Decarbonising the UK’s heating has become an increasingly important issue in recent times. We have an obligation to reduce our carbon emissions dramatically in accordance with the Paris climate agreement by 2050.
A large proportion of our emissions comes from both domestic and commercial heating and cutting this is going to be one of our major challenges over the next couple of decades.
The Renewable Heat Incentive was introduced to encourage homes and businesses to turn to lower carbon solutions such as heat pumps, solar thermal and biomass boilers. While the number of units installed went over 50,000 this year, take up of these technologies has been less vigorous than many eco-advocates would have hoped for.
In March this year, the Government began a consultation and rumours that subsidies would be improved began to circulate. This month, they published The Renewable Heat Incentive: A Reformed Scheme in response to the consultation. It’s good news for those hoping to decarbonise their own heating and get a decent return on investment.
According to the Minister of State for Energy and Intellectual Property, Baroness Lucy Neville-Rolfe:
“Heat is very difficult to decarbonise and no consensus is yet reached on the mix needed for the long term and you will have seen that from the various different reports on the subject. We need to be clear on the challenges, clear on the things we start to make progress on now and we need to agree on a long-term direction.”
Highlights of the RHI Reform
From spring 2017 there will be a number of changes to both the domestic and non-domestic Renewable Heat Incentive.
• All four technologies, air and ground source heat pumps, solar thermal and biomass will continue to be supported by the RHI.
• Heat pumps will have their tariffs increased. Air source heat pumps will be at 10.02 p/kWh and ground source 19.55 p/kWh.
• All new heat pumps will require electric metering and there are some restrictions on those installations with a shared ground loop.
• New biomass installations will be able to access a higher tariff of 6.44 p/kWh.
• Heat demand limits are going to be introduced for ASHPs, GSHPs and biomass heaters but not for solar thermal.
• The solar thermal tariff will remain the same. This is good news for the solar industry as there were rumours that thermal was going to be removed altogether.
• The Government is introducing tariff guarantees to create certainty in the market for larger installations and to encourage businesses to take them up.
• The three tariff bands for biomass will be replaced with a single one with two tiers. Tier 1 is 2.91 p/kWh and Tier 2 is 2.05 p/kWh.
• Tariffs for ASHPs and GSHPs will remain the same.
• Biogas and solar thermal tariffs will remain at the same level.
• New biogas or biomethane plants will only get support when 50% of the generated heat is from waste or residue feedstock.
• Deep geothermal plants will continue to get support with a tariff of 5.14 p/kWh.
You can read the full response to the RHI consultation here.
The Benefits of the RHI Reforms
There are three main reasons for the changes in the RHI:
• First to all, the Government are hoping that in encourages more take up of the four main technologies in both domestic and non-domestic situations.
• It’s going to offer better value to customers and give them greater confidence in the new technologies.
• Finally, it’s going to help develop the market and improve the supply chain, further bringing costs down and creating a good return on investment for consumers in the future.
Whether these changes have the impact that the Government hopes remains to be seen. Having said that, 2017 could well be the time for your home or business to look at how heat pumps, biomass and solar thermal can earn you money back and bring a good return on investment.