British building owners can now make money by generating renewable heat

The first scheme in the world that will pay owners of domestic buildings for generating renewable heat has been launched in the UK by Energy Minister Greg Barker (seen right with MP Chloe Smith opening a 'Mr Renewables showroom' at the beginning of April).

Like feed-in tariffs for generating renewable electricity from technologies such as photovoltaic solar panels, the financial incentive scheme offers householders a fixed amount per kilowatt-hour generated from various technologies, even though the heat is only consumed in the home and not made available for others (as with home-generated electricity that is fed into the electric grid).

Called the Renewable Heat Incentive, it is based on a similar scheme for business, the public sector and non-profit organisations, that has been in operation for some time in the UK, as well as a smaller domestic scheme aimed at solid-walled, hard-to-heat homes, called the Renewable Heat Premium Payment.

Property owners apply to all schemes through the Energy Saving Trust, a government-sponsored body which promotes energy efficiency and renewable energy at the domestic scale.

The purpose of the RHI is to stimulate the renewable heat industry in the same way that feed-in tariffs have done for the solar PV industry. This has seen remarkable growth in the last four years with the cost of a typical PV system installation dropping by more than half.

The UK Government and industry body the Solar Trade Association (STA) have a target of covering over one million roofs with solar thermal and solar PV panels by the end of 2015. Over 200,000 solar thermal systems are already installed in the UK.

Global capacity for solar thermal is over 200GW - around double global installed capacity of solar power. The technology is proven and well established across Europe and elsewhere, and back in the days of previous support systems when grants were offered for installation of many types of renewable energy technologies, solar thermal was by far the most popular technology of choice for householders.

Stuart Elmes, Chair of the Solar Thermal Working Group at the STA, welcomed the launch of the RHI, saying: “Solar heating is popular with householders and quick to install, integrating easily with existing heating systems. We calculate that the returns from solar water heating are similar to those from solar power when you take into account the high price inflation for gas and heating oil.”

Paul Barwell, Chief Executive of the STA said: “With the launch of the Domestic Renewable Heat Incentive the final piece of support for household solar technologies slots into place. Together with the Green Deal for insulation improvements and the Feed-in Tariff for solar power, householders now have a great choice of Government-backed financial incentives to choose from to best suit their clean energy needs.”

Launching the scheme, the Government Minister for Energy Greg Barker (pictured right) said: "Not only will people have warmer homes and cheaper fuel bills, they will reduce their carbon emissions, and get cash payments for installing these new technologies. It opens up a market for the supply chain, engineers and installers – generating growth and supporting jobs as part of our long-term economic plan."

Technologies and payments

The technologies currently covered by the scheme are:

• Biomass heating systems, which burn fuel such as wood pellets, chips or logs to provide central heating and hot water in a home. Biomass-only boilers are designed to provide heating using a ‘wet system’ (eg through radiators) and provide hot water. Pellet stoves with integrated boilers are designed to burn only wood pellets and can heat the room they are in directly, as well as provide heat to the rest of the home using a ‘wet system’ (eg through radiators) and provide hot water.
• Ground or water source heat pumps, which extract heat from the ground or water. This heat can then be used to provide heating and/or hot water in a home.
• Air to water heat pumps, which absorb heat from the outside air. This heat can then be used to provide heating and/or hot water in a home.
• Solar thermal panels, which collect heat from the sun and use it to heat up water which is stored in a hot water cylinder. The two types of panels that are eligible are evacuated tube panels and liquid-filled flat plate panels.

Technology	Tariff
Air-source heat pumps	7.3p/kWh
Ground and water-source heat pumps	18.8p/kWh
Biomass-only boilers and biomass pellet stoves with integrated boilers	12.2p/kWh
Solar thermal panels (flat plate and evacuated tube for hot water only)	19.2 p/kWh

Only one space heating system is allowed per property but homeowners can apply for solar thermal for hot water and a space heating system.

The guaranteed payments are made quarterly over seven years for households in England, Wales and Scotland. (Northern Ireland has its own RHI scheme). The scheme is designed to bridge the gap between the cost of fossil fuel heat sources and renewable heat alternatives.
According to renewable energy expert Richard Hiblen, who has more than 14 years’ experience in this field, the RHI tariffs are ‘good for some and better for others’, but even the worst figures make the technologies more attractive than installing oil or LPG heating.

Phil Hurley, managing director, NIBE Energy Systems Ltd., a renewable heating manufacturer, called the RHI "a game changer for the renewable heating industry". He continued: “The introduction of the domestic RHI gives the industry the security and confidence it needs to realise its growth potential".

