Policy paper

2010 to 2015 government policy: low carbon technologies

Updated 8 May 2015

This was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government

© Crown copyright 2015

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This publication is available at https://www.gov.uk/government/publications/2010-to-2015-government-policy-low-carbon-technologies/2010-to-2015-government-policy-low-carbon-technologies

This is a copy of a document that stated a policy of the 2010 to 2015 Conservative and Liberal Democrat coalition government. The previous URL of this page was https://www.gov.uk/government/policies/increasing-the-use-of-low-carbon-technologies. Current policies can be found at the GOV.UK policies list.

Issue

Increasing the amount of energy the UK gets from low-carbon technologies such as renewables and nuclear, and reducing emissions through carbon capture and storage (CCS), will help us to:

  • make sure the UK has a secure supply of energy
  • reduce greenhouse gas emissions to slow down climate change
  • stimulate investment in new jobs and businesses

Actions

Low Carbon Energy Innovation

Innovation in energy technologies is essential if the UK is to meet our challenging future climate change goal of an 80% reduction in greenhouse gas emissions by 2050.

The Low Carbon Innovation Co-ordination Group (LCICG) brings together the major public sector backed organisations that are supporting low carbon innovation in the UK.

The LCICG aims to maximise the impact of UK public sector support for low carbon technologies to deliver aims shared by all of these organisations.

LCICG’s Strategic Framework

The Low Carbon Innovation Coordination Group has now published its Strategic Framework, Coordinating Low Carbon Technology Innovation Support.

The Strategic Framework sets out the LCICG’s planned approach to collaboration and the prioritisation of future innovation support programmes. Building on the Technology Innovation Needs Assessments (TINAs) evidence base it also presents a shared assessment of the key innovation needs that will likely require government support between now and 2020.

Exploiting renewable sources

We are legally committed to meeting 15% of the UK’s energy demand from renewable sources by 2020. Achieving this will help us to achieve the UK’s energy security and carbon reduction objectives.

Renewables will also have a crucial role to play in the UK energy mix in the decades beyond, making the most of the UK’s abundant natural resources.

To increase and accelerate the use of renewable energy in the UK, we have introduced:

  • Renewables Obligation (RO) – provides incentives for large-scale renewable electricity generation by making UK suppliers source a proportion of their electricity from eligible renewable sources
  • Feed-in Tariffs (FITs) scheme – pays energy users who invest in small-scale, low-carbon electricity generation systems for the electricity they generate and use, and for unused electricity they export back to the grid
  • Renewable Heat Incentive (RHI) – provides incentives for consumers to install renewable heating in place of fossil fuels. It is open to homeowners and landlords, commercial, industrial, public, not-for-profit and community generators of renewable heat
  • UK Renewable Energy Roadmap – sets out a plan for accelerating the use of onshore wind, offshore wind, marine energy, solar PV, biomass electricity and heat, ground source and air source heat pumps, and renewable transport
  • Renewable Transport Fuel Obligation – makes companies that supply more than 450,000 litres of fuel per year source a percentage from renewable sources
  • support for other renewable technologies, eg heat networks
  • ‘Connect and manage network access regime’ and other actions to make sure new generators can connect to the electricity network in a timely, secure and cost-effective way

Our Electricity Market Reform proposals will also provide support for renewable electricity generation from 2014 onwards.

Investing in new nuclear power

The aim is to have the first new nuclear power stations generating electricity from around 2019. We’re reducing regulatory and planning risks for investors in new nuclear through:

We’re making sure National Grid is assessing and developing the potential reinforcements needed on the electricity network to accommodate new nuclear power in a secure, timely and cost-effective way.

We’re also working with nuclear reactor vendors and operators to create and support a globally competitive UK supply chain and to make sure the UK has a workforce that is appropriately skilled to build new power stations.

Creating a new carbon capture and storage (CCS) industry

CCS is essential in mitigating global climate change while ensuring a secure energy supply. It involves capturing carbon dioxide from fossil fuel power stations (or large industrial sources), transporting it via pipelines and then storing it safely offshore in deep underground structures such as depleted oil and gas reservoirs or deep saline aquifers.

