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Non-domestic RHI gains 12–month extension

Originally set to finish at the end of March 2021, and in response to delays caused to building projects by COVID-19, the Government’s non-domestic Renewable Heat Incentive (RHI) has received a 12-month extension. In response to concerns raised by stakeholders that a significant number of existing projects would fail to meet the scheme closure application deadline of 31st March 2021, affected projects are now able to submit an extension application.

Those existing projects unable to commission and accredit to the scheme before the previous deadline now can extend these processes until 31 March 2022.

With increasing pressure to decarbonise in line with the Government’s ambitious net zero targets, the preservation of reliable and continued funding for the commercial sector is critical if organisations are to be further encouraged in the adoption of future-proof sustainable developments. With no clear, immediate replacement for the RHI, concerns had been raised regarding the lack of incentivisation for the commercial sector, as new schemes focussed on domestic installations. Given around 40% of UK greenhouse gas emissions are accounted for by heating, cooling, ventilation, the provision of hot water and lighting the built environment, and some 17% is generated by commercial building stock, it is clear that more help is required to drive the uptake of renewables and more sustainable systems if the UK is to achieve climate-neutral buildings by 2050.

Designed to provide financial incentives to increase the uptake of renewable heat by businesses, the public sector and non-profit organisations, the non-domestic RHI is currently applicable to air source heat pumps, such as the Adveco FPi range and L70, and solar thermal for commercial uses including large and small businesses, plus schools and hospitals. Administrated by Ofgem on behalf of the Department of Energy and Climate Change (DECC), tier one of the RHI incentivises non-domestic energy producers for either the life of the installation or 20 years as a maximum. If conditions are met, with equipment, including a generation meter, being installed by a microgeneration certification scheme (MCS) accredited installer, eligible businesses in England, Scotland and Wales will now continue to be paid for installations completed and commissioned before 2022.

Once successfully accredited, systems will receive quarterly payments per kilowatt-hour (kWth) of energy use, however, if metered as a multiple system, which includes either ASHP or solar thermal and a gas boiler, then payment is made purely for the heat generated by the heat pump or solar thermal aspect of the application.

The current 2020/21 (non-domestic) tariff are:

  • For new air source heat pumps – 2.79(p/kWh)*
  • For new solar thermal collectors less than 200kWth in size (tier 1) – 10.98(p/kWh)*

For specifiers and developers installing renewable heating systems on commercial buildings or small-to-medium-scale district heating projects, the extension also provides crucial financial support ahead of the Green Heat Network Scheme (GHNS) coming into force in April 2022.

*For more information on non-domestic RHI and the full conditions of eligibility, refer to the energy regulator Ofgem.

Adveco FPi Air Source Heat Pumps.

Clean Heat Grant to Replace the Renewable Heat Incentive

The Department for Business, Energy and Industrial Strategy (BEIS) has confirmed that the non-domestic Renewable Heat Incentive (RHI) is to close to new applicants on 31 March 2021. This has led to the launch of consultation for the ‘Future support for low carbon heat’ which details the proposals for support mechanisms following the closure of the scheme.

Replacing the RHI’s tariff-based support is the £4,000 Clean Heat Grant set at a flat rate as opposed to scaling with system size or changing across technology types. The intent is to drive businesses to find which technology is the most cost-effective for their property and address the barrier of upfront costs.

BEIS has indicated it believes the majority of applications will be for air-source heat pumps (ASHP). The Government is proposing to support both low and high-temperature units, where installations provide space and water heating in buildings, but not ‘hybrids’ installed alongside a fossil fuel system.

As part of the consultation process, the Government continues to consider the role that gas/electric hybrid systems may play in the longer-term decarbonisation of the gas grid, noting recommendations relating to Hydrogen in a low carbon economy. Under this scenario, widespread deployment of hybrid systems help to retain the long-term value of the gas grid to the energy system, while enabling near-term reductions in carbon emissions.

Adveco can support commercial businesses wishing to design new low carbon systems featuring  ASHPs. The FPi range of ASHP, for example, delivers an easy to install method for commercial sites to achieve lower cost water heating or cooling. With sleek looks and quiet operation, the compact monobloc design is capable of providing domestic hot water (DHW) at up to 55°C, or cool water to -7°C for use in fan coils. The FPi range is able to achieve an above-average coefficient of performance (COP). Ranging up to a very high COP of 4.7, FPi ASHPs can make a real impact on a property’s energy consumption.

The initial response to the announcement has been mixed, especially regarding the lack of extension of the non-domestic RHI and the instigation of a cap on the future grant scheme. More importantly, for many commercial sites, ASHP will not be enough in isolation, so you need to understand the limitations and why combining with other technologies and controls to create a hybrid system is a necessity. The hybrid approach also offers better compatibility with existing DHW distribution systems and the demands of higher thermal requirements, providing the versatility to reduce operational costs while maintaining the higher water temperatures demanded by commercial DHW operations. A hybrid system built around Adveco’s FPi can help businesses meet their carbon targets in the coming decade while keeping running costs low and should not, it is hoped, be summarily dismissed from the Clean Heat Grant. Exclusion could have a damaging effect on the decision by commercial properties to refurbish systems to be more environmentally friendly if costs become prohibitive without financial support from the Government.