But Neil Schofield, Head of External and Governmental Affairs at boiler (furnace) manufacturer Worcester, Bosch Group, cautioned that: “the funding is weighted heavily in favour of biomass, which is one of the most expensive systems to install and one requiring the largest amount of user intervention. Questions have already been raised over whether DECC has backed the right horse in this respect."

UK Solar Strategy

Earlier this week, the UK Government also launched its Solar Strategy, which contains plans to turn the Government estate as well as factories, supermarkets and car parks in cities around the UK into “solar hubs”.

Energy Minister Greg Barker  said he believes that “there is massive potential to turn our large buildings into power stations and we must seize the opportunity this offers to boost our economy as part of our long term economic plan. Solar not only benefits the environment, it will see British job creation and deliver the clean and reliable energy supplies that the country needs at the lowest possible cost to consumers.”

The UK has an estimated 250,000 hectares of south-facing commercial rooftops, and the government believes that solar increasingly offers efficient and cost effective onsite generation opportunities to both businesses and domestic consumers.

In a further initiative, the Department for Education is working on ways to improve energy efficiency across the 22,000 schools in England, to reduce their annual energy spend of £500 million, and to encourage the deployment of PV on schools alongside promoting energy efficiency. The British Education Secretary Michael Gove said: “Solar panels are a sensible choice for schools, particularly in terms of the financial benefits they can bring. It is also a great way for pupils to engage with environmental issues and think about where energy comes from.”

Renewable Heat Incentive launch set for next Spring

Solar thermal is one of the most affordable renewable technologies and the Solar Trade Association is looking forward to boom time.

Details of the domestic Renewable Heat Incentive (RHI) and related tariff levels have been announced by the Department of Energy and Climate Change (DECC), but anticipated news about the future of the non-domestic RHI has been postponed.

The domestic RHI will launch next Spring. As has always been promised, anyone who has installed a system since 15 July 2009 can claim retrospectively, as long as they meet the Microgeneration Certification Scheme (MCS) standards that applied at the time of installation.

DECC has confirmed the tariff levels for all four eligible technologies. These will be:

• Flat plate and evacuated tube solar thermal panels: at least 19.2p/kWh


• Ground (and water) source heat pumps: 18.8p/kWh


• Air to water heat pumps : 7.3p/kWh


• Biomass-only boilers and biomass pellet stoves with back boilers: 12.2p/kWh.

Payments will be made on a quarterly basis over a period of seven years. Householders who have already received vouchers under the Renewable Heat Premium Payment scheme will be transferred to the RHI and have their value deducted from their RHI payments.

Applicants will need to complete a Green Deal assessment to reduce their energy demand to a certain level in order to qualify for the payments.

Private landlords and providers of social housing will be able to apply for a property or properties that they own (provided they own the heating system). The landlord will receive the RHI payments.

For Local Authorities who use Arm’s Length Managed Organisations (ALMOs) to manage their properties, the application must come from the owner of the heating system.

New build properties will not be eligible for the scheme. The Renewable Energy Association said this "reinforces the need for the government to set demanding carbon compliance standards in the 2013 revision of the Building Regulations Part L, due for imminent release by DCLG".

People will not be able to claim for more than one space heating renewable heating system in the same property, with the exception of installations of solar thermal and another eligible technology.

Climate change minister, Greg Barker, said: “Investing for the long term in new renewable heat technologies will mean cleaner energy and cheaper bills. So this package of measures is a big step forward in our drive to get innovative renewable heating kit in our homes.

“Householders can now invest in a range of exciting heating technologies knowing how much the tariff will be for different renewable heat technologies and benefit from the clean green heat produced. We are also sending a clear signal to industry that the coalition is 110% committed to boosting and sustaining growth in this sector.”

DECC gives an example of what an installer might receive, in the case of a biomass boiler which might cost, say, £8,000 to install. In a year, the estimated heat use could be around 15,000kWh, which, at a 12.2p/kWh tariff, would result in a payment of £1,830. This would mean it might pay for itself in around five years.

New installations of biomass systems will need to meet air quality standards in relation to particulate matter (PM) and oxides of nitrogen (NOx).

Ofgem will be responsible for administering the scheme when it launches.

The RHI is funded directly from Government spending and has been given annual budgets. There are worries that, as with the payments for Feed-in Tarriff PV systems, they might unexpectedly decrease in the future. DECC will make an announcement on this around the time of the launch.

The news was welcomed by trade body the Heating & Hotwater Industry Council, whose director, Roger Webb, said: “it gives the industry confidence to invest in renewable heating products helping to protect and create jobs. We would of course like the tariffs to be higher but we understand the difficulty of introducing a government funded scheme in the current economic climate," he added.

"We will also be urging DECC to monitor uptake and if necessary to increase tariffs if they are not driving up product sales.”