We have developed one of the most comprehensive programmes in the world to help create a new CCS industry. Through our programme we are:

  • running a competition (with £1 billion capital funding available) to support practical experience in the design, construction and operation of commercial-scale CCS
  • funding a 4-year co-ordinated research, development and innovation programme
  • working with industry to reduce costs of CCS technology, develop the supply chain, create storage and help develop CCS infrastructure

Find out more about the Next steps in CCS: policy scoping document

Find out more about how we’re supporting the development of a CCS industry.

Reforming the UK electricity market

The Electricity Market Reform (EMR) programme will significantly change the electricity market. It will result in £110 billion investment for the UK to secure an affordable supply of electricity while meeting our climate change targets.

As part of the programme, we are introducing:

  • Feed-in Tariffs with Contracts for Difference (CfD) – a mechanism to support investment in low-carbon generation:
  • Capacity Market – a mechanism to support security of supply if needed
  • the institutional arrangements to support these reforms

Read more about the EMR programme.

Background

The 2009 Renewable Energy Directive set a target for the UK to achieve 15% (up from 3%) of its energy consumption from renewable sources by 2020. We acknowledged that to meet this target the UK needs to change the way energy is generated and used for electricity, heat and transport.

We took advice from the Committee on Climate Change (CCC) and worked with the renewables industry to assess how much renewable energy can be generated up to 2020 and identify potential barriers. In July 2011 the government and devolved administrations published the UK Renewables Energy Roadmap (updated in December 2012), which sets out the plan for accelerating the deployment and use of renewable energy to help meet the 2020 target.

At the same time the Department of Energy & Climate Change (DECC) published a white paper on Electricity Market Reform. This presents the measures we’re introducing to attract investment, keep energy bills as low as possible in the long run and secure a mix of low-carbon electricity sources that includes renewables, new nuclear, CCS and gas.

We believe new nuclear power can help the UK secure energy supply and meet its climate change targets. When the National Policy Statements for Energy Infrastructure were approved in July 2011, they listed 8 sites considered suitable for new nuclear power stations.

Microgeneration guides

We have been working with industry and the Energy Saving Trust (EST) to develop guidance for consumers containing advice on different technologies, the types of financial support available and how to find installers and products. The microgeneration factsheets cover:

  • the suitability of each technology for your home
  • the benefits of installing each technology
  • the financial support schemes and what you need in order to be eligible

  • information on system cost, potential energy savings and income levels

  • Energy Saving Trust: Microgenration guides

Appendix 1: bioenergy

This was a supporting detail page of the main policy document.

Bioenergy is renewable energy made from biomass, which is organic material derived from plant or animal matter.

The Biomass Energy Centre provides further information about biomass.

The UK has a binding target under the European Commission’s Renewable Energy Directive to source 15% of its overall energy from renewable sources by 2020.

Bioenergy has the potential to provide about 30% of the 2020 target through:

Bioenergy strategy

The UK bioenergy strategy was published by the Department of Energy & Climate Change (DECC), the Department for Environment Food and Rural Affairs (Defra) and the Department for Transport (DfT) in 2012.

The strategy established a set of principles to guide UK bioenergy in a way that secures its benefits while managing risks.

Support for bioenergy generation

Electricity

DECC supports the large-scale generation of biomass electricity through the Renewables Obligation.

It also supports small-scale generation from anaerobic digestion units through the Feed-in Tariffs scheme.

Read about the sustainability standards for electricity generation from biomass.

Heat

DECC supports large- and small-scale generation of biomass heat through the Renewable Heat Incentive.

Further support is available through Defra’s Rural Development Programme for England.

Support for the supply of biomass fuel

In England the Energy Crops Scheme provides grants for establishing short rotation coppice (a woody solid biomass) and miscanthus (perennial grasses that can be turned into biofuel) in appropriate locations. Natural England administers the scheme on behalf of Defra.

Economic benefits of bioenergy

We have published a report by the National Non-Food Crops Centre on UK jobs in the bioenergy sectors by 2020, which estimates the possible levels of UK employment in the biomass combustion (heat and power) and anaerobic digestion sectors by 2020.

Appendix 2: marine energy

This was a supporting detail page of the main policy document.

