Saturday, 20 July 2013

The Domestic RHI for Solar

In-roof solar heating panels - image courtesy Viridian Solar

On 12th July, the Department of Energy and Climate Change announced the details of the Renewable Heat Incentive (RHI), an incentive scheme to promote the uptake of renewable heating such as solar panels, heat pumps and wood pellet boilers in the domestic residential sector.

This new scheme, starting in spring 2014, has the potential to be a complete game-changer for solar heating in the UK.  

Here is a summary of the most relevant aspects for solar heating.

Payments


Owners of qualifying solar heating installations will be paid at least 19.2p per kWh of renewable heat generated for seven years.

This figure of 19.2p may be adjusted upwards (up to a likely maximum of 21.7p/kWh) subject to a review of the tariffs on the non-domestic RHI scheme that is expected to conclude in the autumn.

The payments will be made quarterly in arrears and index linked to the Retail Price Index (RPI) with annual adjustments to tariff levels.  People who have already received a Renewable Heat Premium Payment (RHPP) or other government subsidy will find their payments trimmed back each quarter so that the total subsidy is decreased by the amount of grant they have already received.

Deeming

The heat energy against which the domestic RHI will make payments is calculated rather than measured with a heat meter.  For solar heating, the energy figure will be taken from the Microgeneration Certification Scheme (MCS) certificate.  The calculation will be performed by the solar installer according to the method given in the MCS installer standard, MIS 3001, a calculation based on a modified version of SAP.

The MCS solar thermal working group has been working on an imminent new version of MIS 3001, which has some significant changes to the energy calculation compared to the current standard. 

The 2012 consultation on the standard indicated some of the changes being considered:

  • Hot water demand is based on the actual number of people in the house, not a notional occupancy calculated from the floor area.
  • The fuel bill energy saving is calculated by dividing the renewable heat input to the solar hot water cylinder by the efficiency with which the back-up heater works, this efficiency taking into account the summer-bias of solar energy production.



At the same time, a new version of SAP has been released (SAP 2012), which introduces different solar irradiation for locations throughout the UK, and increases the hot water demand for homes without electric showers.

Full details of the new calculation have not yet been revealed. However, the Solar Trade Association has published the following estimates based on SAP 2012 and its understanding of the likely shape of the energy estimate in MIS3001:



Number of people in the house
Deemed Renewable Heat (kWh)
7 Year Tariff Payments (£)
Assumed System
1
867
1,166
2 m2 panel area, 150 l cylinder
2
1,006
1,352
2 m2 panel area, 150 l cylinder
3
1,383
1,859
3 m2 panel area, 210 l cylinder
4
1,746
2,347
4 m2 panel area, 250 l cylinder
5
2,242
3,014
6 m2 panel area, 300 l cylinder
6
2,428
3,263
6 m2 panel area, 300 l cylinder

Other assumptions: UK average irradiation, south facing, 30 degrees roof pitch, shading – none or very little, no electric showers in home, twin coil solar cylinder

Source: STA

Target Market


The domestic RHI provides financial support to eligible renewable heating systems that provide heat to a single domestic property.

The domestic RHI is available to owner-occupiers, private landlords, registered social landlords, self-builders and third party owners of renewable heating systems.

Apart from self-builders, new build housing is not eligible for the scheme.

It applies in Great Britain.  The devolved administration in Northern Ireland may launch a similar scheme as it has done with the non-domestic RHI.

While you may often hear DECC saying that the scheme is ‘targeted’ at off-gas-grid properties, the scheme is open to all.  This just means that the value of the energy savings for off-grid properties will be higher due to the more expensive oil or electric heating that is no longer being burnt.

Second Homes

The deeming method will mean that second homes have a lower occupancy, and therefore the deemed water use and renewable energy will be much lower.

Second homes that are Holiday Lets (and therefore considered to be businesses) would be eligible for payments under the non-domestic RHI.


Qualification Criteria


For a solar system to qualify for domestic RHI payments, the following criteria must be met:

  1. The installation must be registered on the MCS database – this means it must have been installed by an MCS accredited installer using solar collectors that are MCS or Solar Keymark certified
  2. The property will have a Green Deal Assessment (see note below)
  3. Loft insulation of at least 250mm and cavity wall insulation where these are possible.
  4. The installation is ‘meter-ready’


Self-build properties are exempt from the second and third requirements as they will be built to current building regulations.  In this case an Energy Performance Certificate (EPC) is sufficient.

