On 10 November 2011 OFGEM issued two volumes of guidance on the Department for Energy and Climate Change ("DECC") Renewable Heat Incentive ("RHI"): Volume one "Eligibility and how to apply"; and Volume 2 "Ongoing obligations and payment". Further to the RHI recently receiving State Aid approval from the European Commission, the expectation is that the scheme will be open to applications from non-domestic users before the end of this month.
Ofgem as administrator
Ofgem will administer the scheme and be responsible for responding to applications for support, accreditation, making payments and ensuring compliance with the conditions and obligations. In return for the RHI payments, owners of eligible installations will be expected to allow monitoring of the installations via heat metering, inspections to ensure compliance with RHI Regulations and perform ongoing maintenance. Some in the industry have expressed concern that the metering requirements could be prohibitively expensive for smaller sites.
Eligibility
Volume one of the guidance details the eligibility criteria and the process for accreditation. RHI support is available in respect of certain types of renewable heat installations, of a sufficient size, installed after 15 July 2009. The heat produced must be used for an "eligible purpose"; it must be useful and useable and meet a genuine existing or new economically justifiable heating requirement. The installation must attach to appropriate metering arrangements that facilitate the accurate capture and reporting of information. No other public grants can have been paid in respect of the cost of installing or purchasing the installation. Note that biomethane injection into the grid has its own different eligibility regime.
Technologies and fuels supported
The following technologies and fuels will be
eligible for support under the RHI: solid and gaseous
biomass boilers; solar thermal; ground and water source heat-pumps;
on-site bio-gas; deep geothermal; energy from waste combustion and
injection of biomethane into the grid. Combined heat and power
("CHP") will be eligible where the fuel
or technology is listed above.
The following technologies and fuels will not be
eligible for support under the RHI from the outset: air
heat-pumps; direct air heating and bioliquids. These technologies
may be reconsidered for support in 2012.
The following technologies and fuel will be
excluded from the scheme: co-firing of biomass with fossil
fuel; exhaust air heat pumps; transpired solar thermal panels;
fossil fuel fired CHP and waste heat from fossil fuel.
Ongoing obligations
Once accredited, participants are required to provide periodic reports to Ofgem detailing heat output data, supporting meter readings, ongoing fuel requirements, sustainability information and the treatment of any additional capacity. Participants are also required to maintain installations and meters in accordance with manufacturer instructions (where available) to ensure that they function effectively and to keep records and proof of such maintenance. This is explained in volume two of the guidance.
Payments
Participants will receive quarterly periodic support payments made over a number of years, accruing from the date of installation and being available for 20 years. In simple terms these payments will be calculated by multiplying the participant's tariff level (set according to the type and size of the participant's installation) by the amount of eligible heat generated from the eligible installation in that payment quarter.
Resources
Ofgem Guidance Renewable Heat Incentive Volume 1
"Eligibility and how to apply"
Ofgem Guidance Renewable Heat Incentive Volume 2
"Ongoing obligations and payment"
Frequently asked questions
Draft RHI Regulations
This article was written for Law-Now, CMS Cameron McKenna's free online information service. To register for Law-Now, please go to www.law-now.com/law-now/mondaq
Law-Now information is for general purposes and guidance only. The information and opinions expressed in all Law-Now articles are not necessarily comprehensive and do not purport to give professional or legal advice. All Law-Now information relates to circumstances prevailing at the date of its original publication and may not have been updated to reflect subsequent developments.
The original publication date for this article was 17/11/2011.