Wave and tidal energy offers a predictable and consistent source of renewable energy.

Developing the potential of marine energy resources will help the UK:

  • save around 61 metric tonnes (Mt) of carbon dioxide (CO2) by 2025 (valued at an estimated £1.1 billion to the UK economy)
  • help meet the UK’s renewable energy objectives

Wave and tidal stream energy has the potential to meet up to 20% of the UK’s current electricity demand, representing a 30-to-50 gigawatt (GW) installed capacity. Between 200 and 300 megawatts (MWs) of generation capacity may be able to be deployed by 2020, and at the higher end of the range, up to 27GWs by 2050 (see the Renewable Energy Roadmap).

The UK is currently seen as a world leader and focal point for the development of wave and tidal stream technologies. With its excellent marine resource and its expertise in oil and gas exploration, the UK is in a unique position to benefit from this type of renewable energy and to develop related wave and tidal stream services. The industry is still in its early stages however, and further research is needed to determine how best to exploit these assets.

UK Marine Energy Programme

The UK Marine Energy Programme enhances the UK marine energy sector’s ability to develop and deploy wave and tidal energy devices at a commercial scale.

Through the programme we will:

  • help the UK marine energy sector move towards commercial deployment over the coming 5 years
  • provide a direct link between ministers at the Department of Energy & Climate Change (DECC) and people who work in the marine energy sector

The programme is managed by the Marine Energy Programme Board.

Marine energy parks

We have established marine energy parks (MEPs) to bring together local and national government, Local Enterprise Partnerships, technology developers, academia and industry for the development of the marine energy sector.

The first, the South West Marine Energy Park (SWMEP) was established in January 2012 and stretches from Bristol through to Cornwall to the Isles of Scilly. This includes the Wave Hub in Cornwall and the Fab-Test nursery site in Falmouth.

The second MEP was established in the north of Scotland in July 2013 in the Pentland Firth and Orkney Waters incorporating the European Marine Energy Centre (EMEC).

Funding for wave and tidal energy

To help develop and commercialise wave and tidal technology, we have introduced the most comprehensive marine energy support regime in the world. This provides support from grants for the earliest stages of university research through to demonstration and revenue support for deployment under the banded Renewables Obligation (RO).

Find out about Technology Innovation Needs Assessments (TINAS) in our guide on innovation funding for low-carbon technologies.

Read the report ‘Cost of and financial support for wave, tidal stream and tidal range generation in the UK’.

We have supported the creation of a unique wave and tidal testing infrastructure in the UK. The test centres provide facilities ranging from component testing onshore through to in-sea testing of devices and arrays. These testing centres are:

Marine Energy Array Demonstrator (MEAD) scheme

In June 2011 we announced we are investing up to £20 million in wave and tidal power to help develop marine energy technologies from prototype stage to demonstration of arrays of devices. We are doing this through our MEAD scheme and on 27th February 2013, two projects were selected to be funded under the scheme, subject to State Aid. The projects selected are The SeaGeneration Wales Limited project in Anglesey and the MeyGen project in the Pentland Firth Inner Sound in Scotland.

DECC will fund the scheme from its £200 million budget for low-carbon technologies announced in the 2010 spending review.. Through the Low Carbon Innovation Co-ordination Group (LCICG) DECC makes sure sure the different funding schemes complement rather than compete with each other.

Read more about the MEAD scheme in our guide on innovation funding for low-carbon technologies.

Other sources of funding

See our guide on innovation funding for low-carbon technologies for details of other sources of funding.

Investing in wave and tidal energy

Different types of investors are needed to commercialise the marine energy sector. These include:

  • banks
  • corporate organisations
  • venture capitalists
  • angel investors (individual who provides capital for a business start-up)

In February 2010 DECC commissioned Kreab & Gavin Anderson to produce a survey of the views of potential investors. All were involved in renewable energy and some were already investors in the marine sector.

Tidal range potential

Studies have estimated the UK’s total theoretical tidal range resource at between 25 and 30GWs – enough to supply around 12% of current UK electricity demand. The majority of this is in the Severn estuary (which has between 8 and 12GW), with the estuaries and bays of the north west representing a similar amount and the east coast a further 5 to 6GW.

