Greg Barker has today announced a range of further details on the Domestic Renewable Heat Incentive, along with proposals within 3 consultations which cover both the domestic and commercial renewable heat incentives. This announcement brings more certainty to an industry which will be instrumental in meeting the government’s carbon targets and gives many installers the confidence that the Renewable Heat market is going to see substantial growth over the coming years. The domestic RHI is set for launch in summer 2013 and today’ announcement includes proposed returns to householders.
The announcement confirms details on the domestic Renewable Heat Incentive along with 3 consultations covering both the domestic and commercial RHI. The domestic Renewable Heat Incentive will cover consumers who have installed renewable heat technologies such as; Heat Pumps, Solar Thermal and Biomass after 15th July 2009. It is expected and proposed that householders will be paid for the heat they produce with their renewable heat technology.
Some of the key points in the domestic part of the announcement are;
•Indicative tariff ranges for air source heat pumps (6.9-11.5p/kWh), biomass boilers (5.2-8.7p/kWh), ground source heat pumps (12.5-17.3p/kWh) and solar thermal technologies (17.3p/kWh) that are MCS certified and meet relevant required standards
•Payments for householders over seven years for each kWh of heat produced for the expected lifetime of the renewable technology and based on deemed heat usage
•Tariff levels set to provide a better return for householders living off the gas grid
•Budget management system similar to one introduced for the Feed-in Tariffs scheme
•Minimum energy efficiency requirements based on Green Deal assessments
Key points on the commercial part of the announcement are;
•Inclusion of heating only Air to Air heat pumps with a proposed tariff of 0.97p/kWh for all sizes of installation
•Inclusion of Air to Water heat pumps with a proposed tariff of 1.7p/kWh for all sizes of installation
•Inclusion of biomass direct air heaters with a proposed tariff of 2.1p/kWh under 1MW and 1p/kWh over 1MW
•Extension of biogas combustion tariffs to installations over 200kW
•Introduction of a specific tariff for heat from biomass CHP of a proposed 4.1pkWh
•Introduction of bioliquid CHP tariff of 4.1p/kWh
•Increased tariff for deep geothermal installations from 3.4 p/kWh to 5p/kWh
•Increased range of waste feedstocks eligible for support
•Minimum energy efficiency requirements for district heating, commercial and industrial space and water heating
•Continuation of exclusion of reversible Air to Air heat pumps from the scheme
For the full DECC announcement please visit http://www.decc.gov.uk/en/content/cms/news/pn12_106/pn12_106.aspx
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Improvements to the Feed-in Tariffs scheme
“Today we are announcing plans to improve the Feed-in Tariffs scheme. Instead of a scheme for the few the new improved scheme will deliver for the many.”
(Greg Barker, Minister of State)
Press release 2012/010
09 February 2012
The Government has today announced plans to ensure the future of the Feed-in Tariffs scheme to make it more predictable. Transparency, longevity and certainty are at the heart of the new improved scheme.
The reforms will provide greater confidence to consumers and industry investing in exciting renewable technologies such as solar power, anaerobic digestion, micro-CHP, wind and hydro power.
The Feed-in Tariffs (FITs) scheme provides a subsidy, paid for by all consumers through their energy bills, enabling small scale renewable and low carbon technologies to compete against higher carbon forms of electricity generation.
The surge of solar PV installations in the latter part of last year, due to a 45% reduction in estimated installation costs since 2009, has placed a huge strain on the FITs budget.
Climate Change Minister Greg Barker said: “Today we are announcing plans to improve the Feed-in Tariffs scheme. Instead of a scheme for the few the new improved scheme will deliver for the many. Our new plans will see almost two and a half times more installations than originally projected by 2015 which is good news for the sustainable growth of the industry. We are proposing a more predictable and transparent scheme as the costs of technologies fall, ensuring a long term, predictable rate of return that will closely track changes in prices and deployment.
