Amendments to UK renewable heat incentive submitted to parliament

By Katie Fletcher | July 09, 2015

On Monday, Lord Bourne, parliamentary undersecretary of state for the Department of Energy and Climate Change, announced proposed amendments to U.K.’s renewable heat incentive (RHI) schemes, which he said are essential to the smooth-running of both.

The proposed amendment regulations apply to both the domestic and nondomestic RHI programs, focusing on four key areas: updating industry standards, biomethane expenditure forecasting, clarification on biomass sustainability reporting requirements and power for the scheme administrator to reject applications.

According to Bourne in his written ministerial statement, the amendment regulations introduce updated installer standards for heat pumps, solid biomass and solar thermal. The amendments also introduce changes aimed at achieving language consistency across all Microgeneration Certification Scheme standards, which are specifically referenced, amongst other renewable-heating technologies, in the RHI regulations. “The use of MSC standards is a key part of the domestic RHI scheme to provide assurance to the consumers that both the installer and the installation meet clear standards of competence,” Bourne said in the statement. MCS is also used within the nondomestic RHI scheme for systems smaller than 45 kilowatts (kW).

The heat-pump installer standard has been updated to bring MCS standards in line with the European Energy-related Products (ErP) Directive, which sets minimum requirements for products that use energy. The aim of the directive is to reduce carbon emissions and improve efficiencies in support of government targets. The key date for all heat pumps manufactured or imported into Europe is Sept. 26. After this date, three main changes include improved efficiency, energy labelling and product-integrated pumps. Boilers up to 400 kW will need to meet new efficiency levels, boilers up to 70 kW will be supplied with an energy efficiency label and, beginning in August, variable-speed-circulating pumps must be used inside boilers.

In addition to the new MCS standards, these regulations will introduce a new methodology for calculating heat-pump efficiency called the seasonal coefficient of performance (SCOP) calculator. Certification bodies will use the calculator to determine if a heat pump meets the requirements of the ErP Directive and establish the seasonal performance factor (SPF) required for the RHI scheme. Establishing the SPF using the SCOP calculator will be a requirement for both the domestic RHI and any MCS-certified, ErP-compliant heat pump.

Another proposed amendment is in response to the significant growth in the deployment of biomethane injection to grid under the RHI over the last 12 months. In the statement, Bourne writes there are currently 27 plants in the RHI system and more plants are expected to come forward and be operating by the end of the year.

Bourne’s statement to parliament included that the RHI has a budget management mechanism set out in the regulations where tariffs are automatically reduced by pre-set amounts if forecast spend crosses defined thresholds. Whether to reduce tariffs is assessed on a quarterly basis. “The current approach to estimating biomethane deployment can cause a temporary, but significant, underestimate of forecast expenditure for biomethane plants due to the ramp-up in production typically associated with establishing a new biogas plant,” Bourne wrote. “The current approach does not reflect this ramp-up period in which plants can take around six months to reach full production.”

Bourne adds that this undermines the effectiveness of the RHI budget management policy. “The amendments introduce a more accurate forecasting methodology to better reflect operational realities for biomethane plants,” he stated.

Biomass sustainability reporting requirements, first introduced in February, will come into effect Oct. 5. These reporting requirements are included in the RHI regulations to ensure the use of biomass incentivized by the scheme is sustainable in terms of greenhouse gas emissions savings and broader land-use impacts. The proposed amendments clarify the reporting requirements for nondomestic participants. The clarification means combined-heat-and-power installations participating in both the Renewables Obligation and the RHI do not have to demonstrate compliance with the sustainability requirements under the RHI scheme where they are meeting them under the RO.  Two other small amendments include corrections to the definitions of sustainable biomethane and the land criteria for non-woody fuels.

The last proposed change to the RHI regulations is to provide explicit power for the nondomestic scheme administrator to reject applications to the RHI nondomestic program where the applicant fails to provide further information to support the application within the time period specified in a request by the Office of Gas and Electricity Markets (Ofgem). The domestic scheme already contains provisions where applications can be rejected. Bourne writes in his statement that the changes will deliver cost savings by reducing the operational burden of managing these applications. He also states that the amendment will bring financial clarity, as once an application is rejected, possible spending will not have to be accrued for the applicant.