The 2-year cross-government Severn tidal power feasibility study could not see a strategic case for public investment in a Severn tidal scheme in the immediate term, though private sector groups are continuing to investigate the potential. Other potential projects assessed by developers at sites around the UK include the Mersey, the Solway Firth and the North Wales coast.

Appendix 3: geothermal energy

This was a supporting detail page of the main policy document.

Geothermal energy is stored in the form of heat beneath the Earth’s surface.

Geothermal technologies

There are 2 types of geothermal technology.

Deep geothermal for direct heat use

This is where the source of the heat tends to be hot water aquifers, which are rock strata containing groundwater at depths where temperatures are considerably hotter than the surface. This water can be extracted and will naturally replenish. At temperatures of over 60°C the heat can be used for local heat networks or for cooling through the use of absorption chillers.

Deep geothermal power

This is generally created when cold water is pumped down one borehole, heated up as it moves through fractures in hot rocks (at temperatures over 120°C) and returned to the surface via another borehole to drive an electricity-generating turbine.

One advantage of deep geothermal energy is that, aside from the initial drilling, geothermal plants have little visual, noise or air quality impact. They can also run almost continuously, providing baseload energy, and are not affected by changes in the weather.

The International Energy Agency predicts that by 2050 geothermal electricity generation could account for around 3.5% of global electricity production, with deep geothermal heat meeting 3.9% of projected final energy demand for heat.

In some locations (mainly in volcanic regions like Iceland and New Zealand) high temperatures are found at shallow depths or at the surface. It is these regions that have the vast majority of deep geothermal plants.

Deep geothermal potential in the UK

The UK does not have the resource potential of volcanic regions like those in New Zealand and Iceland, but in some locations underground temperatures have the potential for deep geothermal projects. These are at depths of:

  • over 1km for heat only projects
  • 4 to 5km for power projects

As depths increase so does the uncertainty, complexity and therefore risks (of failed boreholes) and the expense of projects.

Read the British Geological Survey information on geothermal prospects in the UK.

Heat-only projects

Heat-only projects are generally considered to have the greatest potential in the UK because the resource is more widespread and shallower. This includes the hot aquifers (ie subterranean bodies of water) in the North East, Wessex, Cheshire, and Northern Ireland.

The UK’s only existing geothermal heat-generating station (heat only) is at Southampton, where an 1800 metre borehole taps into the edge of the aquifer under Wessex and provides heat to the Southampton district heat network. The borehole is being refurbished.

Find out about Southampton’s geothermal energy district heating scheme.

Power projects

There is no deep geothermal power generation in the UK.

The granite regions of South West England, the Lake District and Weardale and the Eastern Highlands of Scotland are considered most likely to have the best prospects for power generation.

Our support for the geothermal industry

Renewables Obligation (RO)

Power generated from geothermal sources is eligible for support under the RO at a tariff of 2 Renewables Obligation Certificates (ROCs) per megawatt (MWh) generated.

Renewables Heat Incentive (RHI)

Deep geothermal heat for direct use also benefits under the RHI. The RHI also applies to geothermal cooling systems.

In September 2012 we published a consultation on proposed revisions to the non-domestic RHI. If approved in Parliament it will create a separate and higher tariff for deep geothermal heat. Previously the technology was grouped with ground source heat pumps at a lower tariff.

City Deals programme

In March 2011, the Department of Energy & Climate Change (DECC) published the Strategic Framework for Low Carbon Heat in the UK, which identified deep geothermal as an important source of renewable heat for urban networks.

Through the City Deals programme, certain cities are being helped to develop plans for heat networks.

We will provide around £1 million to these cities to undertake feasibility studies on new heat network projects. This includes Manchester and Newcastle, which have both identified deep geothermal energy as a possible heat source for their networks.

Grant aid

Regional Growth Fund

In 2010 the Department for Business Innovation & Skills (BIS) awarded the United Downs project in Cornwall a £6 million grant from the second round of the Regional Growth Fund.

For more information about the fund, see our policy on boosting private sector employment in England and our detailed guide on understanding the regional growth fund.

