Ownergy

FAQs

Find answers to your questions about renewable energy tariffs and energy options

What happens if I extend my system

In principle the extension is treated as a new system and registered separately.

BUT the tariff will be based on the combined capacity of the original system plus the extension.

The existing FITs registration on the original system will be unaffected.

There used to be concessions for extensions within 12 months of the original installation, but these have effectively been rescinded.

See more here.

Why are the tariffs being reduced if deployment is below the threshold?

Even though contingent degression is related to the level of deployment as described here, the government has decided that there can only be two successive quarters with zero degression.

Therefore if the last two degression levels were zero, the next quarter will see degression at the default level even if deployment is below the default corridor.

The government said:

Degression can only be skipped for two successive degressions, so there will be a minimum of 3.5% degression every 9 months to incentivise ongoing reductions in installation costs.

What is a community energy project?

It is an energy project undertaken by one of the following:

  • a community interest company (CIC);
  • a co-operative society; or
  • a community benefit society

The government has further restricted the definition in the case of FITs:

To be defined as a community energy project within the FITs scheme, eligible entities must have no more than 50 employees

What tariff will pre-accredited installations receive?

In general the tariff applicable when they applied for preliminary accreditation, but with one exception.

This from the Phase 2B review:

Once accredited, installations found to be eligible for preliminary accreditation, will receive the tariff that they would have received if they had accredited at the time they applied for preliminary accreditation. However, installations that are granted preliminary accreditation with an effective date in the period 1 January to 31 March each year will be eligible for the tariff that applies from the following April. Tariff lifetimes will apply from the eligibility date.

What are the pre-requisites for preliminary accreditation?

In addition to being in one of the appropriate tariff bands, projects must establish that they are likely to get built by having:

  • planning approval

  • evidence of acceptance of a firm grid connection offer, if a grid connection is needed; and

  • for hydro installations: relevant environmental permits from the Environment Agency or Scottish Environment Protection Agency.

What is the definition of a ‘site’?

This is not specifically defined in the legislation, so Ofgem's guidance notes say how it will make the assessment:

The site where eligible installations or accredited FIT installations are situated in close geographical proximity to each other is determined with reference to:

  • The relevant Metering Point Administration Number (MPAN)
  • Installation location address (including post code), and/or
  • Installation location Ordnance Survey (OS) grid reference
  • Any other factors that Ofgem considers relevant. For example, we would also consider the planning situation and any electrical or mechanical interactions between the Installations.

Some specific instances were addressed in the 2011/12 review.

How has the definition of site changed following the 2011/12 review?

The fundamental definition remains unchanged, but government says it intends to clarify that:

  • several installations e.g. wind turbines or solar panels at a single location are not treated as separate sites because they register separate MPANs;

  • separate residential units on a private wire network (i.e. park homes) are treated as separate sites; and

  • hydro installations that are physically separate are not treated as a single site because of DNO constraints that do not allow them separate connections.

How would emergency 6-monthly degression operate?

This is all too complex (so let's hope it doesn't happen).

The best we can do is refer you to Box 1 on page 20 of the government's decision paper from the Phase 2B Review.

When would emergency 6-monthly degression apply?

If deployment in the first half of the year exceeds 2/3 of the top level of the default corridor. The Phase 2B Review decision said:

We expect that the system of annual degression will provide the basis of tariffs in the longer term. However, in order to provide additional assurance that the scheme will be able to remain within budgets in instances of extremely high deployment, we will introduce, an additional mechanism which allows a mid-year degression (the first of which could occur in October 2014) based on uptake in the first six months of the year.

Six-month deployment thresholds will be two-thirds of those for annual deployment.

Accordingly, we foresee that the six-monthly degression mechanism will only be needed in exceptional circumstances. Under ordinary deployment conditions, where a contingent degression is not required, degression will occur as normal in April only.

How are RO-linked tariffs degressed?

In principle these bands aren't subject to degression as such, but will stay linked to the equivalent RO price. The Phase 2B Review decision said:

Tariffs in the bands set at levels equivalent to the RO will not be subject to annual degression changes unless deployment in the relevant band in the previous year is greater than 150% of the expected level. However, deployment in these bands contributes to the deployment thresholds and may therefore affect degression rates in other bands. If degression is applied to these tariffs, later years’ tariffs will be determined according to the normal degression rules (i.e. were the RO equivalence in a band broken by the need for a 10% degression, normal degression rules would apply from that point on).

How are tariffs linked to pricing under the RO?

You want the simple answer? Tough!

All we can do is refer you to the wording in the Phase 2B Review decision

we will adjust generation tariffs for these bands to levels we consider to be equivalent to the support currently available under the RO. These are calculated using a value of £44.78 per ROC, which is 1.1 times the 2012/13 buyout price. Generation tariffs from 1 April 2013 until 31 March 2017 will be set at a level equivalent to the levels of support provided under the RO to a 5MW plant as a result of the RO Banding Review. Tariffs for 2017/8 and beyond are set at the level of 2016/17. However we expect that tariffs will be reviewed before this time, particularly given the wider context of Electricity Market Reform, so this should be taken as an indicative position in the interim.

Which tariff bands will be linked to pricing under the RO?

Those tariffs for sizes up to 5MW for most RO-eligible technologies.

This approach applies to the hydro band 2-5MW and the wind band 1.5-5MW.

