RHI – is it a really helpful initiative?
After many months of speculation and uncertainty, particularly after the axing of the Low Carbon Buildings Programme last year, Energy Secretary Chris Huhne unveiled the Renewable Heat Incentive (RHI) on 10th March.
To its credit this is the first scheme of its kind in the world and gives the UK some degree of moral leadership in the efforts to reduce reliance on fossil fuels across the world, to reduce both the country’s and individual’s within it’s carbon footprint and to encourage the implementation and installation of the latest renewable technologies in homes and businesses across the UK. On the minus side, the details are still a bit sketchy and there seem to be many different interpretations of exactly what the RHI is and who will benefit from it. The devil is in the detail and there’s loads of that.
Sentinel Performance Solutions, the leading energy efficiency and water treatment expert has broadly welcomed the RHI and what it aims to achieve, although there was some concern that air source heat pumps might have been excluded from eligible technologies. These have now been included, but initially through the mechanism of the Renewable Heat Initiative premium. It has been confirmed that they are in the RHI for ‘domestic’ under the premium payment and tariffs for 2012.
Sentinel has developed a unique range of water treatment products targeted at ensuring that renewable energy technologies heating systems operate as efficiently as possible. The introduction of the RHI offers a huge opportunity for these products to ensure that renewable systems deliver the high efficiency, low carbon solutions they have been designed to provide.
The Government has committed £860 million to making a success of the RHI scheme. It will be introduced in two phases, the first phase targeting industry, business and the public sector, which contributes 38% of the UK’s carbon emissions in July 2011, and the second phase targeted at the domestic marketplace, and timed to coincide with the introduction of the Green Deal, around October 2012.
It’s thought the RHI will reduce emissions by 44 million tonnes of carbon to 2020, around the amount of carbon emitted by 20 typical new gas fuelled power stations. The scheme is also expected to increase capital investment in green technologies by £4.5 billion up to 2020 hopefully stimulating the market in renewable heating systems and technologies.
In simple terms, the RHI is a payment for generating heat from renewable energy technologies sources. The RHI is administered by the official regulator OFGEM that will pay the agreed tariffs with money from the treasury. The result of the RHI is that those benefiting from it will save money by eliminating or reducing the need to burn oil or gas and on top of that will be paid up to 8.5p/kWhr for the hot water and heating they generate and use themselves in their property. The tariff you will get depends on several things but basically on exactly what systems you are using and how big they are. These tariffs will be paid for 20 years from the registration date and will be index linked for inflation. It has been calculated that in most cases these payments will generate enough income to pay for the installation of the renewable systems in seven to nine years – a reasonable pay back period.
“We’re broadly supportive of the RHI but still a little bit concerned that so much of the details has yet to be revealed. In principle it has to be an excellent idea and the incentive to generate heat from renewable sources is clearly vital if the Government is to get anywhere near its targets,” said Sentinel’s Paul Day. “We are proud to have led the way in the development of robust products designed specifically for the individual needs of the different renewable technologies in the UK and across Europe. We’re delighted to see the UK Government providing reasonable incentives to homeowners and businesses to invest in renewable technologies. In the current economic climate we all know that the desire to be green and make a contribution to the necessary reductions in emissions and the lowering of our reliance on fossil fuels has had to come second in many cases to the need to reduce costs and there simply had to be some incentive from Government to ensure that people seriously considered installing new, high efficiency renewable heating systems. We’re confident that the RHI will make a serious contribution to this and that in combination with the Green Deal from 2012 will also encourage the use of renewables on a wider front in the domestic heating sector in the UK.”