Monday, 8 July 2013

Latest results from Renewable Heat Incentive (RHI) show steady uptake

Ofgem's latest set of results for the Renewable Heat Incentive (RHI) paint a positive picture about the uptake of the World's first renewable heat incentive.  

Whilst the numbers overall are still small uptake accelerated during the first 15 months of the scheme and installed capacity approximately doubled every quarter.

At the end of March '13 there were 1,238 approved installations and a further 649 being processed.  Only eight applications had been rejected. Total installed capacity was 266 MW and these installations had generated 168 million kWhth.  Cumulative payments were £7.62m.

The technology split is still dominated by biomass (92%) with solar thermal and ground source heat pumps making up the majority of the remainder (3.9% and 3.4%, respectively).

The emergence of solar thermal as the second most installed technology under the RHI is interesting. It is not clear what the split is between stand-alone systems and those integrated with biomass systems. As Jamie Oliver would say biomass boilers and solar panels are "best friends" and the latter can make a useful contribution to the overall efficiency (and no doubt payback) of a biomass system.

The message overall, therefore, appears positive. We of course know that the RHI has already had to return some of its funds due to under-performance, but given the long lead-in time for biomass and its relative high capital cost it is perhaps not surprising that the situation is 'steady'.

In Kent installation activity for biomass boilers is again steady. Of the projects we know about around 2 MW of biomass heating capacity has come on-stream since December '12. These project at a range of scales but most are in the sub-200 kW range at the moment. Most are chip systems with local fuel supply.

RHI Developments

Whilst the policy overall is very much intact there have been one or two changes that are of interest:

  • Medium tariff (200-999 kW): This tariff was inflated on April 1st 2013 and then promptly deflated by 5% (which effectively brought the tariff back to its pre-April 1st level). This only has a minor impact on the attractiveness of the tariff which, in our opinion, remains very good.
  • Large tariff (1 MW+): This was doubled to 2.0p.
These tariff adjustments are fairly straightforward and only to represent some fine-tuning rather than a radical re-think or withdrawal of support.  The small tariff has remained unchanged to date.  The current tariff is shown below and can be found here

The Ofgem website indicates that the next tariff table will be published on September 15th. It is not known at this stage whether more changes are planned...we will keep an eye out.

Other developments include:


On 30 April 2013 the Renewable Heat Incentive Scheme (Amendment) Regulations 2013 came into effect. These regulations introduced:

  • A long term cost control mechanism, otherwise referred to as the degression mechanism.
  • removal of the provisions relating to the scheme suspension mechanism (Stand-by Budget Mechanism) introduced in the Renewable Heat Incentive Scheme (Amendment) Regulations 2012.
The degression mechanism enables reductions to be made to an individual tariff, or all tariffs, if certain requirements set out in the RHI (Amendment) Regulations are met. It aims to ensure that the non-domestic RHI does not exceed its fixed annual budgets by lowering tariffs to bring deployment down
in line with affordable levels.

Simplification of metering requirements

DECC is addressing issues raised by stakeholders about the complexity of metering requirements and the proportion of complex systems. DECC is addressing this by requiring that the installation only installs meters necessary for the RHI payment formula. This will allow heat loss from external
pipework to be disregarded in specific circumstances (ie if properly insulated). If it is either physically or financially problematic to install a heat meter, we will allow applicants to instead submit a heat loss calculation.

A number of industry associations are taking steps to develop RHI specific training and assessment programmes for those that wish to provide Independent Reports on Metering Arrangements (IRMA). In the interim the Building and Engineering Services Association has published a Guide to Good Practice for Heat Metering in the RHI.

Air quality (AQ) compliance

DECC is introducing requirements for all biomass burning installations to submit a valid certificate or an environmental permit with their application. This will need to show that the boiler complies with the required AQ limits. All applicants with biomass burning installations will now need to submit an RHI emission certificate or a valid environmental permit with their application. If an applicant is submitting an RHI emission certificate it will need to show that the boiler complies with the specified air quality limits.