The Renewable Heat Incentive explained 1 Paul Bourgeois Director Zero Carbon Britain Ltd.

Agenda Introduction Context and History Technology RHI rates and accessing them Progress to date What are the options? Designing heat technologies Case Studies 2

Context and History Legislation Government Strategy Renewable Heat Incentive history 3

Energy Act 2008 Royal Assent on 28 th November 2008 – Implemented the legislative aspects of the Energy White Paper 2007 – Secretary of State to establish a financial support programme – Carbon Capture and Storage (CCS) – Feed in Tariffs – Smart metering... 4

UK Renewable Energy Strategy July % reduction on greenhouse gas emissions 20% energy from renewable sources – 12% from renewable heat All by % by

Renewables Obligation (RO) Feed in Tariff (FiT) Renewable Heat Incentive (RHI) Increase bio-fuels to 5% by 2013/4 Green Deal Main support initiatives

Why are heat incentives needed? A policy mechanism to accelerate growth Long term generation contracts – 20 years for most technologies Price certainty over a fixed time Retail Price Index (RPI) Payment levels are performance based 7

The RHI, as originally planned Announced on 10 th March 2011 World first First phase until 31 st March 2012 – Non-domestic – metered heat – Domestic – limited to £12m via voucher scheme Second phase from 1 st April 2012 – Non-domestic – additional technologies – Domestic – similar to Feed in Tariff 8

What actually happened Non-domestic scheme – Phase 1 Launched 28 th November 2011 – Phase 2 Consultation to extend to new technologies Air quality and biomass sustainability issues July

Applicable technologies Heat generation and Bio-methane production Biomass boilers (including CHP biomass) Solar thermal Ground source heat pumps Water source heat pumps Deep geo-thermal Energy from municipal waste On-site biogas Injection of bio-methane into grid 10

Non-domestic RHI Tariff Rates Tariff nameTechnologyEligible sizeRate Small Biomass Tier 1Solid biomass/solid waste (CHP)< 200 kWth8.3p Small Biomass Tier 2Solid biomass/solid waste (CHP)< 200 kWth2.1p Medium Biomass Tier 1Solid biomass/solid waste (CHP) kWth5.1p Medium Biomass Tier 2Solid biomass/solid waste (CHP) kWth2.1p Large BiomassSolid biomass/solid waste (CHP)> 1000 kWth1.0p Small Heat PumpsGround & water source, deep geothermal < 100 kWth4.7p Large Heat PumpsGround & water source, deep geothermal > 100kWth3.4p Solar collectorsSolar thermal collectors< 200 kWth8.9p Bio-methane/BiogasInjection & Combustion, not landfill gas All scales7.1p 11

Tier 1 and 2 Tier 1 rate purpose is to compensate heat users for the installation and fuel costs. Tier 2 tariff is slightly lower than the fuel cost to incentivise not wasting heat. Tier 1 applies annually up to the Tier Break (installed capacity x 1,314 peak load hours, i.e. kWth x 1,314) Tier 2 applies above the Tier Break. 12

What happened - Domestic Renewable Heat Premium Payments – Voucher scheme operated by the Energy Saving Trust from 21 st July 2011 to 31 st March 2012 – 26 th March 2012 Extended in light on lengthy consultation Not coinciding with Green Deal – October 2012 – Summer

Renewable Heat Premium Payment - RHPP For domestic properties - £12m (Phase 1) £3m through Social Housing projects Solar thermal (any property) - £300 Air Source Heat Pumps - £850 Ground Source Heat Pumps - £1,250 Biomass - £950 Phase 2 – additional £10m

Cost Control Measures - Timeline RHI from general taxation September 2012 – Extending to other technologies and Deployment of household Renewable Heat Incentive End of financial year – Cost Control Regime policy to be implemented Summer 2013 – Domestic RHI to be introduced 15

Access to payments Microgeneration Certification Scheme (MCS) – Up to 45kWth for heat generation MCS Products and Installation Companies – Standards and levels competency – Building Regulations Compliance Certification through one of 16 bodies REAL Assurance Scheme Over 45kWth direct to Ofgem 16

A Mark of Quality Certification Body Certification Body

RHPP Phase 1 Statistics August 2011 to March 2012 £2.95m (less than 25% take up) 18 TechnologyVouchers issuedVouchers paidConversion rate Solar thermal % Ground source % Air source % Biomass %

RHI Non-domestic Statistics 28 th November 2011 to 31 st March installations accredited 5.25MW total capacity – 80% Biomass – 15% Ground source heat pump – 5% Water source heat pump 376 applications (5.3% successful) – Incomplete, insufficient detail, inconsistencies 19

The big question... Uncertainty or opportunity? 20

Opportunities On site generation High heat demand – Short payback periods – Minimal transmission losses Cross fertilising initiatives – Stimulated by Green Deal New build agenda – CfSH, Passivhaus, home economics 21

Burning questions? or Q&A at the end 22

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