Ownergy

FAQs

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

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.

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.

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.

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.

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.
 

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.

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.

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