Monday 31 December 2012

Just What's Wrong with the Commercial RHI?

Just over one year in, how’s the commercial Renewable Heat Incentive doing?

In November 2011, the Department of Energy and Climate Change (DECC) scored a world’s first, launching a kind of Feed in Tariff for heat.  Called the Renewable Heat Incentive (RHI), the scheme pays out for each kilowatt hour (kWh) of useful heat generated by a range of low carbon heating technologies including solar thermal, heat pumps and biomass boilers.

In its first phase, the scheme is open only to non-domestic installations, with a scheme for householders to follow in summer 2013.

(For more on the domestic RHI, read my earlier article: “The Domestic Renewable Heat Incentive for Solar”)

How’s it doing?

So, are civil servants from other countries going to be beating a path to the UK to learn how its done?  On the basis of the performance to date, we don't need to worry about putting more border agency staff on at Heathrow.

OFGEM are administering the scheme, and you can get hold of performance data here.

And the winner is...

The chart shows the number of installations of the three most popular technologies, although it can be seen that the scheme is having mixed success.

The scheme has supported 679 installations of biomass boilers, but only 36 ground source heat pumps and 33 solar thermal systems since it began over 12 months ago.

In terms of eligible heat generated, the skew towards biomass is even more marked with 65.5 GWh of biomass heat generated, compared to a total of 0.9GWh from all other technologies.

To put this in context, the Feed in Tariff stimulated 30,000 installations in its first year.  According to DECC's heat strategy, electricity for lighting and appliances is only 8% of final energy use whereas heating is 46%.  

So the problem isn’t so much runaway take up of biomass as the unpopularity of the scheme as a whole.

How to Fix It

Beyond the obvious first response of making the tariffs higher, is there anything else that OFGEM and DECC could do to improve the success of the scheme?

Here are some suggestions.

  • Increase Awareness  - develop case studies with businesses that have benefitted from the scheme and work with the trade associations to disseminate the case studies to other potential customers.
  •  Streamline the application process – one of the most common problems with applications has apparently been the quality of the schematic drawings showing the location of heat meters.  OFGEM could develop standard schematic layouts, which applicants could select from, rather than commissioning their own drawings. 
Do you have any comments on the scheme or how it could be improved for solar thermal and heat pumps?  Perhaps you have direct experience of making an application?  Please make a comment below.