BEIS will retain the right to review the grant levels in response to market changes or “if uptake falls substantially outside the expected range”. Funding for the Clean Heat Grant has been committed for two years to March 2024, after which the scheme will close to new applications.

The Clean Heat Grant consultation closes on 7 July 2020. Read the latest on the consultation process.

Solar collector panels.

Solar Thermal – Proven Route to Sustainability

A.O. Smith Solar Thermal SGS system

The A.O. Smith Solar Thermal SGS system

Solar thermal represents a vital component for addressing sustainability within commercial organisations. Obviously, solar thermal systems are most productive in the summer months, when there is most sunlight, so this does result in the additional need for non-renewable energy sources during the winter months. Despite this, sustainability is more than achievable, and Adveco will design applications and package the appropriate technology. The A.O. Smith SGS solar water heater with IT storage vessel is a perfect example of a sustainable application. The intelligent solar control of the system ensures maximum efficiency. Even with little solar input, the required hot water temperature is guaranteed by the gas burner operating as a back-up system.

SGS System in situ on North Cumbria Police Headquarters’ award-winning ‘green roof’.

SGS System in situ on North Cumbria Police Headquarters’ award-winning ‘green roof’.

An example of this application in practice is the North Cumbria Police Headquarters’ award-winning ‘green roof’. The building incorporates an A.O. Smith SGS 60-ITE 750 solar system. The solar heat input collected by the 2×5 solar collectors (on-roof-frame construction) is transferred to the available hot water supplies via the ITE 750 which is controlled together with the collectors by the SGS 60. With the use of a single system controller the SGS 60 only fires its high efficiency condensing gas burner when hot water demand outstrips the available stored and solar heat input.

When Stockport Metropolitan Borough Council’s Ponsonby Building was refurbished into a stylish working environment for more than 450 staff, 12 solar collectors were installed on the outside wall feeding an A.O. Smith ITS 1000 to meet the hot water demand. The ITS, an indirect tank, is fitted with two coils. In solar configuration, the upper coil is connected to the primary circuit (boiler) whilst the lower coil is connected to the solar circuit. The top coil after-heats the water if the solar contribution is insufficient. The lower coil transfers the solar contribution which is collected by the solar collectors.

If a solar thermal application is designed to leverage the Government’s non-domestic Renewable Heat Incentive (RHI), this adds a new revenue stream that helps to increase return on investment and reduce the payback period.

Designed to provide financial incentives to increase the uptake of renewable heat by businesses, the public sector and non-profit organisations, the Government has spent £550m to date on non-domestic RHI to reduce carbon emissions. RHI is currently applicable to solar thermal for commercial uses including large and small businesses, plus schools and hospitals. Administrated by Ofgem on behalf of the Department of Energy and Climate Change (DECC), tier one of the RHI incentivises non-domestic energy producers for either the life of the installation or 20 years as a maximum. If conditions are met, with equipment, including a generation meter, being installed by a microgeneration certification scheme (MCS) accredited installer, eligible businesses in England, Scotland and Wales will continue to be paid for installations completed and commissioned before 2021. After 31 March 2021 new installations may not receive any form of subsidy.

Successful systems will them receive quarterly payments per kilowatt hour (kWth) of energy use, however, if your system is metered as a multiple system, which includes both solar thermal and a gas boiler, then payment is made purely for the heat generated by the solar thermal aspect of the application.

Changes to, or a replacement for, the scheme after March next year are currently to be finalised, but whilst the expectation is that solar thermal will play a role in the long-term decarbonisation of heating in the UK, the technology is not deemed a stand-alone solution for phasing out fossil fuels within buildings. As such, the current Government’s stance under the incoming Green Heat Grant is that the technology will not be supported under the new policy mechanism.

The current 2020 tier 1 (non-domestic) tariff for new solar thermal collectors less than 200kWth in size is 10.98(p/kWh)*.

No single technology currently provides the ‘magic bullet’ of sustainability, but for organisations with long-term vision and a willingness to invest in sustainability, solar thermal when correctly sized, commissioned and protected from overheat, is a proven and practical technology for securing on-premise DHW. When delivered in conjunction with other technologies, including high-efficiency gas and electric heaters, micro-CHP and ASHP, you can future-proof a hot water system whilst making substantial savings in operational costs and dramatically reducing emissions all year round.

*For more information on non-domestic RHI and the full conditions of eligibility, refer to the energy regulator Ofgem.

Read more about Solar Thermal from Adveco