“I want to see a bright and vibrant future for small scale renewables in the UK and allow each of the technologies to reach their potential where they can get to a point where they can stand on their own two feet without the need for subsidy sooner rather than later.”
A better FIT scheme for consumers and communities
A tariff of 21p/kWh will take effect from 1st April this year for domestic-size solar panels with an eligibility date on or after 3rd March 2012. Other tariff reductions apply for larger installations.
The Department has listened carefully to feedback on the energy efficiency proposals that we put forward in the consultation of 31st October. Properties installing solar panels on or after 1st April this year will be required to produce an Energy Performance Certificate rating of ‘D’ or above to qualify for a full FIT. The previous proposals for a ‘C’ rating or a commitment for all Green Deal measures to be installed was seen as impractical at this stage. We estimate that about half of all properties are already eligible for a ‘D’ rating.
From 1st April 2012, new ‘multi-installation’ tariff rates set at 80% of the standard tariffs will be introduced for solar PV installations where a single individual or organisation is already receiving FITs for other solar PV installations. This reflects the lower costs of such installations, as they benefit from the economies of scale. Based on the feedback received, the threshold is set at more than 25 installations. Individuals or organisations with 25 or fewer installations will still be eligible for the individual rate. DECC is now consulting on a proposal that social housing, community projects and distributed energy schemes be exempt from these multi-installation tariff rates.
The tariff for micro-CHP installations will be increased to recognise the benefits this technology could bring and to encourage its development.
A better FIT scheme for industry
In line with the evidence of falling costs for solar PV, DECC is proposing to peg the subsidy levels to cost reductions and industry growth to provide more certainty for future investments. This will ensure that subsidy levels keep in step with the market. It builds on the best of the existing German system and will remove the need for emergency reviews.
Using budget flexibility to cover the overspend resulting from high PV uptake this year, while still allowing £460 million for new installations over the Spending Review period. This won’t have any impact on consumer bills beyond the agreed overall cap on renewable subsidies as it will primarily be funded from an under spend on the budget allocated for large-scale renewables.
Notes for editors:
1. The documents published today can be found at:
Response to FITs Phase I consultation
Comprehensive Review of Feed-in Tariffs – Phase 2A: Solar PV cost control (consultation closes on 3rd April)
Comprehensive Review Phase 2B: Consultation on Feed-in Tariffs – Non-PV tariffs and scheme administration issues (consultation closes on 26th April)
2. The government cannot give certainty on tariff levels to people who install solar panels with an eligibility date between 12th December 2011 and 3rd March 2012 due to ongoing legal proceedings. DECC is appealing to the Supreme Court and has until 21st February to lodge its case.
3. The government received a total of 2,392 responses to its 31st October consultation.
Updated 11.45: UK Government loses feed-in tariff appeal
25 January 2012
The appeal court has refused the Secretary of State permission to challenge an earlier ruling that solar Feed-in Tariffs can not be changed retrospectively; Judge also denies request for DECC to go to the Supreme Court, though DECC now indicates it will seek permission to appeal directly from the Supreme Court regardless of today’s decision.
Commenting on the decision, HomeSun ceo, Daniel Green, said, “four Judges, including three in The Court of Appeal, have now called the Government’s actions illegal. That’s a [...] a decisive ruling that Government may not make retrospective changes to the FiT because [...] to do so would be to take away an existing entitlement without statutory authority”.
Further, Green said, “the Secretary of State has failed to have proper regard for the rights conferred by the FiT, which aims to encourage homeowners to generate their own energy. Like a Government bond, that rate is fixed depending on the date the installation becomes eligible and Government cannot change it as they choose”.
DECC has indicated it will now go directly to the Supreme Court to request permission to appeal.
According to HomeSun, today’s decision means that for all installations the FiT remains at 43.3p for 25 years until the Government lays a lawful draft modification to the present rates before Parliament for a minimum of 40 days. This means that the earliest any new rate can kick in is March 3, something the Department of Energy and Climate Change (DECC) had already appeared to accept.