However, the same does not seem to apply for PV, where the government said on their decision document following the Phase 2A review:

Although the majority of respondents to the consultation indicated a preference for the approach to degression to change once tariffs reach the financial equivalent of two Renewable Obligation Certificates [the support for solar PV under the RO], our updated analysis of PV installation costs suggests that a rate of return of nearly 8% can be achieved for large scale PV installations for a tariff considerably lower than 2 ROCs.
We have therefore decided that the degression mechanism should continue to operate when tariffs reach the equivalent of 2 ROCs, to minimise the risk of investor overcompensation and to limit the total cost of FITs support.

Are the tariff levels published following the Review now set in stone?

Not necessarily! From April 2013 some tariffs (for larger systems up to 5MW) may be adjusted further depending on the equivalent RO banding. The Phase 2B Review decision said:

Generation tariffs for the largest capacity band for each technology will continue to be consistent with support under the Renewables Obligation, and will be adjusted in line with current support levels and the outcome of the RO Banding Review.

What is an Energy Performance Certificate?

An Energy Performance Certificate (EPC) is issued by a qualified assessor to show how energy efficient a building is. It shows the result with a rating between A and G, where A is the most efficient.

Further details are available here.

What is the RO banding review?

The Renewables Obligation (RO) supports renewable generation above 5MW (and some projects between 50kW and 5MW). It provides an incentive not in the form of a fixed tariff, like the FITs, but by awarding green certificates called Renewable Obligations Certificates or 'ROCs'.

When the RO was first introduced, all technologies received one ROC for every MWh of electricity delivered. The RO has subsequently been 'banded' with some renewable technologies, such as solar PV receiving 2 ROCs per MWh. Some (like offshore wind) get 1.5 ROCs; others still get 1 ROC; while others get less than 1 ROC.

The banding review is reassessing how many ROCs should be awarded to each technology band under the RO.

What is the REAL Code?

It is a code of conduct developed and monitored by Renewable Energy Assurance Limited, setting out good practice, which suppliers should follow when selling renewable energy systems.

Suppliers registered under the Microgeneration Certification Scheme must follow the REAL Code (or an equivalent). Because the MCS is a pre-requisite for systems up to 50kWe, or 45kWth under the Renewable Heat Incentive, suppliers of such systems should be registered under the REAL Code.

Why did the Supreme Court refuse permission for the government to appeal?

The Court believed that the Appeal Court was correct in ruling that the government's attempt to change tariff levels retrospectively was unlawful.

It said:

Permission to appeal was refused because the application does not raise an arguable point of law of general public importance which ought to be considered by the Supreme Court at this time, bearing in mind that the case has already been the subject of judicial decision and reviewed on appeal.

Why did the Appeal Court rule that the government’s proposed FITs changes were illegal?

The Court said the proposed change was effectively retrospective because (as summarised by the supreme court ruling):

The Court of Appeal upheld the Administrative Court's judgment that it is not within the power conferred on the Secretary of State by the Energy Act 2008 to reduce the tariff paid for electricity generated by small-scale solar photovoltaic generators, in respect of installations becoming eligible for payment prior to the coming into force of the modification.

This gives comfort that the government cannot change tariff levels applicable to systems installed before the new tariff levels have been approved by parliament.

What if I own more than one installation - will I be paid less?

Not unless you are in receipt of tariffs for more than 25 solar PV installations.  If that is the case, you will receive a lower tariff.  These lower tariffs are in the third column of the table linked here, and described in the footnotes to this table.

Does my property need to have a certain level of energy efficiency to be eligible?

Yes - but for solar PV systems only.  From 1 April 2012, the property to which your solar PV system is electrically connected (or attached) must have an Energy Performance Certificate rating of D or better.

Can I link to your website?

If you want to link to this website, be our guest.

If you want to gratuitously pilfer copy for your own website please note that our terms and conditions require you to do the decent thing and ask permission first!

What happens if I start earning the Feed-in Tariffs and then I move house?

 

A FITs registration is specific to a defined system in a specified location. It would lose eligibility if you dismantle the system and move it elsewhere.

In principle, therefore, when you move house, you have two choices.  The first is to sell the system along with the house to the new occupants, who would then receive the tariffs.  This is the most common option taken.

Alternatively you could in theory retain ownership of the system.  In this case, you could continue to receive the generation and export tariffs, but would have to reach agreement with the new occupants about leaving your system on their roof. As part of this arrangement, you would probably allow them to have the benefit of the free electrical generation.  This is a much less used option as it is difficult to set up legally.

When does the Feed-in Tariff scheme end?  I heard it is April 2015?

The government's "annual budgets" for the Feed-in Tariff scheme have only been set until 2015.  However, the scheme is intended to be kept open to new entrants until 31 March 2021.

What happens if I extend my system which is already receiving Feed-in Tariffs?

 

If the time that will have elapsed between the registering of your initial installation and the registering of your extension is less than 12 months, you will receive the tariff that prevails at the time of registration of your extension for the whole (combined) system.

If the elapsed time between registrations is more than 12 months, you will continue to receive the level of tariffs that the initial installation has always received.  As for your extension, this will receive the level of tariffs that prevails at the time of registration of your extension for the combined system size.

I heard the tariffs are going down on 12 December.  Am I affected?

The cut in tariffs only applies to installations registered on or after 12 December 2011.  It does not apply to installations that are already receiving tariffs.  If you are already receiving tariffs, you will continue to receive your current rate (going up with inflation).

If you register a system on or after 12 December 2011, you will receive the pre-December tariff until 31 March 2012, and then the reduced rate thereafter.

Note that the 12 December 2011 cut-off may be brought forward to 3 March 2012 (if the government loses its appeal against legal action being taken against it).  However, it is safer to assume that the lower tariffs will be applicable from 12 December 2011.