Stuart Elmes, Chair of the Solar Trade Association's solar thermal working group, called the announcement “a massive boost for the solar thermal market. The value of this incentive is on a whole new level, there’s nothing like it anywhere in the world. From now on people can install solar heating with confidence that their system will be able to join the RHI scheme, and knowing what their payments will be worth.”

Solar thermal is one of the most affordable renewable technologies for homeowners, with a typical system costing around £4,500. This includes the replacement of an old hot water cylinder with a well-insulated solar cylinder.

Solar thermal systems are relatively small and appropriate for partially shaded roofs or those with limited space. A typical system will provide over half the hot water needs of the average home.

Paul Barwell, Chief Executive of the STA, said: “This announcement today is a major success for the STA. Our team has worked very closely with DECC over an extended period in an effort to ensure that the benefits of solar thermal are adequately recognised in the domestic RHI.

"In particular we have helped to drive a deeming calculation based on true occupancy that better reflects hot water usage in the home. The exceptional technical expertise of Stuart Elmes has been invaluable to our efforts.”

Ground source heat pump manufacturer Kensa's Managing Director, and Chairman of the Ground Source Heat Pump Association, Simon Lomax, said that the "Domestic RHI announcement made today, three and a half years after the initial consultation, is disappointingly short on detail."

Tim Minett, chief executive of CPL Industries, a supplier of biomass systems and wood pellet distributor, said he was “surprised the Government is offering more for other technologies but still expect biomass systems will be the most popular by far.

"They are the easiest to retrofit to properties, simple to use and work in all weather conditions – a big factor in the UK – while 12.2p/kWh will cover the cost of installation, lower people’s fuel bills and provide regular income for years to come. What’s not to like about that? “The domestic RHI should be hugely popular as a fifth of the UK’s housing stock is not connected to the gas grid," but he added, "the chief stumbling block is lack of awareness among the public so what we desperately need now is for the Government to step up and promote the scheme vigorously.”

Brian Smithers, European Director, Rexel, agreed, adding: "it is also in the industry’s interest to drive awareness by educating consumers".

Non-domestic RHI decision postponement

At the same time as making the announcement about the domestic RHI, the Government said it was delaying a decision on expanding the non-domestic RHI scheme, which has been operating for over two years, until the autumn, a full year after the proposals were originally released in September 2012.

Industry response was to express disappointment. The Combined Heat and Power Association said the continuing lack of clarity and certainty is "unhelpful for the hundreds of millions of pounds of renewable heat projects currently under development".

Last year the CHP industry welcomed the proposals to expand the RHI scheme to include tailored support for heat produced from biomass and bioliquid CHP. The proposals highlighted recognition within Government that biomass CHP is the most optimal use for limited biomass resources.

Dr Tim Rotheray, Head of Policy and Communications at the CHPA said: "It is absolutely crucial that the Government now provide clarity and certainty. The Government’s proposals for a CHP-specific rate under the RHI is driving renewable heat projects around the country, and a clear, quick decision will help lock in these investments, lock in the jobs these investments will provide, and lock in our ability to meet our renewable heat targets with highly efficient renewable CHP.”

He did, however, welcome the boost to investor confidence given by the Government's decision, also just announced, to grandfather existing renewable CHP schemes from changes to its quality assurance programme.

The biofuel-industry trade body, the Renewable Energy Association, called the delay "disappointing", but welcomed the announcement on the domestic RHI.

The same response came from the Anaerobic Digestion and Biogas Association's chief executive, Charlotte Morton, who called it "very disappointing for AD developers and operators. Making good use of heat from AD plants makes sense for operators, and will help the government deliver renewable energy targets," she added.

"The (non-domestic) RHI is currently well below its projected budget and another delay will simply make it harder for our members to deliver the projects government wants to see.

"DECC could help resolve this by giving developers clarity over the eligibility date, which would allow projects to start generating and using renewable heat if they have commissioned their plant within a set period," she concluded.

Scandal of the unclaimed renewable heat grants

Only one solar thermal installation has so far been completed under the Renewable Heat Incentive.

Only half of the grants offered by Government to businesses and councils to install renewable heating schemes are being claimed.

One of the main reasons appears to be lack of publicity, but the grant conditions also are claimed to be too tight.

Under the Renewable Heat Incentive, businesses and public sector bodies can claim a subsidy for every unit of power generated from technologies such as solar water heating panels, biomass boilers and heat pumps, in the same way as can be claimed for renewable electricity under the feed-in tariff scheme.

The first tranche of the scheme, launched last year by the Department of Energy and Climate Change (DECC), was underspent by 50%: £5.5 million of the £10.8 million budget was unclaimed. According to Ofgem, just 176 schemes are receiving payment, a pitifully small number.