For it’s part DECC had always stuck firm in defending the necessity of the 12 December deadline. Speaking to Renewable Energy Focus earlier, Minister Charles Hendry explained that the decision to lower tariff rates from 12 December, instead of April as originally expected, was to protect the feed-in tariff budget from a four-month ‘fire-sale’ to install solar panels before the rate was cut by over half: “If we had proposed that the tariff change would happen in the spring, then every salesman would have been going round the country, knocking on doors, saying, ‘come on, guys – sign up, we know this is going to halve in April. We can get all of that done and installed in that time’, and we would have seen a complete fire sale.”
And any resulting bubble – which may now happen – would “soon burst, with disastrous consequences for the tariff as a whole”, Hendry claimed.
But according to HomeSun, it is the Governments’ own action that created a bubble of its own: “The Government’s premature action before Christmas created a massive spike in solar installations between 31 October and 12 December, which has ended up costing the FiT budget £100 million. The current legacy for all installs up until 12 December (including other technologies) is £268m per annum. This means all of next year’s budget is already spent and substantially exceeded, and even 2013/14’s entire budget is already gone”
Despite today’s victory, some in the solar industry have been cautious on Feed-in tariffs. Many believe that the tariff was set too high in the first place, and even the solar industry’s main complaint was the speed with which the changes were to be brought in, not allowing them time to adjust their businesses accordingly.
And some industry insiders believe that the renewables sector, for its part, needs to make concessions to Government when it comes to financial support. “The industry’s got a bit of a reputation for always wanting more, in the expectation that it will be ratcheted down a bit,” one industry figure says. “Industry needs to stop doing that, and come back with something that more accurately reflects what the returns need to be in order to result in deployment.”
According to Gaynor Hartnell of the UK ‘s Renewable Energy Association, “The Government’s action and the subsequent court case had together thrown the solar industry into a state of extreme uncertainty, which was most regrettable. We now want to put this behind us as swiftly as possible, and work with Government and supporters to secure a larger budget for small scale renewable energy generation.”
DECC has today laid before Parliament draft licence modifications which, subject to the Parliamentary process set out in the Energy Act 2008, makes provision for a reduced tariff rate (from 1 April 2012 onwards) for new solar PV installations with an eligibility date on or after 3 March 2012 under the Feed – in Tariffs scheme (FITs).
Energy and Climate Change Minister Greg Barker said:
“I know this is a difficult time for the sector and I want to do as much as I can to end the current uncertainty created by the legal challenge.
“We must reduce the level of FITs for solar panels as quickly as possible, to protect consumer bills and to avoid bust in the whole Feed-in Tariff budget. We’re appealing against the court ruling that’s challenged our proposal for a December reference date. This remains our aim, and we are waiting for the judgment of the Court of Appeal. But this is too important for us to sit and do nothing while we wait. Today we’re putting in place a contingency that will bring a 21p rate into effect from April for installations from 3 March.
“However, we are still pressing ahead with our appeal and if successful, we retain the option of introducing a December reference date. In the circumstances we believe this gives the industry as much certainty as is possible. And it puts us in a better position to protect the budget for everyone involved.”
Further information on the Government’s response to this aspect of the FITs consultation, together with a summary of the relevant consultation responses, is also being published today on the Department of Energy and Climate Change’s website.
The consultation closed on 23 December 2011 and over 2,000 consultation responses were received which we have been analysing carefully. We are intending to announce the outcome of the consultation by 9 February 2012, in time for any resulting legislative changes to come into effect from 1 April 2012. Our aim is that this announcement will be accompanied by a set of reform proposals for the next phase of the comprehensive review of the FITs scheme, which will be the subject of a further consultation.
Eligibility and Tariffs
Anyone who installs a qualifying renewable heat system is eligible to claim the RHI. These are the qualification criteria.
The Renewable Heat Incentive applies in England, Scotland and Wales but not Northern Ireland.
There are several eligibility requirements which must be met for installations to receive tariffs:
They must use an eligible type of renewable heat production
Not all renewable heat technologies are eligable. See which ones are and aren’t here.