When do the reduced PV tariffs apply?

The tariffs apply immediately to all installations registered after 31st March 2012.

However any installations after 3rd March 2012 will receive the existing tariffs only until 31st March 2012, whereafter they get the new reduced rate.

The government consultation (adjusted to reflect the new reference date after the legal challenges) would read:

44. The new tariffs will come into force from 1 April 2012 but will apply from that date to all new PV installations with an eligibility date of on or after 3rd March 2012 (the ‘reference date’). Existing generators with an eligibility date before the reference date will not be affected by the proposed change in tariffs.

45. The effect of this is that, depending on the result of the consultation, installations with an eligibility date that falls between the reference date and 31 March 2012 will receive the current tariff for that period only, and will then move to the new tariff from 1 April 2012. Those installations with an eligibility date on or after 1 April 2012 will start immediately on the new tariff.

What is meant by ‘aggregated projects’ to which the ‘multi-installation’ tariffs would apply?

It's basically where the same tariff beneficiary has more than one tariff-registered installation.

Paragraph 51 of the government consultation said it:

would apply to any solar PV installation where the FIT generator or nominated recipient already owns or receives FITs payments from one or more other PV installations, located on different sites. Specifically, we propose that the multi-installation rate would apply:-

(i) if the FIT generator (whether or not the person in receipt of FIT payments) is either the FIT generator or the nominated recipient for FIT payments for any other solar PV installation; and

(ii) if the nominated recipient for FIT payments (where there is one) is either the FIT generator or the nominated recipient for FIT payments for any other installation.

How do I register my renewable heating system for the RHI?

The installation needs to be registered with Ofgem, the energy regulator, who has been appointed to administer the RHI.

The registration process is described here. If you are not used to dealing with Ofgem, you may find it helpful to use an expert support service.

Are renewable energy installations eligible for Enhanced Capital Allowances (ECAs)?

At present some are, but the Treasury intends to remove this privilege from all equipment eligible under the Renewable Heat Incentive and the Feed-In Tariffs. There is a consultation on this issue which closes on 31st August 2011.

The government justifies this move, saying:

the tariff levels for FITs and RHI are carefully set to provide a sufficient investment incentive, and any extra incentives to invest in these technologies is not appropriate

Are Feed-In Tariffs eligible for EIS and VCT tax breaks?

Yes at present, but for many this is to be stopped from 2012, further to an announcement in paragraph 2.38 of the 2011 Budget.

This says:

The Government will consult on options to provide further support for seed investment, simplification of the EIS rules by removing some restrictions on qualifying shares and types of investor and refocusing both EIS and VCTs to ensure they are targeted at genuine risk capital investments. Feed in tariffs businesses will be added to the excluded activities list.

However some concessions were made in the Treasury consultation in July 2011. This sets out the proposals for the exclusion in sections 4.16 to 4.21, including:

4.19:  Based on the discussions with stakeholders, the legislation ensures that community interest companies, co-operative societies, community benefit societies and Northern Ireland industrial and provident societies will continue to qualify, as will trades generating electricity by hydro power or anaerobic digestion.

Why is the government limiting spending on the FITs - it’s not their money?

True - the FITs are paid for by electricity users.

However it has been decreed that any spending caused by government legislation may be treated as public expenditure.

The official government explanation was:

The Office of National Statistics (ONS) is the ultimate arbiter of whether a UK Government policy should be classified as tax and spend in the National Accounts. Such judgments are made independently of Government. ONS are guided internationally in their decisions, but in broad terms define mechanisms as taxes where they result in compulsory payments by an individual or organisation who does not receive a direct benefit in return. This is referred to as a “compulsory unrequited payment”. This may result in a policy being classified as a tax even where money does not flow through a Government account (because the outcome is similar to Government taking in then redistributing the money).

A well-established example is the Renewables Obligation, which requires energy suppliers to purchase Renewables Obligation Certificates (ROCs) from renewables generators, or to make payments to the buy-out fund.  Because energy suppliers do not receive a benefit in return, the payment they make is defined as a tax. The redistribution of these revenues (ie the revenue received by renewables generators for their ROCs) is defined as public expenditure.

The ONS decision to treat the Renewables Obligation as a tax is published at http://www.statistics.gov.uk/articles/economic_trends/ET635Gazely.pdf

What is Microgeneration?

It is the production of heat or electrical energy at small scale.

This is defined in legislation as follows:

  • Electricity generation at capacities up to 50kW
  • Heat production at capacities up to 45kWth

What is the Microgeneration Certification Scheme (MCS)?

It is a nominally industry-led scheme to provide quality assurance for microgeneration products and installations.

Both the Feed-In Tariffs (for systems below 50kW) and the Renewable Heat Incentive (for systems below 45kWth) require that that the major equipment is product-certified and that the installers is accredited.

For MCS-accredited products see here. For accredited installers see here or, because they also have to be accredited under the REAL code,  here.

What are the Renewable Energy Directive (RED) and Renewable Energy Strategy (RES)?

The RED is the directive adopted by the European Union in 2009 to increase the proportion of renewable energy produced in Europe.

Each country has its target for renewable energy in 2020 averaging 20% across the whole EU.

The UK has signed up to this directive with a national target of 15% of all the UK's energy to come from renewables by 2020. The way this will be achieved is set out in the National Renewable Energy Action Plan (NREAP) and the Renewable Energy Roadmap.

Are there any limits to the eligibility of solar thermal systems?