The ‘meter-ready’ requirement means providing isolation valves for accessible pipework sufficient for a heat meter to be retrofitted into the system without draining it down. 

The optional additional payments for taking part in the Metering and Monitoring Service Package are not available to solar thermal installations.


Link with the Green Deal

In order to join the RHI, a customer needs to have had a Green Deal Assessment (GDA) of their property, but they do not have to act upon the recommendations of the assessment.  

The exception to this, (as for the RHPP), is that to enter onto the scheme you must have loft insulation to a depth of at least 250mm and cavity walls must be filled (where possible). If these measures have already been done (or are not feasible), the GDA will not list them as recommendations.  If they were done subsequent to the GDA, the householder will have to get a subsequent EPC as evidence.

If the householder does want to take up any of the Green Deal recommendations they do not have to enter into a Green Deal finance arrangement, they could pay for it themselves or borrow the money elsewhere.  

From the above, it seems that the most cost-effective route is for the householder to get loft insulation and cavity wall insulation done before applying for the GDA, thereby avoiding the costs of a subsequent EPC.



Solar Thermal in Conjunction with Other Renewable Heating


Neither heat pumps nor biomass work at their highest efficiency when preparing domestic hot water and this is especially true outside of the space heating season, where the heater has to fire up just to make hot water.   For this reason DECC wanted to provide additional support to installations that use renewable heating in conjunction with solar water heating.

Where a solar thermal system is installed alongside a heat pump or biomass boiler, both technologies will receive payment for the full deemed heat.  This means that householders installing both technologies will in effect be paid twice for the water heated by the solar system, once at the solar tariff, and once at the tariff for the space heating technology.


Legacy Systems


People who already installed a solar thermal system on or after July 15th 2009 are also eligible to join the scheme (called legacy systems).  

The installation must have met the MCS standards prevailing at the time of installation, and the deemed heat for a legacy solar system will be the energy saving estimate entered onto the original MCS certificate. The test of the install date will be the date on the MCS certificate.

In order to manage the numbers applying to join the scheme, OFGEM will phase the opening of the scheme to legacy applicants – details to be announced.



3 comments:

  1. Hi Stuart,

    Nice article as always. I wondered if you had any thoughts on the exclusion of New build and the RHI. Seems odd that you can claim FITS on a PV system on a new build but not for RHI on solar thermal? Given that Hot Water demand is not linked to insulation levels and the like surely an exclusion of this nature is a bit off? I realise this is good news for the retro fit market but I worry that removing the RHI for New Build will lead to an increase in illdesigned and poorly installed Solar Thermal systems as the requirement for the MCS standard is now lost and anyone can fit it. Or worse still, developers will ignore the benefits of Solar Thermal (and indeed other technologies) in their plans moving forwards - until of course building regs dictate otherwise.

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    1. Naturally, I feel that the decision to exclude new build from the domestic RHI is a shame. Especially as the FIT is available for new build, adding to the impression that renewable heat/electricity isn't exactly a level playing field.

      I understand that the belief within DECC is that FITs and RHIs don't incentivise housing developers to install renewables. They don't collect the payments and housebuyers 'don't pay more for a house with renewable energy'.

      The progress towards zero carbon homes is supposed to trigger the market for renewables in new build, so they're pinning their hopes on their colleagues at the DCLG to get on with publishing the new building regulations.

      I believe that insurance companies (such as NHBC) require that renewables installed in homes with their insurance meets the MCS standard, so there is a driver for using accredited installers.

      The main problem here is the inconsistent application of the 'logic' - if you're not going to support renewables in new build and leave it to building regs, fine, but at least apply your thinking consistently across all incentive schemes...

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    2. I agree, I guess this is the issue as a whole with incentives taking away somewhat from the real reason for installing renewables. I'm assuming that there is no scope for a change of mind from the powers that be? Nevermind, I'll continue in my little bubble where I believe everyone should be doing it in light of the effects of the Enhanced Greenhouse Effect and a social concscience! (Makes me feel better!)

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