DECC has today published long awaited details of the renewable heat incentive, following a consultation held around a year ago. The scheme is due to come into force later this year, following ratification by Parliament and will be backdated for qualifying schemes completed post July 2009.

Alfagy has carried out a quick review of the document, concentrating on the issues that affect our customers and can provide the following information and opinions.

What changes have been made from last year’s proposals?

DECC has completely changed the banding of plant sizes and subsidies for solid biomass installations.  In the last consultation, it was pointed out that the structure of biomass subsidies could reward people who use their heat inefficiently and so the new structure seems to be designed to help meet the fixed costs of

an installation but encourage efficient use of any heat it produces.

It is thought that this complicated analysis is the reason for the delay in publishing the report.

The winners in the revised RHI details are large ground source heat pumps (GSHP) and Anaerobic Digestion.

Large GSHP (greater than 350 kW) tariffs have been doubled. However this still represents one of the lowest subsidy levels for sources of renewable heat and should be actively encouraged, particularly in new build properties.

Anaerobic digestion plants are now being properly incentivised to use their biogas in the most efficient way. This is to inject it into the gas grid and burn it in boilers at around 90% thermal efficiency or in combined cycle gas power stations at around 50% electrical efficiency rather than in a gas engine at under 40% electrical efficiency. This has been achieved by offering a much better tariff for bio-methane injection into the grid (6.5p/kWh for 20 years compared with an original proposal of 4p/kWh for 15 years).

A typical AD plant engine requires around 2.8 MWth of biogas to generate 1 MWe of electricity, so the equivalent subsidy would be 18.2 p/kWh for electricity, whilst FITs currently only offer 9p/kWh for larger AD plants.

The biggest opportunity for AD will be the ability to produce up to 200 kWth of heat on-site at the same subsidy, even though this won’t require the same level of gas clean-up.

The big losers are air source heat pumps that are no longer eligible for the RHI and solar thermal, which has seen its proposed subsidy halved.

A missed opportunity is that the RHI still doesn’t encourage AD plants to recover more heat from their gas engines for local heating projects; indeed it will probably be more economical to provide the heat from an on-site boiler by burning biogas, whilst the ‘waste’ heat from the engine is vented to atmosphere.

For information, changes from the previous consultation are shown below:

Technology	Scale	Original Tariff	Revised Tariff	Change
Biogas - on-site	45- 200 kW	5.5 p/kWh	6.5 p/kWh	+18%
Biomethane Injection	All scales	4 p/kWh	6.5 p/kWh	+63%
Solid Biomass	45 - 500 kW	6.5 p/kWh	New
Solid Biomass	>500 kW	1.6-2.5 p/kWh	New
Ground source heat pump	45 - 350 kW	5.5 p/kWh	4.3 - 3 p/kWh	Reduced
Ground source heat pump	>350 kW	1.5 p/kWh	3 p/kWh	+100%
Air source heat pump	45 - 350 kW	2 p/kWh	0 p/kWh	Not eligible
Solar thermal	20 - 100 kW	17 p/kWh	8.5 p/kWh	-50%
...................................................................................................... ................................................................................................................................................

The new tariff duration for all the above technologies has been set at 20 years, which extends the period of support originally proposed for many of the installations.

For the first time it is viable to upgrade and sell biomethane into the gas grid in the same way as power is currently traded. However, biogas producers will need to be on the gas grid and for farm based plant this is rarely the case.

The RHI will be administered by Ofgem and payments will be made quarterly.

The feed in tariffs have been increased by 4.6% in line with inflation the increase will be effective as of the 1st of April.

To find out more detail on the increase please click here.