Yes sadly - solar hot water systems are only eligible up to 200kWth.

The tariff levels are also proportionately lower than other heat technologies.

Only water heating panels (flat plate and evacuated tube) are eligible; transpired collectors are not.

Chapter 4 of the government's RHI announcement says

Solar thermal

Solar thermal panels (liquid filled flat plate or evacuated tube solar collectors) will be eligible for support. Solar thermal installations will be eligible below 200kWth capacity only.

Additional solar thermal capacity added to an existing installation, bringing the total capacity above the tariff threshold of 200kWth, will not be eligible for the RHI. We will consider introducing support for solar installations above this scale from 2012.

Is geothermal energy supported by the scheme?

Yes geothermal heat is supported by the RHI (but geothermal power is not supported by the Feed-In Tariffs).

Chapter 4 of the government's RHI announcement says

Deep geothermal

Deep geothermal systems, sometimes also referred to as enhanced geothermal or hot dry rocks, will be eligible for the RHI. Deep geothermal will receive the same tariff as ground source heat pumps.

Geothermal systems tend to be relatively large and there are no MCS or equivalent standards so, for the RHI, Ofgem will verify eligibility based on the documentation required from RHI applicants as part of the accreditation process.
 

When will bioliquids be eligible for the RHI?

Bioliquids have been excluded from the first phase, but may be included in 2012, perhaps using the criterion suggested in the original consultation that they were eligile when replacing oil-fired boilers.

Chapter 4 of the government's RHI announcement says

Bioliquids

Bioliquids will not be eligible for support from the outset of the RHI. We recognise there are valuable uses of bioliquids in renewable heat generation and combined heat and power, including those developed from wastes such as used cooking oil and those made from advanced technologies.

However, before we can support bioliquids in the RHI, it will be necessary to put in place a co-ordinated approach so that the supply of liquid feedstocks into the heat market does not unduly impact on other important uses, including energy and non-energy uses. An evaluation of the costs and benefits of the use of bioliquids in heat, electricity and transport is underway and this will inform the development of a co-ordinated approach to bioliquids.

Working through these complex issues will take time which means that we will not support bioliquids in 2011 but will consider them further for introduction in 2012.

When will hot air heating be eligible for the RHI?

The government has suggested they should be included in Phase 2 from 2012.

Chapter 4 of the government's RHI announcement says

Direct air heating

Technologies which deliver renewable heat directly through hot/warm air will not be supported in the RHI from the outset. This means technologies such as ground or water source to air heat pumps; biomass kilns; furnaces; ovens and air heaters will not be able to claim the RHI. We will, however, look at whether and how these technologies could be included in the RHI from 2012.

There are a number of reasons for not including these technologies from the start of the scheme, which are primarily practical. Our methodology is to meter the heat generated and pay the RHI on that basis, however, there are practical difficulties with metering direct air heating, rather than water and steam. Furthermore, there is insufficient evidence of the costs of these technologies on which to base the RHI tariffs. Given they could be installed in significant numbers, we need to gather further evidence about the costs and operation of direct air heating equipment in order that we can set the correct tariff. Finally, we need to ensure we have the right strategy for supporting air to air source heat pumps specifically given that a large number are installed already for cooling (air conditioning) purposes.

When will air-source heat pumps be eligible for the RHI?

The government has suggested they should be included in Phase 2 from 2012.

It has also indicated they will be included in the Renewable Heat Premium Payment.

Chapter 4 of the government's RHI announcement says

Air source heat pumps

Air source heat pumps will not be supported from the outset, as more work is needed to better understand the costs associated with the technology and, for air to air heat pumps, we have not yet developed a means of measuring direct air heating, as we have for water and steam. Subject to the successful conclusion of the work and affordability, we will look to extend eligibility for air to water source heat pumps from 2012.

What heat pumps will be eligible for the RHI?

Initially ground- and water-source heat pumps will be eligible, provided they have a coefficient of performance (COP) over 2.9.

Air-source heat pumps are not initially eligible, but should be later. So should heat pumps that deliver hot air.

Chapter 4 of the government's RHI announcement says

Heat pumps (ground, water source)

Ground and water source heat pumps will be eligible for the RHI provided they meet certain eligibility requirements. However, air source heat pumps will not be eligible at the start of the RHI.

Eligible heat pumps will be required to have a coefficient of performance (COP) of 2.9 or above. This is to help ensure that heat pumps provide a good return in terms of renewable output and that ultimately, they represent value for money. Applicants will be required to demonstrate, to Ofgem’s satisfaction, that the heat pump meets a COP of at least 2.9; this will usually be part of the equipment documentation supplied by the manufacturer.

[The 2.9 figure is a proxy for the European standard] The EU standard, given in Annex VII of the RED is based on the total useable heat delivered, the average seasonal performance factor and the efficiency of electrical generation. The Commission has committed to providing guidance on how these factors should be measured and we may review our approach once the Commission issues this guidance.
 

Is heat from waste eligible for the RHI?

Only if it comes from the biomass element of municipal solid waste (MSW).

Any other energy from waste is not eligible.

Chapter 4 of the government's RHI announcement says

Energy from waste combustion (the biomass proportion of municipal waste)

Heat from solid biomass contained in municipal waste will be eligible for the RHI and the solid biomass content will not have to be combusted in a separate boiler. Regardless of the RHI, such plants have to comply with waste incineration and environmental permitting legislation. For all installations Ofgem will verify RHI eligibility based on the required documentation provided by RHI applicants as part of the accreditation process, such as schematic diagrams and details about system configuration.