The second stage, worth £7 million was launched in March, and the latest figures show a total of only £817,250 claimed. The vast majority of these are for solid biomass boilers.

If this rate of uptake continues until the scheme closes in March 2013, just £3.9 million will be spent.

New figures, released yesterday, show that DECC's current estimated expenditure for 2012/13, based on the total number of RHI applications received to date, is £18 million. The cap on spending is £70 million. At this rate DECC estimates only £42 million will be spent.

As the figure is based on applications rather than fully accredited installations, the eventual figure is likely to be lower.

The Renewable Energy Association's head of policy, Paul Thompson, said the difficulty in giving away the grants is due to three factors, all decided by DECC: the time-limit, the lack of publicity, and the small amount of support on offer, which, he said was “not enough money to influence people's decisions".

He said: "You've got to have a bright idea that's pretty much developed to be in a position to be able to meet the deadlines".

He called upon DECC to use unspent funds to run a publicity campaign. The Department is currently deciding what to do with unspent funds from the social landlord's scheme.

DECC also launched an £8 million competition for community groups on 24 July, to install renewable heating. Grants up to £160,000 are available but applications must be in by 7 September, which is too early for some groups to manage. In addition, the completion schedule is tight: projects have to be completed by the end of the financial year.

EU targets dictate that 12% of the nation's heating needs to come from renewable sources by 2020, an increase of 2.2% on 2011 levels.

What is mystifying is the lack of installation of solar thermal. In the previous support system run by DECC, solar water heating was by far the most popular technology. It has proved to be very successful in this country, much more so than solar PV in terms of value for money.

In fact, renewable heat in general it is more cost-effective than renewable electricity, at a small scale.

Yet the Ofgem figures show that there has been just one solar thermal scheme supported under the RHI. The full figures are:

Technology Type	No of accredited installations / Registered biomethane producers	Installed Capacity (MW)
Biogas	1	0.113
Solid Biomass Boiler	162	6.02
Deep Geothermal	0	0.000
Ground Source Heat Pump (GSHP)	11	0.378
Municipal Solid Waste	0	0.000	Solar Thermal	1	0.008
Water Source Heat Pump (WSHP)	1	0.024
Bio-Methane	0	0.000

At the end of July DECC also published new regulations that introduce the stand-by mechanism for budget management to the RHI Scheme, part of the impact of which is to introduce an immediate change for biomethane producers who wish to register for the Scheme.

DECC's current consultation on the Renewable Heat Incentive long-term budget management has, as its preferred option, gradually reducing the tariff levels for new installations if deployment levels exceed forecasts.

On current trends, that is not likely to happen, and there could well be a third renewable heat underspend by the Department.

One would be forgiven for wondering if this is part of a deliberate pattern.

UK Solar industry predicts 1GW of installations in the next year

We're going to see a lot more of these in the UK.

The UK solar industry now sees a bright future for itself following last Friday's decision by the Supreme Court to refuse the Government permission to appeal on the ruling that solar PV installations registered after December 12 last year and before March 3 this year could qualify for the 43.3p kWh subsidy rather than the 21p rate the Government tried to enforce.

Many companies have plans for large-scale solar in particular because they see new possibilities from the Renewables Obligation Certification scheme (ROCs), which gives two ROCs for each MWh for schemes over 5MW, and under which there is no size limit.

There is even talk of solar farms as large as those found in Europe, up to even 40MW in size, in the south of England. One player predicts 1GW of plant installed in the UK over the next year.

Emma Hughes of Solar power Portal says that "now that the feed-in tariff fiasco has reached a conclusion many are looking forward to working in the UK solar industry in 2012, especially now there is opportunity under the Renewables Obligation."

REC Solar, Canadian Solar, Q-Cells and many others are all of the opinion that if the component prices decline as expected, and energy bills continue to rise, opportunities for ground-mounted solar to become cost-effective will increase.

REC Solar is hoping to double its capacity this year by installing approximately 60MW, a large proportion of which will be ground mounted.

Superhomes

At the domestic and business consumer level, more than anything else the government has done, the installation of panels on so many roofs across the country has got people talking about energy and its importance.

All over the country this weekend, owners of homes who had installed green equipment or upgrades threw open their doors for visitors interested in doing eco-refits themselves.

Besides solar PV systems, visitors to the 'green showhomes' on these tours saw every type of upgrade from simple insulation and draught proofing measures to complete overhauls and rebuilds, involving many types of green heating from woodchip fired boilers to solar water heating systems, and even in one case, a tank which combined four different kinds of heating.

Many of those on the tours had had their interest in the subject first aroused by seeing solar panels on neighbours roofs.

