Friday, July 20, 2012

UK Government Publishes More Information on Renewable Heat Incentive and Updates to the Fee-in-Tariff Rates

Non-domestic Renewable Heat Incentive

The UK Government says it is providing certainty for investors in renewable heat and small-scale electricity, but there is still a way to go, with the first recording of metered heat-use more than a year away. 

However, the UK AD industry has been waiting a long while already, and will be relieved that this further announcement and the start of another round of consultation has at least gotten underway just in-time before the start of the summer holidays.

What has actually been done is that the government has unveiled proposals to improve the performance and manage the future budget of the non-domestic Renewable Heat Incentive (RHI). They are further fleshing out the mechanisms by which the RHI will work in a final round of consultations before the start of implementation in 2013, beginning with the large installations first.

An advance accreditation scheme, which is part of the package, will help with obtaining funding.

AD Feed-in Tariffs

The UK Government today also announced changes to the Feed-in Tariffs (FiTs), following the consultation which took place earlier this year. Those tariffs remain the same, except for the large scale rate which reduces slightly. 

This reduction is to be expected under the concept of degression. As the technology develops costs and investment risk will also fall and the subsidy level will reflect this. There is evidence at the large scale that processes are becoming more robust and reliable and it can be argued that such a reduction will not harm the industry take up of the AD process at this level.

However, the industry will be disappointed that more tariff support has not been given to the small scale plants in the UK, but as the industry has been pressing for more support for smaller biogas producers for some time, in order to bring the costs within the range of average sized farm operations throughout the UK.

That would have provided a potential explosion in biogas take-up and a very large number of plants built, which could rival those in Germany. It would contribute to government renewable energy targets more rapidly than wind can achieve and it seems disappointing that the government has not had the vision to go for growth in this way. After all the biogas industry is quite labour intensive and the boost to the UK economy would have been significant.

Home grown energy would keep the money in the UK and Europe rather than the alternative payments for fossil fuels which presumably end up largely in the hands of the major oil producing states.

For government the downside would have been the cost in terms of the additional burden on the energy companies, and the government will have been anxious to avoid the press and right-wing conservative MPs suggesting that the government is putting the economy at risk by burdening it with “green” payments. The government would see that as very damaging at such a time of cuts and recession.

It is pleasing that microCHP subsidies are being increased. Micro combined heat and power or micro-CHP is an extension of the now well established idea of cogeneration to the single/ multi family home or small office.

The new tariffs for AD will be:

≤250kW: The current rate of 14.7 p/kWh will remain unchanged
>250 - ≤500kW: The current rate of 13.6 p/kWh will remain unchanged
>500 - ≤5000kW: The current rate of 9.9 p/kWh will decrease to 8.96 p/kWh from December 2012

For more information on the changes to the Feed-in Tariffs and Renewable Heat Incentive please visit:

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