The Department of Energy and Climate Change (DECC) has announced changes to the Renewable Heat Incentive (RHI) as part of a long-term plan that it claims will help the project stay within budget.

The RHI, the first financial incentive scheme designed to encourage the development of renewable energy for heating, was launched for the non-domestic sector in November 2011. DECC states that it is intended to ’revolutionise the way homes and businesses across the nation are heated, cut carbon emissions and help the UK meet its renewables targets’.

Over 1,300 applications have been received since the RHI was initiated, with around £24 million expected to be paid out.

The RHI process consists of three stages:

• installation of renewable heat systems such as solar thermal panels, heat pumps or a biomass boiler to property in question;
• measurement of heat produced by the renewable energy systems;
• payment of a fixed amount based on output, type of technology and size of the system.

Speaking of the RHI, Energy and Climate Change Minister Greg Barker, said: “I am fully committed to ensuring our Renewable Heat Incentive helps as many organisations as possible get on board with a range of exciting sources of renewable heat, and at the same time stays within its means. That’s why we are introducing a new, flexible way to control spending, alongside some further improvements to the scheme.

“This is however just the first step on our journey to safeguard longevity, provide certainty to industry and sustain growth under this scheme. We are also continuing to explore whether the tariffs we offer are set at the best levels to encourage further uptake, looking at how we can open up the scheme to new technologies, and considering the right approach to encourage householders to invest in renewable heat.

“We are continuing to work with industry and others on our plans and will be making announcements about our proposals for support as soon as possible.”

The main updates to the non-domestic RHI scheme include:

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

A consultation on the ‘longer-term budget management and scheme improvements’ is now open until 14 September.

Marine energy investment

Further to this, theDECC also announced yesterday (27 February) that it is giving £20 million in funding to two companies to develop the marine energy industry. MeyGen Ltd and Sea Generation Wales Ltd will use the investment to carry out device testing and ‘move the sector towards commercialisation’.

Both companies will build arrays of underwater turbines in order to harness the power of tidal movements, with MeyGen operations taking place off the northern coast of Caithness, whilst Sea Generation Wales will work off the coast of Anglesey.

Commenting on the award, MeyGen CEO Dan Pearson said: “We are delighted to be awarded this prestigious capital grant following a thorough assessment process, and we applaud DECC for its continued support of the Marine Energy sector. The grant is a ringing endorsement of our project and will be used across all construction aspects of delivering the Demonstration Phase.”

CEO of Siemens Energy Hydro & Ocean Unit Achim Wörner added: “We are very pleased that the Skerries project being developed by Sea Generation Wales Ltd has been selected for the £10 million Marine Energy Array Demonstration award.

“The Skerries project located in Anglesey, Wales, will be one of the first arrays deployed using the Siemens owned Marine Current Turbines SeaGen S tidal turbines. The marine consent for the project was recently awarded, the first tidal array to be consented in Wales. The 10MW array will be fully operational in 2015.”

Gas profits

The renewable energy announcements come as gas company Centrica yesterday (27 February), revealed an 11 per cent rise in profits from domestic customers in 2012. Centrica, which operates under the British Gas name, announced profits of £606 million after increasing gas bills by six per cent.

However, environmentalists have voiced concern that tax cuts from government’s Renewables Obligation scheme and a still-awaited electricity decarbonisation target have led to company’s such as this monopolising the energy market, pushing up prices and making the UK further reliant on ‘dirty’ gas as a player in the future energy mix.

Friends of the Earth's Energy Campaigner Guy Shrubsole said: "The UK's energy market is dominated by six big companies hooked on increasingly expensive gas. We urgently need to fix the system to increase competition, tackle climate change and provide affordable power for the future.

"The Energy Bill is a once-in-a-generation opportunity to overhaul our power system and bring skyrocketing bills under control. The government must set a decarbonisation target and develop the huge potential of clean British energy from the wind, waves and sun."

The Committee on Climate Change has further warned that ‘extensive use of unabated gas-fired capacity (i.e. without carbon capture and storage technology (CCS)) in 2030 and beyond would be incompatible with meeting legislated carbon budgets’.