Burning down the woodlands of the rich and famous
So, we’ve reached the first year anniversary of the domestic RHI. How has it fared?
Let’s start by looking at the goals that the scheme set itself. It is a widely-held and totally incorrect belief that the renewable heat incentive (RHI) was aimed at reducing carbon emissions in the UK. This is absolutely not the case. It is squarely aimed at meeting the EU directive on renewable energy. By 2020, the UK is supposed to be generating 15% of its total energy consumption from renewable technologies. For this to happen, decarbonising the electricity grid with solar PV and wind turbines is not enough. Heat is 75% of all non-transport energy use. So the primary goal for the domestic RHI was to incentivise the highest level of renewable heat for the least cost.
The Impact Assessment reveals that in the first year the scheme aimed to incentivise the installation of generation for 200GWh/yr of renewable heat from 46,000 systems (excluding legacy systems). The Department of Energy and Climate Change predicted that this would cost it £0.04 per kWh in tariff incentives.
In the last quarter of year one, the total heat generation was 90.2GWh, equivalent to 360.9GWh each year. While this figure is for legacy and new installations combined (separate data is not available), I understand that the domestic RHI has exceeded forecasts for energy generated and has also delivered this energy at a lower cost than expected.
So, three cheers for the domestic RHI?
Well, the interesting thing isn’t so much the total generated heat, but where it’s coming from. Instead of 46,000 installations providing the heat, the total number of new (not legacy) accredited installations is 9,078 at the end of the first year, 20% of the figure predicted and a mere 1.2% of the way towards the 745,000 installations targeted in the Impact Assessment.
The average size biomass boiler incentivised under the scheme is a whopping 27kW. The IDHEE boiler sizing calculator recommends only 8kW for an average detached house of 85m2 with cavity wall insulation, 200mm of loft insulation and double glazing. To get to 27kW you have to up the size of the house to more than 500m2
So where are these renewable heating installations? They’re in the mansions of the landed gentry, burning free fuel from woodlands on their estates to heat the family pile and they’re being sent cheques from the taxpayer to do it.
I’m not interested in the politics of envy. All of this would be fine with me, if it were a stepping stone to some desirable future where all homes are heated by low-carbon technologies, but it’s not. It’s a dead end, and quick and cheap way of box-ticking our EU commitment. Once we’ve run out of Country Life boot rooms to heat, we’ve got nowhere to go. We’ve learnt nothing and developed nothing useful. The supply chain that is being developed is of no relevance to the millions of normal-sized homes we must deal with.
The other (subsidiary) goals of the scheme were to develop a supply chain for renewable heat, to deliver low carbon heating to the wider (gas grid connected) market at a later time, and it is in delivering this aspect of its goals that the scheme managers must be concerned. The primary goal of the scheme (set by Treasury) of buying renewable heat as cheaply as possible has completely crowded out the subsidiary goals of developing a supply chain that can cost-effectively deliver low carbon heating to all homes. The technologies that can deliver this future are solar thermal and heat pumps. These technologies are tanking under the domestic RHI.
Just to be clear. The problem isn’t that biomass is over-subsidised and is taking market share away from other technologies. The problem is that the attractiveness of the scheme for the other technologies is just too low. Simply waiting for the biomass tariff to drop as the schemes automatic adjustments to over-deployment kick in is not going to fix the problem.
For sure there are some technical issues that could be swept out of the way to make it easier for people to choose renewable heating. The requirement for a Green Deal Assessment is a barrier. The MCS must be reformed. The visibility of the scheme to the general public should be increased. But fundamentally, the renewable heating technologies suitable for normal homes need a higher level of financial support. This could be for a relatively short time to get the public interest up, but it would be the quick fix that could unlock a virtuous circle of economies of scale in the supply chain leading to lower costs, which in turn need lower levels of support in future.
If DECC can’t win the argument with the Treasury, they need to engage in some clear joined up thinking to create opportunities for renewable heat.
At the same time as running the domestic RHI to encourage people to replace or supplement gas and oil boilers with low carbon heating, DECC has been pouring money into subsidising the replacement of gas and oil boilers with…..more gas and oil boilers. The Green Deal cash-back scheme and its successor the Home Improvement Fund have between them subsidised the replacement of 15,000 boilers. At the very least, support under this scheme should require that a subsidised heating system is left ‘renewables-ready’. Replacement combi-boilers should accept solar preheated water. Supported heating systems with a hot water cylinder should have a twin coil hot water cylinder or high efficiency radiators installed to make retro-installation of solar thermal or heat pump simple.
DECC also has a Fuel Poverty Strategy, a large part of which seems to involve spending £2bn a year on Winter Fuel Payments to older people (including, bizarrely, those living overseas in warm climates). Instead of subsidising the burning of gas and oil, why are we not insulating these homes and installing renewable heating systems instead? £2 billon a year would pay for a heck of a lot of insulation and renewable heating systems.
The domestic RHI may be fulfilling its primary goal of buying low-cost renewable kilowatt-hours, but this is not cause for celebration. For it to become a springboard to a low-carbon future, a serious rethink is needed.