Deep Geothermal Challenge Fund

DECC has provided more than £4.5 million in grants to support the following projects through the Deep Geothermal Challenge Fund:

Power projects

  • United Downs near Redruth, Cornwall – £1.475m in 2009
  • Eden Project near St Austell, Cornwall – £2.011m in 2009

Heat-only projects

  • Southampton City Centre – £200,000 in 2010.
  • Eastgate in Weardale, County Durham – £461,000 in 2009
  • Science Central site, Newcastle City Centre – £400,000 in 2010

International

On 30 May 2011, we signed a Memorandum of Understanding with the Icelandic government on a number of energy issues, including supporting the development of deep geothermal energy in the UK.

Appendix 4: offshore wind

This was a supporting detail page of the main policy document.

The UK has some of the best wind resource in Europe, with 20 offshore windfarms (including the 4 largest farms in the world) and a 3308MW capacity. Since 2000, the Crown Estate have run five rounds of offshore wind leasing which have increased in scale and technical complexity as the industry has developed.

The offshore wind target

We take a market-based approach to the generation of wind energy and do not have technology-specific targets.

The amount of offshore wind energy that is produced in the UK, and the timing, depends on:

  • the market uptake
  • the relative cost of offshore wind compared to other options
  • the ability of other technologies to produce energy
  • the potential for energy exports to other countries
  • the need for increased renewables capacity beyond 2020

The UK renewable energy roadmap indicates a central range of up to 18 gigawatts (GW) for the deployment of offshore wind by 2020. Increasing the rate of deployment to achieve this will require a substantial reduction in costs. If this occurs there is very high potential for deployment after 2020, with over 40GW possible by 2030.

Offshore Wind Cost Reduction Task Force

The Offshore Wind Cost Reduction Task Force aims to reduce the levelised costs of offshore wind to £100 per MW/h by 2020.

Offshore wind farm leasing

The Crown Estate owns the majority of the seabed within the 12 nautical mile limit of territorial waters. Offshore renewable development in territorial waters can only take place if the Crown Estate grants a lease for a site.

Beyond this limit, in the Renewable Energy Zone the Crown Estate issues a licence to develop a renewable energy installation, rather than a lease.

Potential impact on the environment and sea users

The most recent Offshore Energy Strategic Environmental Assessment (SEA) 2 Post Consultation Report published in 2011 concluded that there were no overriding environmental considerations to prevent the achievement of up to 33GW of offshore wind in the Renewable Energy Zone and English and Welsh territorial waters.

The Department of Energy & Climate Change (DECC) has assessed the impacts of offshore wind installations on sea users as part of its programme of Offshore Energy SEAs. This has helped to make sure these installations are built in the most appropriate places.

All offshore wind developers must undertake environmental impact assessments (EIAs).

The Department of Energy & Climate Change (DECC), Marine Scotland, The Crown Estate, Carbon Trust and the offshore wind development community are currently working together on an Offshore Renewables Joint Industry Programme (ORJIP) to obtain evidence that will help reduce the risk of offshore wind projects not getting consent.

Offshore wind health and safety

Wind generators are covered by the Health and Safety at Work Act 1974 (HSWA).

The Health and Safety Executive (HSE) performs regulatory checks on the operation and maintenance of wind turbines and also commissions research as needed. An HSE-commissioned report on risk assessment in the vicinity of wind turbines will be published shortly.

RenewableUK provides health and safety news, information and guidance for the UK wind and marine renewables industries.

Economic benefits

Wind energy creates opportunities for companies involved in:

  • manufacturing turbines and components
  • installing, operating and maintaining wind farms
  • the supply chain supporting this sector

In turn, these opportunities create jobs, which can often be filled locally.

Further information

Find out how to plan wind farms and access grants for offshore wind investment in ‘Offshore wind: part of the UK’s energy mix’.

You can also read about innovation opportunities for offshore wind development in ‘Innovation funding for low carbon technologies: opportunities for bidders’.

Appendix 5: the Renewables Obligation (RO)

This was a supporting detail page of the main policy document.

We introduced the Renewables Obligation (RO) in 2002 to provide incentives for the deployment of large-scale renewable electricity in the UK.