Although it is usually better from an environmental perspective to reuse, recycle or produce biogas from these materials, this is not always possible and combustion can offer a better option than disposal to landfill, which generates harmful greenhouse gas emissions. Due to its renewable biomass proportion, currently around half the heat produced by burning municipal waste is renewable heat.
 

Are all biomass boilers eligible?

No, they have to be of a type that can burn only biomass. Systems below 45kWth must be MCS-accredited.

Chapter 4 of the government's RHI announcement says

Biomass boilers

Solid biomass will be eligible for the RHI only where that heat is generated using biomass boilers specifically designed and installed to burn biomass. Biomass boilers with a capacity of up to and including 45kWth will have to be certified under the Microgeneration Certification Scheme (MCS) or equivalent scheme. For biomass boilers larger than 45kWth, Ofgem will verify eligibility based on the required documentation provided by RHI applicants as part of the accreditation process.

Will there be any reporting, inspections or other policing of the scheme?

Yes the owner will have to submit an annual declaration.

There may also be spot-checks or other inspections as described here.

Chapter 3 of the government's RHI announcement says 

Information and inspection

To ensure Ofgem is able to monitor compliance with the conditions of the RHI, applicants will have to agree up-front that they will provide any relevant information as requested by Ofgem and allow an inspection of the installation to ensure the eligibility criteria are being met. This may be up-front as part of the accreditation process, on a regular basis (e.g. an annual declaration that the participant continues to meet all eligibility criteria) or as part of an ad hoc spot-check.

Will the systems have to be maintained?

Most renewable heat systems need maintenance to keep them operating at their best.

Maintenance is also a requirement for RHI eligibility as described here.

Chapter 3 of the government's RHI announcement says 

Maintenance

We need to ensure that the RHI represents value for money, with a clear return in terms of the amount of renewable energy produced for the money spent. As a condition of receiving support, participants will therefore be required to maintain their equipment to ensure it is working effectively.

Clearly, there is a natural incentive for a participant to keep their equipment maintained without any specific requirement, given it will provide their heating or be crucial to their industrial process, however we still believe there is a risk, albeit low, that some may not. There is a risk that poorly maintained equipment will be less efficient and may have a more harmful impact on the environment. We therefore believe a specific requirement is needed.

Views from stakeholders have been mixed as to what maintenance requirements should be put in place, ranging from those who felt an annual service carried out by a certified installer should be required, to those who warned against a ‘one size fits all’ approach, stressing that maintenance requirements varied considerably. Given the wide range of technologies, we do not think it is practical to specify in legislation a particular level of maintenance or frequency of servicing; what would be appropriate for a biomass boiler may not be for a solar thermal system. We think including such a provision risks being excessively burdensome or possibly misleading. Therefore, at this stage, we do not intend to specify a particular level of maintenance and the requirement will simply be that the equipment is maintained in line with any manufacturer instructions where available.

Participants will be required to keep any evidence of maintenance work carried out, for example, servicing receipts and to provide this evidence, on request, to Ofgem. As part of any annual declaration, a participant will also be required to declare that the equipment is maintained. Where Ofgem is concerned that the equipment is not being maintained, it can then seek further evidence and where satisfied that it is not being maintained, take appropriate action. 

Is used, second-hand or converted equipment eligible?

Not at present, but this may change in the future.

Chapter 3 of the government's RHI announcement says

Conversion

Only new equipment (or where it is completed and first commissioned on or after the 15th July 2009 and the equipment was new at the point of commissioning) will be eligible for the RHI. The tariffs have been calculated on the basis of the installed costs of new equipment. While we recognise that new equipment may not always be the most efficient way of utilising a renewable resource where conversion of existing equipment is an option, we do not have sufficient evidence at present to incorporate it into the scheme. Many conversions at the large scale will be highly bespoke and it is difficult to classify what would be eligible and calculate the appropriate level of incentive. However, we will gather evidence and consider further whether and how conversion could be made eligible for the RHI in future.

If additional capacity is added after more than 12 months, how is it rated?

It is effectively treated as a new system, but in the capacity band applicable to the combined capacity of the new plus existing plant.

Chapter 3 of the government's RHI announcement shows a table to illustrate this principle and says

Additional capacity is first commissioned more than 12 months after the previous installation

Where additional capacity is completed and first commissioned more than 12 months after the previous installation, the first part of the installation will continue to be treated as before. The additional capacity will be rewarded on the basis of the total capacity of the installation and will receive the current tariff level. Using the above example, the first 600kWth boiler will receive the 600kWth tariff available when it first commissioned. The second 600kWth boiler will receive the 1200kWth tariff available when it is first commissioned. In this case, the tariff lifetime of the additional capacity will start from when the additional capacity is commissioned. Each boiler will have to be metered separately so that the output of each one can be appropriately rewarded.

If additional capacity is added within 12 months, how is it rated?

Effectively it is treated as though the system had been orignally installed at the increased (combined) capacity.

Chapter 3 of the government's RHI announcement says

Additional capacity installed and first commissioned within 12 months

Where additional capacity is first commissioned within 12 months of the commissioning date of the original installation, it will be treated as a single installation. Therefore, the total capacity of the installation will be counted for the purpose of the tariff. For example, a 600kWth biomass boiler added to another 600kWth biomass boiler within the same 12 month period, will mean that the installation will be treated as a 1200kWth installation. This means it will fall into the tariff band for the higher capacity but at the rate which applied when the first boiler was accredited. The lifetime of the installation will be determined by the date that the first boiler was first accredited. The additional capacity and the original installation will have to be metered separately.

