Where now for the RHI?
The commercial phase of the Renewable Heat Incentive (RHI) has been open to applicants for over a year, with reported levels of take up indicating a lukewarm reception at best. Jeff House considers issues that may be hampering the success of the scheme.
As acknowledged by the Department for Energy and Climate Change (DECC), heating and hot water production account for almost half of all energy consumption in the UK. With this in mind, effective reduction of demand and integration of low carbon technology will be crucial if the UK's mandated target of an 80 per cent reduction in CO2 emissions by 2050 is to be met.
The scale of the task in hand is brought into stark relief by the Government Construction Advisors assertion that some 80 per cent of the building stock predicted to be in use come 2050 is standing today. Therefore, from a policy viewpoint, the link between the Climate Change Act and the RHI is clear. A far greater share of renewable heat is needed in our existing buildings.
Hailed as a world first, DECC introduced the RHI scheme on the 28 November, 2011 to stimulate the uptake of renewable heat technologies by industrial, commercial, public sector and not for profit organisations. A limited range of technology types are supported, from single building up to district scale outputs, with those of direct interest to the building services sector being solar thermal, biomass and ground source heat pumps, all established technologies which can be readily integrated at building level.
Conspicuous by their absence during Phase 1 of the scheme are air source and gas absorption heat pumps. Again, well established and accepted technologies in the commercial sector, yet excluded from RHI at the outset owing to a claimed 'lack of evidence'.
In the new build sector renewable heat is becoming a necessity for most projects, given the CO2 compliance targets set out in Building Regulations. Despite pressures such as the CRC Energy Efficiency scheme, the regulatory drive to reduce emissions does not translate well to the RMI market where capital investment and running costs remain primary considerations. With this in mind, RHI pays up to 8.9p/kWh, index-linked, for up to 20 years, making calculations of the whole life cost of installations far more attractive.
To meet expected demand for the first phase of RHI, a budget of some £70 million was allocated per financial year. OFGEM, which administers the RHI on behalf of DECC, publishes quarterly updates, the latest of which states that, as of the end of September 2012, only £1.2 million had been dispensed to accredited installations for the year 2012/13, less than 2 per cent of budget.
Biomass is clearly dominant
This is somewhat concerning as the scheme is structured such that any annualised under spend is not re-invested in successive years. From a reported 348 accredited installations, biomass is clearly dominant, representing 90 per cent of successful applications and, surprisingly, solar thermal only accounts for some 3 per cent of installations. This leads to the first issue with the scheme.
In order to meet with RHI entry requirements all 'useful' renewable heat must be metered. Dedicated heat meters must be of 'class 2' accuracy and compliant with the relevant requirements set out in Annex I to the 2004 Measuring Instruments Directive (MID) (2004/22/EC). Most solar thermal systems use a mixture of glycol and water as a heat transfer medium, to provide frost protection. Obtaining a heat meter compliant with 'class 2' accuracy specifications and able to measure a glycol mixture proved somewhat challenging at the scheme outset. There are now a number of suppliers offering equipment to meet this requirement therefore opening the RHI up to more solar thermal applications.
In wider terms, heat metering requirements within RHI proved unwieldy at the scheme outset. In most cases the renewable heat source in question will only provide a proportion of the overall building heat requirement, owing to seasonality or the requirement for backup heat for crucial installations. This leads to a situation where the overall system has two or more heat sources, for example a heat pump with a gas boiler providing peak load during winter months.
Initial scheme requirements dictated that, dependent on pipework distribution design, a heat meter would be required for each heat source and even some sub circuits, leading to unnecessary cost given that only the renewable heat contribution is needed. Difficulties with heat metering aside, market feedback also brings into question the overall application procedure. It is claimed this is a barrier to uptake both in terms of the administrative burden and the length of processing time.
In June 2012, OFGEM consulted industry over a range of topics pertaining to RHI. In light of findings, OFGEM have now published new guidance documents intended to support applicants in submitting a full and 'properly made' application, saving time, improving the rate at which applications can be processed and encouraging greater take-up.
These documents provide information concerning the issues with heat metering, and sets out what they are doing to speed up the accreditation process, as well as explaining what applicants can do to ensure installations meet scheme requirements. OFGEM report that the number of RHI accredited installations increased from 121 to 348, between June and September 2012, an increase of 188 per cent. Whilst this is encouraging, there is clearly more work to be done.
RHI phase 2 is expected this year which will not only open the scheme to domestic installations but also extend it to further technology types. In order for this to succeed more awareness is needed. Indeed, it is noteworthy that Government has allocated £2 million to support marketing of the Green Deal. Perhaps some support for RHI would be more prudent if the scheme is to truly succeed in delivering its intent.
// The author is marketing & applications manager at Baxi Commercial Division //
12 February 2013