RHI Impacting the U.K.

In my last policy article, I discussed the United Kingdom’s Department of Energy and Climate Change (DECC) plans for incentivizing renewable energy specifically the plans to incentivize renewable heat energy through the Renewable Heat Incentive (RHI) that emerged in 2011 from the Energy Bill of 2008. As of April 23, 2015, the quarterly report for the RHI program has been released detailing the effects of the changes made to the RHI policy in October of 2014. Some of the problems arising from the changes to the RHI program are that the policy is being spread a little too weighted between renewable heating technologies, and this is somewhat negatively impacting the overall effectiveness of the policy entering the 2015 fiscal year from both a domestic and non-domestic standing.

Below is non-domestic percentage of applications from companies taking advantage of the RHI program since the beginning of the program in 2011. As shown, companies are heavily biased towards the use of small biomass boilers which received a 12 percent tariff digression as of October 2014 that has resulted in a 33 percent decrease in the number of non-domestic applicants as of first 2015 quarter. (DECC) However small biomass boilers still receive the most tax incentive of any other renewable heating technology.

Renewable Heat Incentive (RHI): quarterly statistics — March 2015

However in the domestic realm, the RHI program is showing an increase across more forms of renewable heat technologies entering 2015 as shown below. Air source heat pumps seem to be the driving heat technology. “A large proportion of applicants are located in regions with large rural areas such as the South West (17 per cent) and Scotland (19 per cent). It is likely this is because many rural areas are not on the gas grid and will be replacing solid fuel or oil burning systems with renewable systems.” (DECC) Heating pumps generally generate renewable heat energy more efficiently than biomass boilers, and this trend in the domestic realm of the RHI program is definitely positive in spreading the different renewable heating technologies across the UK.

Renewable Heat Incentive (RHI): quarterly statistics — March 2015

There are a number of concerns with biomass boilers compared to other forms of renewable heat energy and this is negatively impacting the goals set in the Energy bill to be achieved by 2020 for renewable heat energy. From The Guardian newspaper writer Arthur Neslen addresses some of these issues in his article ‘Green’ biomass boilers may waste billions in public money. Some of his concerns are towards biomass boilers in the RHI program are the efficiency of biomass boilers, improper/ unregulated installation of biomass boilers, and the government’s ambiguity to resolve these issues.

He goes on the quote the DECC’s 2014 studies showing that biomass boilers fall short of the 85 percent fuel to energy efficiency rate standard by almost 20 percent yet the government is still pushing this heating technology at the forefront of the RHI program. “The sole regulator for biomass boilers is the Microgeneration Certification Scheme but it only covers smaller models, below 45KW in capacity. In effect this means there are no quality standards for almost 90% of all schemes under the RHI,” says Simon Lomax, managing director of Kensa Group, a manufacturing company of heating pumps. As shown earlier, small biomass boilers produce up to 200 kW of energy but yet the only standards in place cover up to 45 kW potentially meaning that most biomass boilers do not meet any quality standards, but since there is such popularity in the non-domestic realm of using biomass boilers to receive tariffs from the RHI program; the government is trying to find a balance of setting standards for these biomass boilers that produce more energy. Though in my opinion 90 percent is a bit of stretch coming from a technological competitor.

As I noted earlier, the RHI policy may be somewhat skewed between the various renewable heating technologies. This can be seen through the large gap non-domestically in promoting other heating technologies aside from biomass boilers. Heat pumps are seeing a rise in the domestic realm of the RHI program as well as solar thermal energy. In my last article, I discussed the different sides on stretching the policy out more evenly or more heavily promoting the popular renewable heating technologies. Unfortunately both pushes towards stretching or strengthening will have negative and positive impacts on the RHI policy as a whole, but the DECC needs to do something in order to level out and promote the RHI policy as a whole since there was a 33 percent drop in the non-domestic contracting of the RHI policy for the first 2015 quarter.

Though the DECC seems to be emphasizing more support to incentivizing the non-domestic side of the RHI program, it would be more environmentally beneficial to see a greater emphasis on improving the RHI program domestically by distributing tariffs across the different renewable heating technologies in order to reduce the amount of CO2 emissions since that is driving goal behind the 2008 Energy Bill and it will help to levitate the 2020 goals of the RHI program if more people are involved, contributing, and benefiting from the RHI program. The drawback is that this can be somewhat harder to do in order to convince more people to go the extra mile domestically in order to improve their homes. This will also be much more costly to provide funding for the installation of renewable heating systems. According to the quarterly report, “The domestic RHI is an incentive scheme where participants receive tariff payments for the heat generated from an eligible renewable heating system which is heating a single dwelling. Payments are made over a 7 year period and tariff levels for each eligible technology have been calculated to bridge the financial gap between the cost of renewable and off-gas heating systems.” (DECC)

From this, the UK has seen a substantial rise in renewable heat by generating almost a 1000 GWh more of energy than they did before 2015. The policies in place for renewable heat energy are still young in the UK and the goals are set high. The RHI program has contributed greatly to improving the renewable energy efficiency as a whole to Energy Bill. The DECC will continue to make strides in order to improve standardizing and effectiveness of renewable heat technologies and will continue to promote the RHI program throughout 2015 and onto reaching their 2020 goals in energy efficiency both domestically and non-domestically.

Works Cited

Dhillon, Lakvinder. “Renewable Heat Incentive: Too Long on the Back Burner?” Cvent. Ecoconnect, 17 Mar. 2014. Web.

Neslen, Arthur. “’Green’ Biomass Boilers May Waste Billions in Public Money.” The Gaurdian, 14 Jan. 2015. Web.

“Renewable Heat Incentive Quarterly Statistical Release.” (n.d.): n. pag. Www.uk.gov. Department of Energy and Climate, 23 Apr. 2015. Web.

Scott, Craig. “Will the UK Warm to Renewable Heat?” The Gaurdian, 27 Mar. 2015. Web.

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