This indicates that a chief aim of government policy has succeeded: increasing public awareness in energy matters, even though investment in photovoltaic technology in this country is not cost-effective at the level of subsidy initially set by the feed in tariffs.

But although many of the thousands of people on these tours knew about the Feed-in Tariffs, a high level of ignorance was revealed about the follow-up schemes, the Renewable Heat Incentive and the Green Deal, indicating the huge amount of work that the Government yet has to do to publicise these initiatives.

The 'Superhomes' tours were organised by volunteers in many towns and cities in England and Wales, either by the network members themselves, or local Transition Towns groups.

Several were oversubscribed, indicating the increased popularity of the subject, further evidence of which was the changed nature of last week's Ecobuild exhibition in London, which was far more upbeat, corporate and mainstream than it had been in previous years, with much floor space taken up by solar and heat pump installers.

Speaking at the Ecobuild exhibition, Energy and Climate Change Minister, Greg Barker said: “This is an aspirational agenda. We know people are always looking to improve their home even in times of austerity. It’s part of the British DNA.”

John Gaffney, who organised a tour in and around Llandeilo in Carmarthenshire, said “many of the homes we have seen this weekend who have solar photovoltaic panels installed still think it is worth the investment even with the reduced tariff."

“It seems so complicated from the outside, knowing what to do," said one of the super homes tourists, Peter Jones of Llangadog, "But seeing what other people have already done is a terrific help in getting ideas about what is possible in your own circumstances."

A highlight of this tour was a home which had both water and space heating supplied by both a ground source heat pump and solar water heating panels, with the electricity for the pumps supplied by photovoltaic solar panels supported by FITs. “We generate more energy than we need, so we are still actually paid by the energy supplier after we have used all the energy ourselves," said owner Caroline Langdon.

Green Deal red tape removed

Last week, Greg Barker sought to remove doubts that the Green Deal implementation would be delayed, but did say there will be a “managed” roll-out of the scheme, meaning that some aspects will launch before others, chief of which may be the Energy Company Obligation, which is simpler to arrange.

He said that the Government would be responding to the Green Deal consultation in April and secondary legislation would appear “by summer recess”.

"This doesn't affect the planned October launch,” he said.

He told attendees to the exhibition that red tape was being removed from those who wanted to become accredited installers, including the requirements to have a surety bond in place prior to being authorised; to hold warranties for the 25 year length of the plan when they were longer than standard industry warranties, e.g. for boilers,; and the requirement that installers pay for an Independent Conciliation Service.

Instead, a new Green Deal Ombudsman capable of handling complaints will be appointed.

"Remove stamp duty"

UK Green Building Council chief Paul King has called the Government’s handling of the solar FITs “catastrophic” and said it is now crucial that the Government instills confidence in businesses preparing for the Green Deal.

This weekend, many visitors on the superhomes tours expressed fears that if they invested in renewable heat systems that the tariff rate for these would be reduced in the future. Many appeared unaware that tariff rate reductions did not affect those whose installations had met the deadlines.

In this respect the public perception arising from the solar FITs fiasco has been extremely damaging.

To rebuild confidence, and create more publicity, Paul King has called on the Government to link the Green Deal with stamp duty and council tax, making less energy efficient homes pay more through the tax system.

He said it didn't matter if the implementation of the Green Deal was delayed if it meant that its integrity would be preserved and the fine detail was in place and did not have to be amended subsequently.

He said: “I would much rather delay it rather than go and blunder it as it will take 10 years to get it out of the public consciousness.

Collective energy purchasing

In a further bid to engage consumers with energy purchasing, today, Ed Davey has written to all of the energy suppliers asking them to support collective purchasing schemes as another way of helping householders engage easily with the electricity market and bring prices down.

He wrote: "I want to make it easier for consumers to club together and use their collective purchasing power to engage with the market and to get good deals on their gas and electricity."

This was a key part of the Consumer Empowerment Strategy that Ed Davey launched as a Minister in the Department for Business Innovation and Skills last year.

He said particular you want to see schemes that reached out to “include more vulnerable customers and people who don't shop around for their gas and electricity".

The purpose of the letter is to encourage all energy suppliers to engage with these organisations on their ideas.

Renewable energy now yields irresistible returns on investment for all businesses

Whatever kind of business you are running, you would be crazy not to take a serious look at using renewable energy - not just to satisfy your own power needs but as a sound financial investment. But you need to get the best, expert advice and think strategically.

The return on a sensible investment in renewable technology would average 11-12%, with the potential for returns of over 20%, according to a report from Carbon Trust Advisory released this week.

With much of the rest of the economy in the doldrums, and energy prices set to rise considerably, where else are you going to get a return like this?