How is capacity determined for multiple systems?

In principle when there are multiple systems of the same type at the same site meeting the same heat load, these will be treated as a single installation for the purposes of establishing the tariff band.

Chapter 3 of the government's RHI announcement says

Definition of an installation

While the RHI applies to a wide range of sectors, the scheme will need to define an installation in order to establish the relevant capacity of the renewable heating equipment in order determine a number of eligibility criteria and tariff bands.

The RHI tariffs are banded by the type and size of renewable heating equipment; the tariffs are higher for smaller installations. Therefore, where multiple units of the same type of heating equipment are installed, there will be an incentive for the owners to claim those units as smaller individual installations rather than as one larger installation, in order to claim the higher tariff. Clearly defining what constitutes an installation is important for ensuring people do not game the system.

An RHI installation can be comprised of one or multiple units of the same heating technology connected to a common heating system.
Where multiple units of the same technology are installed within a 12 month period, their combined capacity will be considered for the purpose of the level of tariffs they receive. Different renewable technologies on a single site will be treated as separate installations in order to allow for differentiation between tariffs and certain eligibility criteria.

How is the capacity of a heating system ascertained?

In principle it is the manufacturer's rating for the maximum heat output of the system.

Chapter 3 of the government's RHI announcement says

Installation capacity

For the purposes of the RHI, the installation capacity will be the total installed peak heat output of the installation. Ofgem, as administrator of the scheme, will require details of installed capacity as part of the accreditation process.

Installation capacity will be simple to establish for standard equipment as it will be part of the information provided by manufacturers. For bespoke equipment it may be more difficult but the output capacity of the installation as commissioned will have to be proven to the satisfaction of Ofgem from technical evidence provided by the applicant as part of the accreditation process. Where the installed peak output capacity is provided with the equipment by the manufacturer, that will be used to rate it for the RHI.

Will replacements for existing renewable installations qualify?

Yes

Chapter 3 of the government's RHI announcement says

Replacing existing renewables

Renewable heating systems that replace an existing renewable heating system will be eligible for the RHI support. Some stakeholders have claimed that owners of older installations, which are not eligible for the scheme (e.g. completed and first commissioned before 15th July 2009) would replace them, despite being fully functioning, with new installations in order to claim the RHI.

Clearly this would go against the intent of the scheme and would not represent value for money. However, this has been deemed as low risk given the up-front capital that would be required and the disruption caused. Furthermore, making replacement of renewable technologies ineligible would be difficult to enforce and would exclude those with a genuine need to replace old or failing equipment. However, we will keep this situation under review and monitor the types of installations claiming the RHI. If there is evidence that a significant number of new installations are replacing well functioning renewable heating systems, we will take action.

Is heat used for cooling eligible under the RHI?

Yes, except for cooling by heat pumps.

Chapter 3 of the government's RHI announcement says

Cooling

Heat used for cooling counts towards the renewables targets under the Renewable Energy Directive (RED) and therefore, provided it meets all other eligibility criteria, it will be eligible for RHI support. Many commercial and industrial users of energy consume comparable amounts of energy for heating and for cooling. Heat can be used to provide cooling through absorption chillers; this is quite common practice in commercial and industrial uses. Therefore, cooling delivered in this way will be supported under the RHI.

However, the scheme will not support cooling generated by heat pumps, as this does not count under the RED towards our renewables targets. Only the heat element of generation from heat pumps will be eligible.

What uses of heat are not eligible?

The government has specified the principles of what is eligible. Apart from the two ineligible applications listed below, the regulator Ofgem is left to rule on what is not eligible (and may include notes of this in their guidelines).

Chapter 3 of the government's RHI announcement lists under

Non-eligible uses of heat

What uses of heat are eligible?

The RHI only applies to useful heat applications and excludes the production of heat for electricity generation.

Chapter 3 of the government's RHI announcement says

Eligible Uses of Heat

The RHI will only support useful heat. It is not practical to provide an exhaustive list of all the acceptable heat uses which will be eligible. Instead, we can outline the broad principles of what we want to support:

  • The utilisation of useful heat;
  • The heat must be supplied to meet an economically justifiable heating requirement i.e. a heat load that would otherwise be met by an alternative form of heating e.g. a gas boiler;
  • This heat load should be an existing or new heating requirement i.e. not created artificially, purely to claim the RHI; and
  • Acceptable heat uses are space, water and process heating where the heat is used in fully enclosed structures.

The only exception to this approach is for biomethane injection, where we will not specify how the biomethane should be used, given it will be injected into the existing gas grid.

Ofgem will determine what constitutes an ineligible heat use in accordance with the RHI regulations.
 

Why do installations commissioned before 15th July 2009 not qualify for tariffs?

The 15th July was the date when the Renewable Energy Strategy was published, and at the time the Government announced it would be the cut-off date.

Chapter 3 of the government's RHI announcement says

We appreciate the arguments that individuals and organisations have presented for allowing installations complete before 15th July 2009 to receive support, in particular that it may discourage potential early adopters of future technologies and that the possible increase in the price of biomass caused by increased renewables take-up, may put them at a competitive disadvantage relative to those who will receive the RHI. However, given the current tight fiscal climate, the money available for the RHI must be used in the most effective way possible to help deliver new, additional renewable heat. The RHI is not a reward, it is an incentive to drive the uptake of new renewable heat; paying for something which had been installed prior to the RHI being announced would not be an effective use of public funds and cannot be justified.

It's probably of no comfort to anyone, but we think this was wrong.

