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Fruits Of The Earth

As of next year, owners will get payback for ground source heat generated on site. Gemma Goldfingle finds out how the scheme will work.

Heating and cooling systems account for 40% of the UK’s carbon emissions according to the Carbon Trust, and more than half of average domestic energy bills.

Yet only 1% of heat comes from renewable sources.

In February this year, the Department of Energy and Climate Change (DECC) launched the Renewable Heat Incentive (RHI) to help encourage developers and clients to go green while heating their buildings.

The scheme recognises that renewable heat is actually a commodity, and is vital if the UK is to meet its carbon reduction targets.

Producers of renewable heat will be rewarded per kWh of heat generated, in a similar manner to feed-in tariffs for micro generation.

Launching the incentive energy minister Lord Hunt said: “It is crucial that we take action now to encourage the switch to greener, alternative sources of heat.

“We need to provide the right financial framework to enable individuals, communities and public sector organisations, businesses and industry to take up renewable heating and make it tomorrow’s mainstream heating choice.”

“The Renewable Heat Incentive will now give a clear financial reward for heat production. Hopefully this will unlock the power of the residential market.”

The scheme has a tiered tariff which offers 7p per kWh for installations of less than 45kW; 5.5p per kWh for medium installations between 45-500kW; and 1.5p per kWh for larger schemes.

The owner of the equipment will be paid annually for installations below 45kW and quarterly for schemes producing more than that.

“The geothermal market has been driven by commercial clients. Renewables legislation has forced developers to look at ground source energy,” says Geothermal International director and chairman of the Ground Source Heat Pump Association (GSHPA) Karl Drage.

“The Renewable Heat Incentive will now give a clear financial reward for heat production. Hopefully this will unlock the power of the residential market.”

But some in the industry, however, think the tariff does not go far enough.

“Heat pumps are not cheap to install. They are still seen as a luxury by many clients. The tariff is a good start but it is not as high as incentives in other countries,” says geothermal contractor GECCO2 managing director Nick Love.

“In its current form the RHI ignores emerging technology. Different methods of generating heat have different business models, and different investment requirements.”

Cementation Skanska geothermal manager Peter Smith, meanwhile, believes planning requirements to have renewables on site, such as the Merton Rule in London, will be more of an incentive than the RHI.

GSHPA chief executive David Matthews is concerned that the process has not been fully clarified.

The heat generated in installations of less than 500kW is estimated or “deemed” rather than metered. “We need to have clear figures,” says Matthews.

Geothermal Engineering managing director Ryan Law is also disappointed that large-scale geothermal projects are in the same tariff as projects over 500kW, with a payback of just 1.5p per kWh.

“In its current form the RHI ignores emerging technology. Different methods of generating heat have different business models, and different investment requirements. Large-scale deep geothermal energy has substantially more start up costs than installing ground source heat pumps on a project. It will also produce much more output: it can power entire communities,” he says.

Consultation on the Renewable Heat Incentive closes on 26 April.

 

The growth of geothermal

Ground source energy could supply a third of the UK’s heat supply, according to the Environment Agency.

In the UK there are an estimated 8,000 ground source heat pumps, but the EA believes this could top a million if the Renewable Heat Incentive gives sufficient support.

Tony Grayling, head of climate change and sustainable development at the EA says: “Ground source heating is a rapidly growing technology that has the potential to produce at least 30% of the country’s renewable heat needs, but it needs financial support in order to grow.”

Currently, the majority of installed units are domestic, with a capacity of 4-12kW.

However, the EA predicts there will be huge growth in the commercial market.

In the Ground source heating and cooling pumps: state of play and future trends report the EA claims up to 1.2M units could be installed, heating 11% of homes and 40% of commercial buildings in the UK.

 

How the scheme works

RHI payments to be claimed by, and paid to, the owner of the equipment

In small and medium-sized installations, both installers and equipment must be certified under the Microgeneration

Certification Scheme

Payments paid annually for small installations and quarterly for all others

Tariff levels proposed to provide a rate of return of 12% on the additional capital cost of renewables

Payments calculated on the annual amount of heat output, in kilowatt hours (kWh). At the small and medium scale the amount of heat generated will be estimated or “deemed” when installed

For large installations heat output will be metered, and the total annual support calculated from the actual energy generated

RHI will remain open to new projects until at least 2020

Schemes completed after 15 July 2009 will be eligible

Ofgem will administer the RHI, making incentive payments to recipients and taking responsibility for auditing and enforcing the scheme

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