The RO requires licensed UK electricity suppliers to source a specified proportion of the electricity they provide to customers from eligible renewable sources. This proportion (known as the ‘obligation’) is set each year and has increased annually.

In the UK there are 3 obligations:

How the RO works

This is how the RO works:

  1. The level of the annual obligation on electricity suppliers is published by 1 October in the year before it comes into effect, eg the obligation for the financial year starting 1 April 2015 was published on 1 October 2014.
  2. Eligible renewable electricity generators report the amount of renewable electricity they generate on a monthly basis to the Office of the Gas and Electricity Markets (Ofgem).
  3. Ofgem issues Renewables Obligation Certificates (ROCs) to electricity generators relating to the amount of eligible renewable electricity they generate.
  4. Generators sell their ROCs to suppliers (or traders), which allows them to receive a premium in addition to the wholesale electricity price.
  5. Suppliers present their ROCs to Ofgem to demonstrate their compliance with the RO. Suppliers who do not present enough ROCs to meet their obligation must pay a penalty (known as the ‘buy-out price’).
  6. The money Ofgem collects in the buy-out and late payment funds is re-distributed on a pro-rata basis to suppliers who presented ROCs.

Read our guidance on how the number of ROCs issued to generators is calculated.

The RO will close to new generators on 31 March 2017. Electricity generation that is accredited under the RO will continue to receive its full lifetime of support (20 years) until the scheme closes in 2037.

ROCs

How the value of a ROC is determined

ROCs are tradeable commodities that have no fixed price. The amount an electricity supplier pays for a ROC is a matter for negotiation between the supplier and generator.

For the purposes of government financial planning, the long-term value of a ROC is made up of the buyout price, ie the payment avoided by the supplier for presenting ROCs to Ofgem, plus 10%.This is roughly £46 per ROC in 2013/14 prices.

From 2027 the Department of Energy & Climate Change (DECC) will fix the price of the ROC for the remaining 10 years of the RO at its long-term value and buy the ROCs directly from the generators (as set out in the white paper on Electricity Market Reform and subject to parliamentary approval). This will reduce volatility in the final years of the scheme.

You’ll find further information about the fixed ROC in the technical update to the white paper on Electricity Market Reform.

Setting the obligation level

DECC sets the level of the obligation each year using a fixed target or a ‘headroom’ calculation. It does this in accordance with provisions in the Renewables Obligation Order 2009 (as amended).

‘Headroom’ works by providing a set margin between the predicted generation (supply of ROCs) and the level of the obligation (demand for ROCs). This helps reduce the possibility of supply exceeding the obligation in any given year and therefore reducing the market value of a ROC. Headroom lets investors feel more confident that there will always be a market for their ROCs and it helps stabilise the ROC price.

The obligation level determines the number of ROCs suppliers are required to produce for each megawatt hour of electricity (MWh) they supply to customers. Each supplier’s obligation is calculated by multiplying their total annual supply to customers in the UK (MWh) by the level of the obligation (ROCs per MWh).

The obligation level for each obligation period (1 April to 31 March) is published annually by 1 October of the previous year. The obligation level for suppliers in 2013/14 is 0.206 ROCs for each MWh they supply to customers in England and Wales. In 2015/16 it will be 0.290 ROCs.

Find out how we’ve calculated the level of the RO for 2014/2015 and 2015/16:

Suppliers can meet their obligation by:

  • presenting ROCs
  • making a buy-out payment to Ofgem to cover any shortfall in the number of ROCs requirement (set at £43.30 per ROC for 2014/15)
  • a combination of both

The money Ofgem collects in the buy-out and late payment funds is recycled on a pro-rata basis to suppliers who presented ROCs minus the cost of Ofgem’s administration of the RO.

Suppliers that do not present ROCs pay into the buy-out fund at the buy-out price but do not receive any portion of the recycled fund.

Cap on new build dedicated biomass generating capacity

There is a cap of 400MW on the total new build dedicated biomass capacity that can expect grandfathered support under the RO. Guidance on how to apply for a place within the 400MW cap on new build dedicated biomass projects is available.

The cost to consumers

It is assumed that suppliers pass the cost of compliance with the RO on to consumers through their energy bills.

