Heat turned up on renewables

24 March 2011

Claimed to be the world’s first financial incentive of its kind, the Reneawable Heat Incentive announcement by the Government recently will revolutionise the way heat is generated and used in buildings.

The Renewable Heat Incentive (RHI) will support emerging technologies and businesses in the UK, strengthening security of supply by reducing dependence on fossil fuel heating and emissions. Currently around half of the UK’s carbon emissions come from the energy used to produce heat – more than from generating electricity. The RHI will reduce emissions by 44 million tonnes of carbon to 2020, equivalent to the annual carbon emitted by 20 typical new gas power stations. With over 95 percent of heat in the UK is currently produced by burning fossil fuel but with North Sea supplies now in decline leading to an increase in imports, low carbon alternatives are needed.
The £860m RHI scheme is expected to increase green capital investment by £4.5bn up to 2020, stimulating a new market in renewable heat and encourage installation of equipment like renewable heat pumps, biomass boilers and solar thermal panels to reduce emissions and support the existing 150,000 jobs in the heating industry. A full system of RHI payments will be available to households from October 2012; In the interim, more than a quarter of the first year’s budget to be guaranteed for up to 25,000 household installations through a "RHI Premium Payment" to encourage take-up.
The renewables sector has largely welcomed the announcement. Graham Bartlett, MD of Energy Solutions at E.ON, said: "We’ve already installed more than 2,000 heat pumps across the country, as well as offering solar heating and hot water systems. This is an important step in developing the market for these new technologies just as the Feed-in Tariff has done for renewable electricity. Alongside that, it's absolutely vital that we start weaning ourselves off an over-reliance on gas boilers and on to more renewable systems like solar energy or heat pumps. This is even more important for off-grid homes who will need to move away from oil or coal-based heating systems."
Adrian Walker, MD of Hoval Ltd, suppliers of biomass boilers in hotels, urban office developments, schools, hospitals and leisure centres, has welcomed the announcement as a "Major boost to the new green economy through support for the UK wood heating sector. We hope that this RHI ‘cash-back’ measure will unlock significant commercial investments in our sector. There will be multiple benefits for the UK economy including manufacturers such as Hoval, boiler installers and service engineers, and the wider UK wood fuel industry. In a time of very difficult economic conditions this will provide welcome green jobs and support high technology skills development."
RES sees the RHI proposals as a "major boost to the new green economy through support for the UK’s renewable heating technologies." David Povall, CEO of RES Enterprises, the on-site renewables division of the RES Group, said, "The RHI scheme will provide a guaranteed incentive scheme for wood fuelled boilers, solar water heating and other renewable heating technologies, making long-term commercial investments in building-integrated renewable energy viable. There are currently more than 2000 commercial wood heating boilers and 100,000 solar thermal systems now in place throughout the UK, but the UK lags behind other European countries. There is potential for significant growth, creating jobs in the wood fuel and wood heating and the solar hot water markets. The UK market for renewable heat is potentially very large and the RHI announcement will act as a catalyst unlocking significant commercial investments in our sector."
However, Dimplex has given a reserved welcome to the RHI scheme, and is calling on the Government to fill in the gaps as a priority so that the industry can gear up for future growth. Chris Davis, business development director at Dimplex Renewables, said: "While any support for the UK renewables market is good news, this announcement falls some way short of the industry’s expectations. In its current form, the scheme is unlikely to provide the growth stimulus the industry needs if we are to work together to achieve the Government’s target of 12 percent of heat from renewable sources by 2020.
"We’d like to see some of the scheme’s gaps filled in, in particular with regard to domestic tariff payments, and also we see a clear need to work with the Government on getting non-domestic and communal residential air source systems included under the scheme. It’s crucial to maintain the momentum from this announcement and not lose sight of the need to continue moving ahead."
He continued, "RHI tariff payments for commercial-scale installations will come into effect in July 2011, but for heat pumps in the first year at least, only ground and water source technologies are included, with air source excluded. This will affect the uptake of commercial scale and multi-dwelling air source systems, which have already proved extremely efficient in the UK, and in retrofit applications, the advantages of air source in terms of cost and relative ease of application seem to have been overlooked."