Turning Up the Heat

The U.K. is developing a program to incentivize renewable heat generation and use.
By Lisa Gibson | February 22, 2011

To replace the system in which renewable heating process equipment is purchased through capital grants, the U.K.’s Department of Energy and Climate Change is developing the Renewable Heat Incentive to encourage the purchases through tariffs.

Implementation of the program is expected in June, and while final details have yet to be released, the public consultation document outlines its key aspects:

• Support a range of technologies including air- and ground-source heat pumps, solar thermal, biomass boilers, renewable combined heat and power; and use of biogas, bioliquids and the injection of biomethane into the natural gas grid.

• Support heating at all scales including households, businesses, offices, public-sector buildings and industrial processes in large factories.

• Tariff levels have been calculated to bridge the financial gap between the cost of conventional and renewable heat systems at all scales, with additional compensation for certain technologies for an element of the nonfinancial cost; and a rate of return of 12 percent on the additional cost of renewables, with 6 percent for solar thermal.

“I certainly expect it to have a significant impact on the use of heat,” says Geoff Hogan, information officer and researcher for the U.K.’s Biomass Energy Centre. “It obviously depends on how generous it is, but if it’s reasonably generous, as figures suggest, then we do expect quite a reasonable incentive for people to install renewable heat of one kind or another.”

The DECC does, however, specifically propose the exclusion of wood-burning stoves, saying they present practical difficulties such as monitoring how much they are used and to what extent they are used with renewable fuel rather than coal. Under the current proposals, qualifying systems completed after July 15, 2009, will be able to claim the RHI, according to the consultation. The document also specifies that payments can only be made to the owner of the renewable heating plant, to a producer of biogas or biomethane or to a producer of biofuel for generating heat. The DECC also proposes that RHI beneficiaries receive support over a number of years rather than in the form of a single upfront payment, encouraging owners to keep their equipment operating and well-maintained.

For small-scale applications of up to 45 kilowatts (kW), the agency recommends 9 pence per kilowatt hour (kWh) for solid biomass and a tariff lifetime of 15 years, and 5.5 pence per kWh for biogas on-site combustion for a lifetime of 10 years. For large-scale applications of 500 kW and above, the DECC proposes between 1.6 and 2.5 pence per kWh with a tariff lifetime of 15 years. For qualifying applications in between, solid biomass would receive 6.5 pence per kWh for 15 years, with on-site biogas receiving 5.5 for 10 years, as proposed.

“We are trying to meet various commitments to our lower carbon future,” Hogan says. The U.K. has a renewable energy goal of 15 percent by 2020, aiming for 80 percent carbon emissions reduction by 2050, as well as other international obligations. In 2009, the U.K. used more than 895,000 metric tons (986,500 tons) of oil equivalent from biomass to generate renewable heat, according to statistics compiled by the DECC.

“We’re not as advanced as many other European countries in terms of percentage of heat generated,” Hogan says, explaining that the country has an extensive gas grid, along with cheap gas prices and cheaper gas combustion equipment compared to solid fuel combustion equipment. “So without some sort of incentive, we haven’t had the extensive rollout of biomass heat that they have in other countries.” 

—Lisa Gibson