The financial landscape is improving due to Government initiatives such as the Feed-in-Tariffs (FiT) for generating renewable electricity and the similar Renewable Heat Incentive (RHI) - which covers technologies such as solar water heating, heat pumps and biomass boilers.

This is due to kick in at the end of this month for businesses (a similar scheme for homes will follow next summer).

The big names are already leading the way. ASDA, IKEA, John Lewis and Marks & Spencer have all set a target of moving to 100% renewable energy. IKEA now obtains 80% of its total energy use from renewables and has invested in a mix of ground source heat pumps, biomass, solar panels and wind power.

In the US. Google has invested heavily in solar plants, with a 1.65 megawatt photovoltaic power array installed in 2007. But it has learnt that you can't just buy a renewable energy plant and then forget about it.

At the beginning, it failed to put in monitoring and maintenance facilities for each array that would clean the panels regularly and tell it when failures had occurred. A couple of years later it took a look and discovered in this survey that at any one time, the plant may be only generating 70%, and sometimes as little as half, of its potential.

Factors such as accidents, power and frequency matching, shading, potential annual degradation of cells by .5% to 9.5% a year can all affect a photovoltaic system's output.

Similar technical complications arise from all energy technologies, and few can simply be plugged in, switched on and forgotten about in the way that we rely upon the grid.

While The Carbon Trust is right to push the fact that "anaerobic digestion (AD), wind power, biomass heating systems and ground source heat pumps are some of the most attractive and practical renewable energy technologies for UK businesses", businesses need expert help, not just in choosing the right technology for their location but in designing an entire energy management approach that finds the most cost-effective interventions they can make for their particular circumstance.

Investing in demand reduction, energy efficiency, or voltage optimisation, for example, might create just as profitable returns and improvements to the bottom line.

The Carbon Trust can also advise whether a company should purchase or directly generate its own renewable energy, whether to do so on or offsite, where to find the expertise and the implications for an organisation’s supply chain.

UK’s largest renewable gas project

The Carbon Trust suggests that AD (selling the biomethane produced to the gas network) and biomass boilers, typically will offer the highest average internal rate of return.

Biomethane from anaerobic digestion is going to be in hot demand - it may comprise at least 15% of the domestic gas supply by 2020, according to a study by British Gas and the National Grid.

This week British Gas and AD plant manufacturer Bio Group led the way in this area with a joint project to build a £5m anaerobic digestion plant in Stockport to take advantage of the RHI. It will produce organic fertiliser and biomethane which, once upgraded to match the quality of natural gas, will be fed into the gas network.

The feedstock will include food waste from local hotels, restaurants and British Gas’ own offices. It will be constructed on an old landfill site in Stockport, Greater Manchester and will open in April 2012 when it will be capable of supplying 1,400 homes each year.

British Gas and Bio Group, with the Renewable Energy Association, helped to launch a scheme earlier this year called the Green Gas Certification Scheme (GGCS), that provides assurance to customers of British Gas' renewable gas tariff of the biomethane's authenticity as a renewable energy source.

Although complex, the renewable energy field is rapidly becoming easier to enter and more and more mainstream. And with energy prices set to grow by up to 37% by 2020, the opportunity to reduce bills is a strong incentive for all businesses to investigate renewable energy options.

Any business wishing to enquire about the Renewable Heat Incentive (RHI) should phone the accreditation enquiries line 0845 200 2122 between 8:30am until 5pm Monday to Thursday, and 8:30am until 4:30pm on Fridays or email RHI.Enquiry@Ofgem.gov.uk.

Microgeneration Strategy published - but will it over-achieve?

The government's new strategy envisages the ideal cost of installing renewable microgeneration technologies to move to around £5-6,000 with a payback period of around five years so that millions of householders take it up. But it's worried that if its strategy is a success, then its support schemes may run out of money.

Its new Microgeneration Strategy and Action Plan for England, published yesterday, aims to remove non-financial barriers to the spread of these technologies, and calls for more demonstration homes, which are known to be the best way to promote uptake, and for industry, local authorities and government bodies to work together.

But the Government is worried about the scheme becoming a victim of its own success. Its accompanying impact assessment warns that implementing the strategy "could encourage greater uptake than we have projected" which ″could drive up subsidy costs of the schemes".

As a result it promises to keep tight watch on levels of uptake given that more funding would not be available over and above the ｣15 million allocated to the Renewable Heat Premium Payments, ｣850 million funding for the Renewable Heat Incentive or the ｣610 million a year for FITs.

Launching the strategy and action plan, Greg Barker said, "The onus is on the industry itself to make the most of the opportunities presented by the financial incentives - supported by Government action to streamline regulation such as planning and standards, while at the same time ensuring consumers are protected."

