Yesterday (26 March), DECC published a progress report on its heat strategy, ‘The Future of Heating: Meeting the Challenge’. It has also announced plans to update the Renewable Heat Incentive (RHI), particularly in terms of tariffs.

The report, a follow up to 2012’s ‘The Future of Heating: A strategic framework for low carbon heating in the UK’, aims to ensure that ‘affordable, secure, low carbon heating plays an important role in the nation’s energy mix, now and in the years to come’, according to an official statement.

The updated action plan, intended to ‘drive forward green growth’, recommends the following:

• a £9 million package to help local authorities get heat network schemes up and running in towns and cities across the country, with a new Heat Networks Delivery Unit to sit within the Department of Energy and Climate Change (DECC) providing expert advice;
• £1 million for the cities of Manchester, Leeds, Newcastle, Sheffield and Nottingham to help them develop heat networks;
• 100 green apprenticeships to be funded primarily for young people in small-scale renewable technologies;
• up to £250,000 for a new first come, first served voucher scheme for heating installers to get money off the cost of renewable heating kit installation training, with up to £500 or 75 per cent of the cost of the training course per person;
• plans to work with individual industrial sectors to design long-term pathways to cut carbon across UK industry.

Commenting on the report, Energy Secretary Edward Davey said: “If we can increase the use of low-carbon heating in our homes, businesses and across our economy, we can help reduce our dependence on costly carbon intense fossil fuels.

“Last year, we launched the UK’s first ever heat strategy, to get us on the right pathway to decarbonisation and today we have published an update on the progress we have made so far, alongside a new set of actions specifically targeted at industrial heat, urban heat networks and heat in buildings.

“Many homes and businesses across the UK have already switched away from fossil fuels and are using kit like biomass boilers, heat pumps and solar thermal panels to provide heat, thanks to government support, and I want to ensure even more householders and organisations get on board.”

The strategy action plan also contains a number of low-carbon heat case studies, including the first ever biomethane installation accredited under the RHI in Poundbury, Dorset. Also featured are Aspire Housing’s work to install low-carbon heating in the homes of 56 social tenants, and the gas combined heat and power plant that provides heat to the 72 storeys of the Shard in London.

Insulated pipes to connect a new building to the University of Warwick's campus-wide combined heat and power system

Renewable Heat Incentive update

A large part of the heat strategy is the Renewable Heat Incentive (RHI), and DECC has recently announced plans to review the tariff structure, and as part of the heat strategy announced which technologies were to be included in the review.

The RHI was introduced to the non-domestic sector in November 2011 and is designed to encourage the development of renewable energy for heating. Those taking part in the scheme install renewable heat systems such as solar thermal panels, heat pumps or a biomass boiler to their property and measure its output. They then receive a fixed amount based on this output, the type of technology used and the size of the system.

However, in February 2013 the government announced that it planned to review the scheme to encourage further take-up among businesses and those in the commercial sector, particularly in terms of the tariffs the RHI pays out for using renewable heat generation methods. According to the latest government report, large biomass technologies could potentially see an increase in tariffs, whilst ground source heat pumps will definitely see an increase when the new tariffs come into effect in early 2014.

Aside from the changes to tariffs, the RHI scheme will see the following changes:

• a gradual reduction of payouts to new applicants if uptake of the technologies supported under the RHI is greater than forecast;
• the introduction of sustainability requirements for all existing and new installations using solid biomass as a feedstock;
• simplified metering requirements to ‘reflect feedback’ received from participants and to reduce burdens on industry;
• new air quality requirements for all solid biomass installations including CHP installations which burn biomass (applicable to all new installations only).

Government is also planning on introducing an RHI for households, and is now expected to publish the tariff level in summer 2013 with the aim of seeing the scheme up and running by spring 2014. This represents a significant delay to the scheme, which was initially intended to begin in Autumn 2012. The heat strategy update included research on householder views on renewable heat, which is intended to help inform the design of the domestic RHI scheme.

Biomass ‘dirtier than coal’

The government’s subsidies to the biomass industry have recently come under fire from environmental groups, which claim burning whole trees in power stations can be dirtier than coal. The 'Dirtier than Coal' report, produced by the RSPB, Friends of the Earth and Greenpeace, disputed claims that biomass is ‘carbon neutral’ and said that government should be focusing on promoting smaller-scale biomass plants that burn waste wood, rather than large-scale biomass plants that could receive more money under the tariff review.

Government subsidies of biomass have come under criticism from within Parliament, with Stephen McPartland MP of the All Party Parliamentary Furniture Group arguing that renewable obligation certificates (ROCs) are currently being harnessed by big businesses on an industrial scale, rather than by small, sustainable combined heat and power projects.

He wrote that the subsidies ‘encourage the construction of new power stations designed specifically to burn huge quantities of biomass. Unfortunately, biomass is a euphemism which actually means trees and wood. Done on a small scale and combining heat and power (CHP) biomass plants are an excellent idea: they help provide economic and environmentally efficient solutions at a local level.’

Good news for anaerobic digestion

The review was welcomed by the anaerobic digestion industry, however, as biogas and biomethane are to be excluded from the RHI tariff review, meaning investors can be certain of the tariffs the technology will fetch.

The Anaerobic Digestion and Biogas Association (ADBA) has welcomed the government’s decision to exclude biogas from its review of RHI tariffs, with Charlotte Morton, Chief Executive of the group, saying: “DECC is right to exclude biomethane and biogas from the review of the RHI tariffs, as we have suggested to them since they announced the potential for reviews in January…

“The government’s focus should now be on issues which are holding back projects, such as the lack of preliminary accreditation for biomethane, the 200 kWth limit on support for heat from biogas combustion, and clarity on overall RHI budgets after 2015.”

Morton expressed relief that the industry would not be thrown into turmoil, as the solar industry was by the review of Feed-in-Tariffs; in 2011 the government cut the level of payments for any solar scheme completed after 12 December. The sudden nature of the cut reportedly unnerved investors, who became wary of the government’s handling of renewable incentives. Indeed, Morton welcomed the decision to exclude biogas from consideration for reasons of stability: “There is a significant number of projects in the pipeline, and these do not need further reviews of tariff levels, but rather consistency and certainty in government policy.”