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Cash rewards for low carbon electricity and heating - feed-in tariffs from ...

Cash rewards for low carbon electricity and heating - feed-in tariffs from April Householders and communities that install low carbon electricity-generating technology such as solar photovoltaic (PV) panels, wind turbines up to 5 MW in size and micro-CHP systems will be entitled to claim payments for the low carbon electricity they produce, even if they use it themselves, from next month. The UK’s long-awaited ‘feed-in tariffs’ arrived in an announcement by the Department for Energy and Climate Change (DECC) on 1 February. Also announced was a blueprint for a similar scheme to incentivise low carbon heating technologies, the renewable heat incentive (RHI) - but this will operate from April next year. The level of payment, which vary from 4.5 to 41 p/kWh, depends on the technology and is linked to inflation, said DECC. Generators will receive further payments for electricity they feed into the grid. Payments will be made for periods between 10 and 25 years, and he scheme will also apply to installations commissioned since July 2008, when the feed-in tariff policy was first announced. Ofgem will administer the feed-in tariff scheme and electricity suppliers will be responsible to paying the reward to their customers. Ofgem will also be responsible for making payments direct to large heat generators under the RHI from April 2011. The schemes are designed to bring about a significant increase in the amount of locally-produced green energy, as a contribution to the wider shift of the energy mix to low carbon. Ed Miliband said: ‘The guarantee of getting an income on top of saving on energy bills will be an incentive to householders and communities wanting to make the move to low carbon living. The feed-in tariff will change the way householders and communities think about their future energy needs, making the payback for investment far shorter than in the past. It will also change the outlook for a range of industries, in particular those in the business of producing and installing small scale low carbon technology.’ A typical, 2.5 kW well-sited solar PV installation could offer a homeowner a reward of up to £900 per annum and save them £140 per year on the electricity bill, says DECC. The table gives a short summary. The UK currently gets around 5.5% of electricity from renewable sources and that will need to increase to around 30% to meet the 15% 2020 target for all energy, says DECC, adding that modelling shows that small-scale renewable installations could meet 2% of electricity demand in 2020. The UK currently gets less than 1% of heat from renewable sources. This will need to rise to around 12% in order to meet the 15% 2020 target for all energy. Perhaps predictably, the renewables and microgeneration industries both welcomed the new schemes, while also pointing to their shortfalls. The Renewable Energy Association (REA) was enthusiastic. Policy Director Gaynor Hartnell said; ‘The potential impact on households, businesses, farmers, schools and virtually every other energy user you can think of should not be underestimated. The balance of power has shifted. Instead of being tied to fossil fuels and energy price fluctuations, people and communities can now take control of their energy supply and their energy bills.’ ‘The next ten years must be the decade of delivery for renewables and these schemes mean every home and every neighbourhood can get actively involved. Come 2020 we hope installing renewables such as solar panels on roofs or heat pumps in backyards will be as every day as putting up satellite dishes or installing double-glazing,’ added Hartnell. But the REA was disappointed that biomass (apart from anaerobic digestion) had been removed from the scheme, and that the feed-in tariffs have not been used to help advance the commercialisation of new technologies including wave, tidal and pyrolysis. Speaking about micro-CHP, Graham Meeks, Director of the CHP Association, commented: ‘Support under the feed-in tariff is vital in the early stages of commercialisation for microCHP, and today's announcement is a step in the right direction. It will help secure the UK's world-leading position in this exciting low-carbon technology, whilst giving householders a cost-effective choice in cutting their carbon footprint.’ The 10 p/kWh tariff is available for the first 30,000 micro-CHP installations and a review will take place when 12,000 units have been installed. The CHPA is concerned, though, that the Government has not followed through on commitments to support mini-CHP units of up to 50 kW capacity. DECC plans for the proposed RHI a scheme will come into effect in April 2011 and guarantee payments for those who install technologies such as ground source heat pumps, biomass boilers and air source heat pumps. Under the proposed tariffs the installation of a ground source heat pump in an average semi-detached house with adequate insulation levels could be rewarded with £1,000 a year and lead to savings of £200 per year if used instead of heating oil. Details of funding for the RHI scheme will be published in the Budget 2010.

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