As an example of what could be done, the Government proposes that information on financial incentives could be included in Energy Performance Certificates (EPCs) to stimulate take-up of renewables. Market research by Consumer Focus has shown that more people would take up renewable energy in their homes if this was included at the point of property sale or rental as part of the green deal advice process.

An army of skilled workers will be required to meet the demand but accreditation needs to be standardised. A survey is to be undertaken of all training schemes to recommend what's needed to create the competent installers of tomorrow to be completed by October 2012.

Industry must do its bit as well, including analysing the whole product life-cycle for each microgeneration technology to pinpoint where things could go wrong in advance and bolster customer confidence. It should do more to market the concept of microgeneration and the potential benefits to consumers with independent source of advice by September this year, and produce a guide on warranties and insurance schemes for customers and factsheets for each technology with information on maintenance and the longevity of key components, by April next year.

Micro-hydro will be removed from the Microgeneration Certification Scheme for the purpose of Feed-In Tariff eligibility to make it easier for customers to find an appropriate installer. Schemes under 50kW are already rigorously regulated under environmental and planning consenting requirements. The Chief Executive of the British Hydropower Association, David Williams, called this "a great relief".

Importantly, the strategy recognises also the value of heat pumps, micro-CHP and, into the future, compressors and absorption chillers which could provide solar-powered cooling.

Wood fuel is also considered vital and the Government is developing a Bio-energy Strategy for publication later this year, which will set out the government's strategic direction for bio-energy to 2020 and beyond.

Building Regulations and the Standard Assessment Procedure (SAP) will also be amended to better quantify the benefit of including renewables in developments.

Government and industry will work together to explore opportunities to expand the microgeneration sector by working with European level initiatives. This includes, for example, Smart Cities, which launched on 21 June, and addresses technologies, local production and energy networks, including electricity, heating and cooling.

Launching the initiative, Energy Gnther Oettinger said: "With an 80 million Euro package we plan to demonstrate smart integration of urban energy technologies in selected pilot cities. This will kick-start important new markets for European industry. Cities are key to the EU's objectives of 20% energy saving by 2020 and to developing a low carbon economy by 2050, because 70% of the EU's energy consumption takes place in cities." Manchester is the English city taking the lead in this imaginative scheme.

Community energy

Connected with this, the Government wants to encourage more communities to take up district level renewable energy schemes that would be owned by the communities themselves.

Currently there are many barriers forming an uphill battle to communities that wish to do this, such as lack of knowledge about planning, local awareness, skills, time and access to finance. DECC has pledged to do more to address these issues with a stakeholder group to be set up next month, including developing the Community Energy Online web portal and engaging in collective purchasing of renewable energy in order to get a better deal.

The latter opportunity was identified earlier this year in a BIS proposal, Better Choices: Better Deals. It cites the pioneering example of Barnet in achieving this and, in fact, many of the initiatives set out in the microgeneration strategy.

Good Energy in particular has welcomed the recognition in the strategy that community energy projects come in all shapes and sizes and could be as large as 20MW in capacity, and that the Government is committed to a wider distributed energy strategy as part of its Electricity Market Reform.

The new post-carbon age business model

The idea of providing a service of renewable energy - rather than a simple supply - and reaping a return on investment from selling any surplus generated to the grid, or by claiming the difference between the regular and premium rate, is emerging as the favoured business model for financing the low carbon revolution.

The latest example is the announcement from Google on Tuesday that it will finance a $280 million retrofit of residential solar power systems in the United States through a deal with startup SolarCity. This is the search engine's largest single renewable energy investment to date.

Upfront cash payments will enable householders who can't afford a large upfront investment to have solar modules installed on their roofs by SolarCity in a leasing arrangement. This allows them to pay a monthly fee for the modules that would be offset by savings and electricity bills.

The systems will be owned by Google who would earn a higher return on their investment than if the cash was in a bank.

This business model is now becoming established in the UK. The latest example was announced on Wednesday by the Foresight Group and Our Generation Limited, who have agreed an initial £10 million programme of residential solar PV installations in the UK over the next 3 months.

Energy services company Our Generation will make the installations and utility E.ON will be responsible for recruiting and managing the customer experience through its SolarExchange initiative.

15,000 of its customers will receive solar power installations costing as little as £99 and save up to £180 on their annual energy bill.

Foresight already manages solar power assets worth over £150 million.

The model is being used by many companies in the UK to finance the installation of solar PV modules on rooftops. The premium 41p/unit paid by the utility for solar electricity provides the return on investment.

Britain's forthcoming Green Deal and Renewable Heat Incentive will see many more examples of this model rolled out, with both large (Tesco, B&Q) and small companies seeing opportunities.