DECC’s report on the estimated impacts of energy and climate change policies on energy prices and bills, published in March 2012 estimates that the impact of the RO on average household electricity bills is £30 in 2013 (in real 2012 prices).

Since 2011/2012 the RO has formed part of the Levy Control Framework (LCF) within the government’s public spending framework. The purpose of the LCF is to ensure that the RO supports renewable electricity deployment in a cost-effective and affordable way.

Outcomes

Read a summary of RO statistics since it started in 2002.

Ofgem publishes data on the RO on the Renewables and Combined Heat and Power (CHP) Register, including details of the stations accredited under the RO and the ROCs awarded.

Ofgem also publishes an annual report on the RO and guidance material relating to the operation of the scheme.

Appendix 6: Renewable Heat Incentive (RHI)

This was a supporting detail page of the main policy document.

The Renewable Heat Incentive (RHI) is the world’s first long-term financial support programme for renewable heat.

The RHI pays participants of the scheme that generate and use renewable energy to heat their buildings. By increasing the generation of heat from renewable energy sources (instead of fossil fuels), the RHI helps the UK reduce greenhouse gas emissions and meet targets for reducing the effects of climate change.

There are two parts to the RHI:

  • Domestic RHI – launched 9 April 2014 and open to homeowners, private landlords, social landlords and self-builders
  • Non-domestic RHI – launched in November 2011 to provide payments to industry, businesses and public sector organisations

The RHI is the main scheme of our heat strategy.

Delivering the RHI

Domestic Non-domestic
Pre-application enquiries by ESAS in England & Wales: 0300 123 1234 Ofgem deliver the scheme
Or contact Home Energy Scotland in Scotland: 0808 808 2282 Guidance on www.ofgem.gov.uk
Ofgem to deliver the scheme RHI enquiry line: 0845 200 2122
Guidance on www.ofgem.gov.uk Email rhi.enquiry@ofgem.gov.uk

The domestic RHI scheme

The domestic RHI scheme opened on 9 April 2014.

It is a financial incentive scheme designed to encourage uptake of renewable heating among domestic consumers. The domestic RHI is targeted at, but not limited to, homes off the gas grid. Those without mains gas have the most potential to save on fuel bills and decrease carbon emissions.

The scheme will cover single domestic dwellings and will be open to homeowners, private landlords, social landlords and self-builders. It will not be open to new build properties other than self-build.

The domestic RHI will pay the following tariffs per unit of heat generated for seven years:

Technology Tariff
Air-source heat pumps 7.3p/kWh
Ground and water-source heat pumps 18.8p/kWh
Biomass-only boilers and biomass pellet stoves with integrated boilers 12.2p/kWh
Solar thermal panels (flat plate and evacuated tube for hot water only) 19.2 p/kWh

The tariffs have been set at a level that reflects the expected cost of renewable heat generation over 20 years. Payments will be made on a quarterly basis.

Domestic RHI Payment Calculator

If you are thinking about installing a renewable heating system then an online tool.has been developed to help you calculate how much you might receive through the Domestic RHI Scheme.

By inputting a few simple details the Domestic RHI Payment Calculator will be able to provide you with an estimate regardless of whether or not you have decided on installing a particular technology. You can also compare estimates across different technologies if you wish. You will be able to obtain an estimate both with and without an Energy Performance Certificate.

The launch of the scheme follows extensive consultation on how a financial incentive would work best for householders and landlords. We set out the policy framework for introducing longer term support for domestic renewable heating in ‘Renewable Heat Incentive: the first step to transforming the way we heat our homes’ in July 2013. Alongside this we published the government response to the consultation, RHI: proposals to launch a domestic scheme, and the associated impact assessment.

The domestic Renewable Heat Incentive (RHI) launched on the 9th April 2014. On 10 November 2014 we announced our intention to amend the regulations to make some small changes to the policy, based on experiences and feedback. These changes came into force on February 5th 2015.

Other documents published alongside the domestic RHI policy framework and government response include two technical guidance documents which provide further information on metering ‘Metering for Payment Technical Supplement’ and the ‘Metering and Monitoring Service Packages Technical Supplement’. We have also published a guidance document which sets out the process by which technologies become eligible for the RHI, Renewable Heat Incentive New technologies: process towards eligibility.

