Summary of Key Aspects of the Renewable Heat Incentive Scheme with regard to Wood Pellet Systems

  1. 1.Commercial and Public Sector Customers.

  1. The RHI will be available for all wood pellet heating systems commissioned since 15th July 2009.
    • The system must be accredited with Ofgem, who will oversee all payments and compliance.
    • The scheme commences following Parliamentary approval and successful accreditation.
    • It is paid quarterly, on receipt of heat usage data, for 20 years. It will be adjusted for RPI.
    • All installations must have calibrated heat meters.
    • Back-up heating systems are allowed, but must not feed heat in via the heat meter.
    • Any boiler under 45kW, and its installer, must both be MCS accredited (Microgeneration Certification Scheme).
    • Any installation that has received grant-funding must repay the funding before claiming RHI.

Tariff bands are as follows: Installations <200kW 7.6p/kWh first tier 1.9p/kWh second tier 200kW-1MW 4.7p/kWh 1.9p/kWh >1MW 2.6p/kWh The first tier applies for up to 1314 hours of the boiler running at its full capacity – 15% of overall time. The second tier is for all heat generated beyond this. The second tier is set below the marginal cost of fuel, to prevent deliberate energy wastage.

For example: A 100kW boiler generating 200,000kW annually will claim (1314x100x£0.076) + (68,600x£0.019) = £11,289.80 pa. This equates to approximately 45T of wood pellet fuel, which might currently cost approximately £8500pa. A 600kW boiler generating 2,000MW annually will claim (1314x600x£0.047) + (1,211,600x£0.019) = £60,074 pa. This equates to approximately 450T of wood pellet fuel, which might currently cost approximately £78,000pa.

This situation makes us particularly vulnerable economically, politically and with regard to the environment. Additionally the EU has committed itself internationally to reducing greenhouse gas emissions. In this context and even though traditional fossil fuels and nuclear energy will continue to play an important role, Europe has a special part to play in promoting renewable energy. They are an attractive option to diversify the EU’s energy supply: renewable sources are available locally, they bring environment benefits and they contribute to employment and the competitiveness of the European industry. Support for renewable energy is needed as long as technologies are still developing and market prices for non-renewable energy do not reflect their full costs to society due to subsidies and external costs.

  1. 2.Domestic Customers

Domestic installations are defined as single private dwellings only.
Commercial activities such as B&Bs, or district heating systems, will be treated under the commercial arrangements above.
Domestic installations will only become eligible for the RHI from October 2012.
The RHI rates and arrangements will then be the same as for commercial installations above.
In the meantime, new domestic installations can apply for a grant of £950 towards installation of a boiler.
This is probably only for those currently not on the gas network – details will be published in May 2011.

Renewable Heat Incentive Calculator   

Please refer to the DECC website for the full wording.

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