Biomass and biogas heat generation must also use eligible sources of fuel.
The tariff paid depends on what type of energy is used and the size of the system.
There are some limits to the system size
For example solar and biogas heating are only eligible for installations below 200kW. Check in the eligible energy sources.
This differs to the Feed-In Tariffs where a 5MW ceiling has been applied for all technologies.
They must be new and have been installed after 15th July 2009
Even then they may not be able to receive tariffs straight away. See the date requirements.
Only new equipment is eligible for the RHI; converted installations are not. However new systems replacing
existing renewable installations will qualify.
There are some restrictions on the equipment and suppliers you can use
Each eligible installation has to be registered by the energy regulator Ofgem.
There are some specific requirements. For example, systems below 45kW capacity must comply with the Microgeneration Certification Scheme.
The tariff will be paid based on the eligible heat output of the installation
The heat cannot be wasted and must be used for a prescribed purpose; space, water or process heating (not for electricity production, for example).
There are criteria about how this output should be measured.
The installations will have to be maintained and may be inspected periodically.
Who can claim the tariffs?
The owner of the renewable heat installation is the beneficiary of the tariffs.
For further details
Follow the links above, or read Chpater 3 of the government’s document.
Government clarifies solar feed-in tariff rate as industry uncertainty
DECC confirms tariff rate will not fall below 21p for installations completed between 12 December 2011 and 31 March 2012
The government has confirmed the current feed-in tariff rate for solar installations with less than 4kW capacity will not fall below the proposed 21p per kWh for all systems completed between the December 12 last year and March 31 this year.
BusinessGreen understands that Department of Energy and Climate Change (DECC) officials had signalled to industry representatives that the feed-in tariff rate for installations completed after the December 12 date proposed as the cut-off point for the previous rate of 43p per kWh would not be cut below the 21p per kWh rate set out in the government’s consultation exercise.
The reassurance was significant as it meant solar firms could assume that regardless of the outcome of the current legal battle over whether the government’s plan to effectively cut incentives before the end of the consultation period is illegal, the feed-in tariff rate for the current period would not fall below 21p.
It implied that if the government won its appeal against a court ruling branding its proposals as “unlawful” the feed-in tariff incentive for installations carried out after December 12 would probably be cut to 21p, while if it lost the case the incentives would revert to the previous rate of 43p per kWh.
However, for several weeks the department failed to offer a public confirmation that cuts would not go deeper than the proposed 21p rate for the period between December 12 2011 and March 31 this year, fuelling concerns among some solar firms that deeper cuts could potentially be imposed.
Responding to a question from BusinessGreen, a spokeswoman for DECC said it was safe for solar firms to assume the current rate would not fall below 21p per kWh. “The tariff rates for PV installations will not fall below the proposed levels (e.g. 21p for the less than or equal to 4kW band) for systems with an eligibility date between 12th December 2011 and 31st March 2012,” she said in an emailed response.
The news was welcomed by one industry insider who said it would provide some much-needed certainty to solar firms currently attempting to promote installations that remain economically viable at the proposed new incentive rate of 21p per kWh.
However, industry trade bodies remain concerned that no such reassurances have been offered for installations with over 4kW of capacity.
Moreover, clarification on the longer term future of the feed-in tariff scheme could still be several weeks away, with speculation mounting that the three judges considering the government’s application for an appeal hearing are unlikely to deliver a decision this week.
Speaking at last week’s initial appeal hearing, the judges said that while they were aware that it would be preferable for a decision to be reached as quickly as possible it would be “highly optimistic” to think such a complex case could be considered within a week.
Solar industry insiders are also increasingly concerned that if the government loses the case it may respond by cutting incentives in the future to just 9p per kWh.
Ministers have repeatedly maintained that if the feed-in tariff is returned to the previous rate of 43p per kWh it will trigger a surge in installations that could break the budget for the scheme.