Renewable heat incentive rewards solar water heating but will increase air pollution

Chris Huhne has finally announced much-awaited details of the Renewable Heat Incentive (RHI) scheme.

It covers such technologies as solar water heating, using wood, wood pellets and woodchips, air and ground source heat pumps, energy from waste, on-site biogas, deep geothermal and injection of biomethane into the grid.

36% of the UK’s overall energy is used for heat, creating 175 million tonnes of carbon emissions a year.

The industry had originally hoped that the scheme would start at the same time as the Feed-In Tariffs for renewable electricity a year ago, then it was expected this April, but now payments won't be be available to households until October 2012.

The scheme has become a victim of government cuts and will be smaller in size than originally thought and introduced in phases.

Importantly, because of criticism of the potential impact on fuel bills, the RHI will not be funded by an RHI levy but from general Government spending.

As a result, it will be introduced in two phases. In phase 1, more than a quarter of the first year's budget, around £15 million, is to be guaranteed up to 25,000 household installations through a premium payment scheme.

Phase 1 will focus on people living off the gas grid, who typically spend more on their heating and whose fuels, like coal, have a higher carbon content.

Participants will then provide feedback on how the scheme works to help design the second phase.

In this phase, coinciding with the introduction of the Green Deal, the scheme will expand so that by 2020 there will be an estimated 13,000 installations in industry, 110,000 in the commercial and public sector supply 25% of this sector is demand, and creating 150,000 jobs.

Carbon savings and air pollution

It is hoped that the scheme will help deliver 44 million tonnes of carbon dioxide savings by 2020, though 8 million of these are already accounted for by the European Emissions Trading Scheme. Those emissions within the emissions trading scheme will cost £35/tCO2 and those outside the scheme a further £12 per tonne.

However, there are concerns about the impact on air quality of a lot of new biomass combustion, particularly from particulates such as PM10. The final RHI proposals could lead to 28TWh of biomass burned. and assessment by Defra of the proposals shows that this could lead to up to £2.6 billion of potential lifetime social cost.

This is a staggering amount.

The Tariffs

The highest tariffs will be paid to solar thermal water heating (8.5p/kWh) small biomass schemes (7.6p/kWh or 1.9p/kWh - see below why), and biomethane (6.5p/kWh). Small ground source heat pump schemes will receive 4.3p/kWh, and large schemes 3p/kWh.

Municipal solid waste schemes including Combined Heat and Power (CHP) will receive 4.7p/kWh or 1.9p/kWh, depending on which tier they are in, and large biomass schemes 2.6p/kWh.

Solar water heating was by far the most popular renewable energy technology under the previous renewable energy subsidy schemes like Clear Skies. It works very well in the UK and can supply between 40 and 50% of domestic hot water requirements, so it is good that it receives the most support.

Because of doubts about their efficiency air source heat pumps will not be eligible at the start of the RHI. Nor will heat pumps that deliver the heat to air as opposed to water. Some will consider this unfair, but it is to do with the difficulty of metering this kind of heat.

Heat meters will need to be installed at the point of generation and, where appropriate, at the point of usage in order to claim payments.

Bioliquids also will not be eligible from the start because of the complexity of the market and their uses in transport etc. They can also have a high energy density.

RHI support will only be available if the installation in question has not received (and will not receive) any other public funding.

The tariffs will be paid for 20 years to the eligible technologies that have been installed since July 15, 2009 with payments for each kilowatt of renewable heat produced.

Payments, which will be administered by Ofgem, are to be claimed by, and paid to, the owner of the heat installation or the producer.

These payments will be fixed for the lifetime of the scheme, once a measure is installed, adjusted in line with inflation. But the levels of support available for new entrants as time goes on may decrease.

Rewards linked to energy conservation

Following criticism that there might be no requirement that the building in question has an efficient fabric, by being introduced with the Green Deal, homes must be insulated to reduce demand, as with earlier schemes, such as the Low Carbon Building Programme, because everyone knows is more cost efficient to save energy than to generate it.

There has been a worry about what happens when some smart meters enter into the market. When buildings are metered on a half hourly basis energy the incentive will be to run your equipment as much as possible because the more your meter ticks over, the more money you make.

This has to some extent been met by introducing a two-tier tariff system for biomass boilers to reduce incentive to over-generate. Upon reaching a prescribed level of heat generation, the tariff drops to a lower tier 2 tariff. For solar thermal, once the equipment is installed, the amount of heat generated is not controlled by the owner.

The RHI has been a long time coming. There are many in the industry raring to get installing, and there is a huge potential market. But most will have to wait a good while yet before they can take advantage of the scheme.