Should I sign an option for a solar farm on my land?

If you have a good site for a solar farm or solar park, there are several ways in which you can benefit - the main alternatives are shown here.

One of the options is to lease the land to a third party project developer, who will construct the solar park, receive the income from the tariffs and pay you a rent for the land as described here.

There are now many project developers scouring the country for good sites and trying to sign option agreements with the landowners. These usually prevent the landowner from dealing with any other developers for a period of time. Before signing such an agreement, the owner should satisfy himself that the developer has a commitment to complete the project.

In what is known as a 'land grab', some developers are closing as many option agreements as they can, to keep their competitors out. They may then cherry-pick the best ones to pursue and others could get sidelined. The problem from the landowner's perspective therefore may be that his land is locked up and can't be developed by anyone else (at least for a few months until the tariffs go down, and the project is no longer viable).

For this reason, we advise landowners whenever they can to take the project to planning consent themselves. If they then want to pursue a land lease option they can sign an agreement which obliges the developer to complete the project. Once they have consent, landowners can also pursue other options where they keep a share of the project.

This does commit the landowner to some initial cost (and Ownergy often offers terms to share part of this). But if the project is later sold to a third party developer, these costs can be recovered (at a profit).

What’s the difference between a co-developer and a normal project developer?

A co-developer is an expert company, which works with a site owner or energy user to realise a renewable energy project. Normal project developers aim to install the project as principal, and may rent the land from the owner and/or provide electricity to local users.

In a co-development the project owner will retain most of the revenues generated from the Feed-In Tariffs. A normal project developer would keep all this benefit, and pay a modest rent to the landowner.

Why would the Spending Review look at tariffs?

The tariffs come from energy users not the Treasury, so are not 'public spending' as such.

However, it has been decreed (by the Audit Commission, we believe) that government must be mindful of the impact of any regulatory measure that has a financial impact on the public. Clearly the Tariffs legislation has added to the cost of energy bills, so this is something the Treasury can consider.

Free solar PV offers

 

Several companies are now offering to install solar PV for free on residential roofs where the homeowner would then receive free electricity while the company collects the tariff income. There are several pros and cons of taking up such offers as outlined by Consumer Focus.

 

Is it true, local councils are banned from selling electricity?

Yes it was, under the 1976 Local Government Act. However, DECC reversed this law in August 2010.

Can I use a gas/oil boiler and a renewable heat system?

There is nothing in the proposed legislation which stops systems with fossil fuel backup being eligible under the RHI.

Two notes of caution, however:

  • It has yet to be decided how this would be treated by the 'deeming' calculation, which decides the eligible output on which the tariffs will be based. In other words, your system should qualify for the designated p/kWh tariff, but you cannot yet be sure how many kWh/year will be ascribed to it, and therefore what the income will be.
  • The transitional arrangements for systems installed between July 2009 and April 2011 do require that the system “will be the sole fixed heating installation in the property (not counting any immersion heater that may form part of such installation)”. However, it does allow these systems to alternatively use the ‘final’ criteria (thereby suggesting that those might be different).

Hopefully these details should become clearer when the government publishes its response to the recent consultation in the summer.
 

Do I get FITs if I install a new system on an old RO site?

We believed so, but we asked Ofgem, just to be sure.

They confirmed:

The FITs Order does not discuss the building of new generating stations on the site of a previous station. Part 4 of the Order does however discuss extensions to accreditations. Assuming that the installation is completely new and not an extension to the previous generating station and that it does not utilise any residual apparatus from the previous generating station, it is unlikely that positioning a station on the site of a previous generating station would affect the eligibility of the station for FITs or that previous RO accreditation would have an impact.

Does solar energy work on a dull day?

Briefly, yes!

The output of both solar electric and solar thermal panels is related to the level of radiation falling on them. Obviously the sunnier it is the better, but they will give some output whenever there is some level of solar radiation (i.e. except at night).

In the case of solar electric (PV) systems, the output is proportional to the level of light (not heat) on the panels. They are receptive to a broad spectrum of light so will produce power throughtout daylight hours. They are actually slightly more efficient at lower temperatures.

Solar thermal panels respond more to radiation at the infra-red (heat) end of the spectrum.

How easy is it to generate your own power?

Once you have your systems installed it is tremendously easy as your system will do everything automatically for you.

The more challenging bit is knowing what to install and how to do it. That is why we set up Ownergy!

What if I produce more heat than I need?

If you are lucky enough to be connected to a heat network, you can ‘export’ the surplus back to the network, and get paid for it – in addition to the tariff you get. So make sure you are as energy efficient as possible so you can maximise your exports.

In most cases there isn't a heat network and the systems will be designed to produce only the heat that you need (you won't get a payment for wasting it!)

Are there any other restrictions to the RHI?

The main criteria are the type of renewable energy, and installation date.

Systems will also have to be installed to prescribed quality standards in order to qualify (see our page on other eligibility criteria).

A few types of technology have been excluded.

When does the RHI start? Will my system qualify?

The Renewable Heat Incentive is due to come into force in 2011 for non-residential installations and October 2012 for households. See here.

All eligible systems installed from then on will certainly qualify. Many systems installed before then (but after 15th July 2009) should also qualify (but the payments won’t start until the tariffs come into force, and won’t be retrospective). See more details about installation dates.

Are there any size limits to the RHI?

No. Unlike the Feed-in Tariffs, the RHI has no upper or lower limit. It'll therefore apply from domestic heating systems all the way up to industrial process heat and combined heat and power. There are some exclusions for very small scale applications (like open fireplaces).