BusinessGreen has obtained an update from the Solar Trade Association and the Renewable Energy Association sent to its members following a meeting between the trade groups and DECC officials, which reveals the department is now considering cutting feed-in tariffs post April 2012 to 9p per kWh in an attempt to stop the scheme over-spending.
“Reducing the tariff for all PV systems installed post 1st April 2012 to 9p kWh (equivalent to 2ROCs) remains a possibility,” the update reads. “DECC officials were keen to stress that this is not their preferred outcome, but all options remain under consideration. However, we are concerned as we understand DECC came very close to this two months ago, but this was fought off by the Minister. The legal process may have implications as to whether this outcome might be avoided again.”
However, others within the industry have argued that it is misleading to suggest the prospect of deeper cuts to incentives are solely the result of the on-going court case, arguing that with Climate Change Minister Greg Barker admitting the feed-in tariff scheme has already overspent for the current year the only way to maintain reasonable levels of incentives in the medium term is to raise the scheme’s spending cap, regardless of the outcome of the court case.
Meanwhile, Friends of the Earth’s Donna Hume reiterated the campaign group’s call for the government to table legislation immediately to ensure it can cut feed-in tariff incentives as quickly as possible if it does lose the appeal.
The latest developments come as figures obtained in response to a parliamentary question from Shadow Energy and Climate Change Secretary Caroline Flint show that over 100,000 solar installations were completed during a six-week gold rush period between the announcement of the proposed cuts to incentives last October and the planned cut-off date of December 12.
The surge in installations means that almost as many installations were completed over the six-week period as were installed over the previous 19 months of the scheme.
The figures support government claims that urgent cuts to incentives are required to stop the feed-in tariff scheme exceeding its budget.
However, they will also fuel criticism of the government’s handling of the scheme, with industry insiders accusing ministers of overseeing a boom and bust period that has resulted in the rate of installations “falling off a cliff” since December 12.
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Statement by DECC spokesperson on FITs case
13 January 2012
“The Court of Appeal has not yet decided whether to give permission for an appeal or made a judgement on the FITs case. The Court will wrap up the decision on permission for an appeal and a possible judgement if an appeal is allowed in the next few weeks. Once the outcome is known we will consider our options and make an announcement on the way forward to provide clarity to consumers and industry.”
No decision on UK government’s feed-in tariff case
The UK Court of Appeal failed to reach a decision on Friday as to whether the government could proceed with its appeal against the High Court ruling on feed-in tariffs (FITs).
Back in December, the High Court ruled that the government’s decision to cut FITs for small-scale and domestic solar photovoltaic installations was illegal before the end of the consultation period on the plans.
But the government appealed against the decision earlier this month.
“The Court will wrap up the decision on permission for an appeal and a possible judgement if an appeal is allowed in the next few weeks,” according to a statement from the Department of Energy and Climate Change (DECC) issued late on Friday.
Once that decision has been made, the government will make an announcement on “the way forward to provide clarity to consumers and industry”, continued the statement.
But Friends of the Earth, which brought the action with solar panel installers Solarcentury and HomeSun, is urging the government to come up with a ‘plan B’, rather than pursue the appeal.
“By pushing through with this appeal Ministers have prolonged the uncertainty hanging over the solar industry,” says campaigns director Craig Bennett.
He suggests that the government should either put a proposal before Parliament to cut solar tariff payments by the end of February, in line with falling installation costs, or increase the budget of the scheme using the tax revenues generated by solar firms.
“Win or lose, the government must breathe life back into UK solar to help more cash-strapped families free themselves from soaring fuel bills by plugging into clean British energy,” says Bennett.
For further information:
UK Court of Appeal to hear feed-in tariff arguments today (13-Jan)
UK Court of Appeal to hear government’s feed-in tariff case on Friday (9-Jan)
UK government to appeal against High Court feed-in tariff ruling (5-Jan)
High Court rules UK government’s solar feed-in tariff cuts are illegal (22-Dec 2011)
16 January 2012