The government’s decision to cap the funds available to the Renewable Heat Incentive (RHI) is not necessarily bad news, says David Pepper, managing director of Lochinvar UK
On the surface, the recent announcement that the government would cap the funds available to the Renewable Heat Incentive (RHI) at £70m was a little dispiriting. It has also said it will pull the plug completely at just a week’s notice if it looks like the scheme will go over budget. Again, that’s not really a massive vote of confidence.
On top of that, it delayed the start of the domestic RHI for a year until next summer.
However, this is not all bad news. At least, there is now some welcome certainty and we have something to work with. The heating industry and its existing and potential customers can now plan for the future knowing there is a ring-fenced budget for the scheme.
Our government, which came into office claiming it would the greenest ever, has changed its mind far too often on energy issues. The Feed-in Tariff payments were changed (although that was the right decision in the end); and it dropped the ball spectacularly by failing to make ‘consequential improvements’ mandatory under Part L of the Building Regulations.
On top of that, there seems to be no clear concept of how the Green Deal, which is due to start this October, will be implemented because the professional competence criteria for installers are not achievable under the current arrangements.
However, let’s give credit where it is due. The RHI is up and running in the commercial sector and the regulator Ofgem is trying to iron out some of the problems and learn lessons from the projects that are now in place. For example, heat metering is proving to be a major sticking point. Currently, metering can be classed as either ‘simple’ or ‘complex’.
If your system is classified as complex it means some parts qualify for the RHI and others don’t. The user only receives payments for the heat used, which means the systems need meters to measure the heat used and others to calculate what fraction of the heat comes from the RHI approved part of the system.
The meters must be good quality; they must be well installed and regularly calibrated or the data produced will be inaccurate leading to incorrect RHI payments. There are currently no professional standards for heat meter installation and that must be quickly addressed.
The vast majority of applications forRHI payments so far have been forbiomass schemes – 80 per cent of projects; accounting for98 per cent of total heating capacity generated by the scheme. This is, in part, because these schemes are relatively straightforward to install and meter – but the unintended consequence is that other renewable technologies are missing out.
To its credit, Ofgem is trying to simplify things. It has published a Frequently Asked Questions document and promised to give more guidance on how to make a successful application forRHI payments.
The decision to set a budget and rules of engagement means our industry can get on with its job of ironing out the technical issues – particularly installation standards for heat meters, but also some of the more general issues surrounding the production of renewable heat.
The scheme is on a much more modest footing than we all hoped, but at least it is moving forward. Now the government must stick to its guns and give the industry a chance to get on with delivering our part of the bargain – the solutions and the technologies that underpin all political ambitions for cutting carbon and improving energy secretary.