Great Britain: Performance of the two UK Renewable Heat Incentive Schemes
Mon, 3 November 2014
The UK has two Renewable Heat Incentives (RHI) that assist solar thermal. The non-domestic variant (non-dRHI) has operated since November 2011. The variant for households (dRHI) has operated since April 2014. Whereas the share of solar thermal applications within the non-DRHI is still low with 3 % (left chart), every fifth new domestic renewable heating system contains a solar water heater (right chart). For solar thermal, the non-dRHI currently pays 0.10 GBP/kWh for 20 years and the dRHI currently pays the end-user tariff at a rate of 0.192 Pound Sterling (GBP)/kWh for 7 years. Both rates will be annually adjusted for inflation through the payment period. The pie charts show the numbers of accreditations of non-dRHI and dRHI technologies.
Source: Gas and Electricity Markets Authority (Ofgem)
For non-dRHI from Nov 2011 to the end of September 2014, over 1 GWh of heat has been measured and paid from 136 solar thermal installations. Of these, since April 2014, there has been 35 new which effectively representing one new installation every 5 days in the past 6 months.
There are two aspects to the dRHI to understand – the adoption of the previous legacy subsidy to dRHI known as the Renewable Heat Premium payment (RHPP) and those that are new since the scheme started in April 2014. The right pie chart above shows only new installations because the legacy conversion process is only a paper-work exercise. The legacy conversion to dRHI meant the owner had to repay their original small single RHPP grant payment in return for the larger total dRHI subsidy spread over seven years. There have been 2,236 RHPP conversions, but only 344 new solar thermal DHW dRHI accreditations since April 2014. This effectively represents two new installations every day that the scheme has run.
Numbers of accreditations within the dRHI scheme for different technologies
Many rules and little promotion
Earlier this year, several UK trade organisations reported an initial positive reaction to the long-awaited dRHI scheme. Indeed especially biomass boilers show a strong increase in the monthly applications (see figure on the left). But for solar thermal the number of monthly applications flattened already in August and September and there are many reservations, especially because there are so many rules to follow and so little promotion by the government to the end user.
First the equipment has to be fitted by an installer certified under the Microgeneration Certification Scheme (MCS) who is required to follow the methods shown in the MIS 3001 document Requirements for Contractors for solar thermal. This in turn requires a solar thermal energy performance calculation to be presented to the end-user according to another document MCS 024 Solar Domestic Hot Water Energy Calculation which provides the deemed basis for the total annual energy eligible for the dRHI tariff. The calculation is only for simple system layouts using restricted climate assumptions based on 21 UK regions. This calculation is used because no heat meters are used under the dRHI unlike the non-dRHI.
Numerous requirements: EPC, GDA and PEL
Besides dRHI is only for properties capable of getting a domestic Energy Performance Certificate (EPC) which confirms the property is a domestic dwelling. The recipient of the subsidy must be the owner of the heating system hence this can be the person owning and living in the home, a private landlord or a registered social landlord. In general it is not applicable to a new home unless this has been self-built.
Other requirements are that the property should also have a Green Deal Assessment (GDA) and where the GDA recommends installing loft and cavity wall insulation, these must first be fitted before applying for the dRHI. New self-built house can be exempt from the GDA requirement as these will be assumed to have adequate building insulation.
The key components of the equipment for the dRHI have to be chosen from a Product Eligibility List (PEL) held by the scheme administrator Ofgem. The argument is that the dRHI is not incentive enough to overcome the burden for installers and customers to obtain it for solar thermal. As an example the installation cost without MCS/RHI will be typically GBP 1,000 to 1,700 less and the householder does not need to obtain a Green Deal Report. Avoiding the EPC would save them another GBP 250. With all this bureaucracy for the RHI, it is no wonder the UK PV market still remains strong when it is supported the simpler choise of UK PV feed-in tariffs.