pumps/deep geothermal –Small commercial (< 100kWth) 4.5p/kWh –Large commercial (> 100kWth) 3.2p/kWh Solar collectors < 200kWth 8.5p/kWh Biomethane and biogas combustion < 200kWth 6.8p/kWh

Eligibility criteria Installed/first commissioned on or after 15 July 2009 Equipment new at time of installation Grants not received for purchase/installation of equipment Medium of heat transfer must be liquid or steam – i.e. no direct air heating No single domestics in 2011 (but RHPP may be an option) Definition of domestics: “single self contained premises used wholly or mainly as a private residential dwelling where the fabric of the building has not been significantly adapted for non-residential use” MCS or equivalent EN45011 requirement under 45kWth for solid biomass, heat pumps, solar thermal Certification required for both the installer (at time of installation) and plant

Eligible heat uses In a building for… Space heating, hot water or carrying out a process (not electricity) Definition of building “permanent or long-lasting building or structure of whatever kind and whether fixed or moveable which, except for doors and windows is wholly enclosed on all sides with a roof or ceiling and walls” Examples in Guidance: tents vs portacabins, distillation columns vs uncovered tanks Chemical Plant – Parliamentary debate NB: must not generate heat for predominant purpose of increasing payments

Metering requirements Every installation requires at least one meter Regulations specify whether classed as “simple” or “complex” Standards for meters Requirements on placement All installations required to submit a schematic diagram showing metering

Simple or Complex Metering? Do any of following apply? - Heat delivered by steam - CHP - Heat used in more than one building - Ineligible heat uses on heating system

Yes – one or more apply COMPLEX Need to meter all of: - Heat generated by eligible installation - Total eligible use of heat on system - Heat generated by all plants on heating system

No – none apply SIMPLE Only need to meter: - Heat generated by eligible installation

Schematics need to show All plants providing heat, whether eligible or ineligible All uses, both eligible and ineligible The pipework connections between all plants and heat uses An indication of building boundaries and names/types The positions of relevant hot water and steam meters and their associated components Labelled with a key

Independent Metering Report Needed for all installations over one MW and all complex systems over 45kW Must be produced by a ‘competent’ individual Unbiased and impartial With PI insurance of at least £1 million No list as yet but HVCA looking to produce one – Others are likely to become available A report template has been produced and must be followed

Competence requirements Experienced and suitably qualified – (HND or equivalent at least) Experience and expertise in flow measurement and heat/steam measurement systems – (demonstrated by training and development records) Relevant background – (involved in energy, utilities, building services, heating system design, operation or maintenance)

Other documentation you may need to apply… Receipts and/or invoices relating to the installation of the equipment Commissioning certificate Commissioning report Photograph of the installation clearly showing the serial number of the equipment Evidence that any grant has been surrendered or repaid in full Copy of meter Class 2 Measuring Instruments Directive (MID) certificate Manufacturer’s technical specification for heat pump units to support COP claims

Key Ongoing Obligations Maintenance of equipment Submission of periodic data Calibration of meters Notification of any major changes Keeping of records Annual declaration Compliance with any document audit / site inspection request

Compliance and enforcement One of Ofgem’s functions is to monitor and enforce compliance with upfront and ongoing requirements They will audit In deciding whether to take enforcement action, they will take into consideration circumstances including: Seriousness of the non-compliance and the duration Whether the participant voluntarily reported the non-compliance Reasons why the non-compliance occurred and any mitigating circumstances Whether there is a history of non-compliance by the participant Whether the participant has gained financially through the non- compliance The conduct of the participant after the non-compliance has been discovered

Accreditation and payment timeframe For most applications, they will aim to reach a decision on accreditation within 20 working days (i.e. 4 weeks) For complicated applications, the Ofgem team may need to seek more input, and so they will aim to reach a decision on accreditation within 30 working days (i.e. 6 weeks) This does not include any time where the accreditation application is with the applicant (eg when they are waiting for a response to a request for further information) Ofgem intends to be able to pay participants within 20 to 30 working days of receiving valid periodic data (i.e. 4-6 weeks)

How to apply Accreditation Key process to apply for scheme and determine eligibility Online applications for majority

How to apply

On-line application form

RHI draft Guidance Consultation 74 responses received from 56 companies, 15 industry associations or industry networks, two individuals and one government department Overall well received by industry, as providing substantial detail for stakeholders on a significant new scheme Several key areas where stakeholders sought greater detail or clarification Revised Guidance will be published shortly after revised Regulations laid in Parliament

Key areas of change 1. Definition of ‘installation’ – they will include a table specifying the items of plant that we will generally consider to form part of an ‘eligible installation’ per technology 2. Definition of ‘insignificant heat loss’ – they have developed theirapproach to this concession 3. Metering arrangements for complex systems – clarity provided on a range of issues more examples in Guidance 4. Requirements for the Independent Metering Report – competency criteria revised and broader range of installations required to submit the report

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