Assess renewable heat incentives

You may need to think twice before telling your finance director to 
sign up for renewable heat incentives. Hywel Davies gives five reasons why

11 August 2011
   
As the UK becomes increasingly reliant on oil and gas imports, the Renewable Heat Incentive (RHI) provides a financial reason 
to reduce carbon emissions 
and improve energy security. 
But what exactly does it offer 
individual businesses?

The RHI was launched by the government to provide long-term financial support to encourage the public as well as commercial interests to use renewable heat installations. It is the first financial support scheme of its kind in the world and is designed “to revolutionise the way heat is generated and used in buildings and homes”.

Upcoming legislation
Regulations underpinning the scheme are due to be approved by Parliament this summer, with the first phase launching soon after. This will provide long-term tariff support for non-domestic buildings, including the industrial, business and public sectors as well as charitable and community organisations, which together produce 38 per cent of the UK’s carbon emissions.

Phase two will see households offered the same long-term tariff support, starting in October 2012, at the same time as the introduction of the government’s incoming Green Deal.
The incentives will support a range of technologies and fuel uses, which include solid and gaseous biomass, solar thermal, ground and water source heat-pumps, on-site biogas, deep geothermal, energy from waste and injection of biomethane into the gas grid.

Incentive payments, based  on metered heat output, will be claimed by, and paid to the owner of the installation on a quarterly basis for a period of 20 years.

The levels are intended to cover the cost difference between conventional and renewable heat systems, and to provide additional compensation for certain technologies for an element of the non-financial costs. Non-domestic installations completed after 15 July 2009 will also be eligible 
for support as if they had 
been installed on the date the scheme starts.

For small- and medium-sized installations, up to and including 45kW thermals, both installers and equipment must be certified under the Microgeneration Certification Scheme (MCS), or to an equivalent standard, to ensure quality assurance and protect consumers. The scheme will be run by Ofgem, which will deal with applications, accredit installations, make incentive payments to recipients and monitor compliance with the scheme rules and conditions.

So why would any business not want to cash in on the incentives on offer under the RHI? If the scheme offers to bridge the cost gap between conventional installations and renewable alternatives, why would anyone not take advantage? Well, here are five reasons to say ‘not yet’ to the finance director:

1⁄ Use less energy

The most cost-effective way to cut energy bills is not to use energy. But can you be sure that your business does not use energy when it’s not needed? Does the heating run out of hours, when it is not really needed? Do the cleaners turn every light on before they start cleaning? Do you have heating and cooling fighting each other? All these offer instant payback, yet many businesses are not cashing in.

2⁄ Turn off equipment
Is office equipment turned off when not needed? Are computers left running when they are not being used? Do IT systems encourage staff to leave computers on all day even while users are in a meeting? There are some very easy gains here.

3⁄ Assess services
Are your building services systems properly commissioned? For example, 
do they come on when needed, go off when not needed, and operate efficiently when on? Does someone take responsibility 
for checking this, or for checking that a supplier makes these checks regularly?

4⁄  Measure your usage 

Do you measure and monitor your energy bills? How does your energy use compare to benchmark figures? 
Is it good, bad or indifferent? How does it compare with the CIBSE TM46 energy benchmarks? If your energy use exceeds these values, then find out why. Questions 1 to 3 apply.

5⁄  Maintenance contracts
Are your heating, ventilation and air conditioning systems properly maintained? Are maintenance contracts 
in place? Who wakes up in the morning thinking about how 
best to deliver those contracts and whether they give value 
for money?

Once you have the answers to these and identified that you have heating plant, or hot water plant, that needs replacing then you should investigate the advantages of systems that attract RHI. The chances are, if you are managing your energy use, you will be better able to identify and buy appropriately sized equipment under the RHI.

As well as the benefits of the incentive and reduced fuel bills, you will have advantage of knowing that your energy spend delivers good value for money. All things that tend to keep the finance director happy!

Hywel Davies is technical director at CIBSE