Does the RHI apply to all forms of renewable heat?

Pretty much all, see a full list of eligible energy sources.

There are some technologies for which a tariff level hasn't been proposed yet, but the consultation asks how to deal with them.

What is the Renewable Heat Incentive?

To put it simply the Renewable Heat Incentive (RHI) is a Government scheme which makes payments for every kilowatt-hour of renewable heat you produce. The level of the payment (the 'tariff') is laid down by the Government and can be different for different renewable energy sources. It's an innovative approach similar to the Feed-in Tariffs for electricity. The RHI also pays a tariff for biogas fed into the gas grid.

What is renewable heat?

It is heat produced from a sustainable source such as solar, biomass or heat pumps. Heat from fossil fuels like gas, oil and coal is not renewable. There is a range of renewable energy sources.

How are the capacity thresholds defined?

The Government has not yet finally decided how it will define 'capacity' - the parameter used to define where the tariff levels are set. Logically the so-called 'declared net capacity' (DNC) should be used to allow for variations between renewable energy types.

What is tariff degression and how would it apply to my system?

The level of the tariff applicable to systems installed in the future will decrease with time, according to annual degression rates. The degression rate is used only to determine the tariff applicable to the system based on its registration date - once you've been allocated a tariff that rate would apply for the full 20 years.

[For example: If you install a 4kW PV system in June 2010 you would receive 41.3p/kWhr for 25 years until June 2035. If you installed it in June 2012 you would receive 21.0p/kWhr until June 2037. From August 2012 you would get 16.0p/kWh until August 2032]

Do I have to accept the 3p/unit of power exported or can I trade the electricity on the market?

You don't have to accept the fixed price; you can opt to negotiate your export price on the market. However, you will have to decide at the start of each year if you want to do this, and will then have to stick to it - you can only swap between fixed and market pricing once a year.

Is the Tariff subject to inflation?

The Feed-In Tariffs are index-linked to the Retail Price Index (RPI). It is currently proposed that the Renewable Heat Incentive will not be index-linked. See more information on the page for durations and variations for the RHI.

Which is better financially for larger systems, FITs or ROCs?

The government has tried to set the tariffs for larger systems at about the same level as the RO.

The decision on which to go for will depend on your view of the administration associated with each option, and the certainty of the price you will get under each (ROC and electricity prices are both variable and can be volatile at times).

What are the arrangements for systems already registered for the RO and wanting to transfer to FITs?

Systems under 50kW and registered for the RO must transfer to the FITs.

Systems between 50KW and 5MW have the choice of whether they convert.

Systems above 5MW cannot transfer - they have to stay in the Renewable Obligation.

Can systems already registered for ROCs stay in the RO?

Only if they are above 50kW. Smaller systems will generally have to transfer to the Feed-In Tariffs.

Can the Tariffs be applied for if the company is taking part in the Carbon Reduction Commitment?

The government intends to treat energy which earns tariffs the same way as ROC-earning generation (i.e. it would not qualify as zero emissions but would have to be assigned emissions at the grid average).

The only way of getting full renewable credit under the CRC, therefore, is not to register for Feed-In Tariffs, the Renewable Heat Incentive or the Renewables Obligation.

We think this is inappropriate and are making representations accordingly.
 

Can builders claim FITs on installations under the Code for Sustainable Homes?

Yes they can. The government has accepted that this would be a good way of helping builders cover any additional costs in achieving Zero Carbon Buildings.

If you aren’t connected to the grid, would you still receive the production aspect of the tariffs?

Yes, you will get the standard generation tariff, but can't get the extra 3p export tariff. We believe it'll still be an attractive proposition in most cases, because the avoided costs off-grid are generally higher (diesel gensets etc.).

However, if your system is DC, there's a major catch.

If I register for ROCs, can I receive the Feed-In Tariffs?

You cannot claim both Feed-In Tariffs and ROCs.

However, if you have a renewable energy system that was installed before July 2009 and was registered for the Renewables Obligation, you are eligible to switch to the Feed-In Tariffs.

How long would I get this tariff for?

The Feed-In Tariffs will be paid for a period of 20 years from the date the system is first registered, except for solar photovoltaic systems installed before 1st August 2012, where the period is 25 years. If the system doesn't last that long, of course it will stop producing kilowatt hours and no tariff will be paid.

Read detailed information on our page about durations and variations.

How much is paid for each kilowatt hour?

This varies by type and size of system - see the tariffs table to find out more.

Why are they called ‘feed-in’ tariffs?

Good question! This sort of tariff was first introduced in Germany in the 1990s and it applied only to power which was 'fed in' to the electricity grid. The tariffs in the UK apply to all the electricity the system produces, whether it is used on site or fed in to the grid, so it’s actually a misnomer (they should really be 'production tariffs').

When do the Feed-In Tariffs start? Will my system qualify?

The Feed-In Tariffs came into force in April 2010. Any system installed after 15th July 2009 qualifies. Existing systems installed before this date will qualify only if they are under 50 kilowatts and registered for the Renewables Obligation.

Are there any size limits to the FITs?

Yes, the Feed-In Tariffs only apply for systems up to 5 megawatts. That’s pretty big so will suit all household uses and most businesses, except for large factories.

Systems between 50kW and 5MW can alternatively choose to use the Renewables Obligations.

What is renewable electricity?

It is power produced from a sustainable source such as solar, wind, or biomass. Electricity from fossil fuels like coal, oil and gas or from nuclear stations is not renewable.

Powered By WolfeWare