At the time of the July announcement we still needed to finalise when legacy applicants would be able to apply for the scheme, the details of how we would manage the domestic RHI budget, treatment of some types of subsidy and confirmation of the solar thermal tariff. These details are now set out in ‘Further details of the domestic Renewable Heat Incentive’, which was published on 4 December 2013. This document also provides an update on implementation of the biomass sustainability requirements.

The Government is proposing an amendment to the Infrastructure Bill 2014/15 which will introduce an amendment to the primary legislation governing the Renewable Heat Incentive (RHI) schemes. The proposed amendment would allow participants to allocate their RHI payments to third parties and allow the Secretary of State to appoint an alternative body to deliver the schemes in the future. The amendment would also allow some future changes to the scheme to be made by the negative resolution procedure.

If you have any questions about the domestic RHI scheme please contact the Energy Saving Advisory Service on 0300 123 1234 in England and Wales, and Home Energy Scotland on 0808 808 2282 in Scotland.

Factsheets and guidance on applying for RHI are available from Ofgem.

RHI financing models call for evidence

On 28 January 2015 the RHI launched a six week call for evidence to seek information and evidence to inform the development of policy to amend regulations to allow additional financing options into the domestic RHI. There are also a small number of questions on the non-domestic RHI, seeking initial views on whether there is a case for making any similar changes to the non-domestic scheme. A consultation would take place before any changes were made to the non-domestic scheme. Contribute here by 13 March 2015 or via the e-consultation.

Training voucher scheme to help cross-skill heating engineers to renewable heating systems

This is a £650,000 fund aimed at expanding the skill set of domestic heating engineers to include the installation and maintenance of renewable heating systems. This is an important step to boost the installer base and supply chain.

Giving consumers and installers reliable information is an important part of helping them make decisions about their heating system. With the launch of the domestic Renewable Heat Incentive it is important to ensure that consumers have a range of installers to consult, and that these installers are trained to the very latest standards.

The non-domestic RHI scheme

The non-domestic RHI scheme has been open to commercial, industrial, public sector, not for profit and heat networks since November 2011. The scheme is designed to bridge the gap between the cost of fossil fuel heat installations and renewable heat alternatives through financial support for owners.

Find out more about the non-domestic RHI scheme, including eligibility and how to apply

Expansions and improvements to the non-domestic RHI

The government response published on 4 December 2013 sets out a series of improvements and increased support under the non-domestic scheme. Response documents for the three consultations are available below:

Key features of the new policy are:

  • An increase in support for renewable CHP, large biomass boilers (over 1MW), deep geothermal, ground source heat pumps, solar-thermal and biogas combustion;
  • New support introduced for air-water heat pumps and commercial and industrial energy from waste;
  • An evolved approach to budget management, using improved market intelligence to allow credible growth rates across the range of renewable heating technologies supported, whilst ensuring that the scheme remains affordable and achieves value for money

We estimate the policy changes set out here could incentivise around 5,000 non-domestic installations and an additional 6.4TWh of renewable heat by the end of 2015/16.

A summary of revised tariff levels and other policy changes are included in the fact sheet below. Full details can be found in the government response.

Summary of changes to the non-domestic RHI

A further clarification on the policy intent for the eligibility of biogas plants with a capacity of 200kWth and above is available:

Clarifying note on biogas CHP eligibility

The regulations which bring in these changes, as well as refinements on the rules of eligibility and operation of the scheme, were approved by Parliament on 15 April 2014 and came into force on 28 May 2014.

Position paper on tariff guarantees

In the December 2013 government response “Improving Support, Increasing Uptake”, we reiterated our intention to introduce a form of tariff guarantee for the largest installations, subject to successful demonstration that a tariff guarantee is affordable and good value for money, and securing State Aid and Parliamentary approval.

This position paper on tariff guarantees should provide more clarity as to our latest thinking on how tariff guarantees might operate and seeks views on the design. Any decisions on tariff guarantees will be taken alongside wider decisions on the RHI policy as part of the next Spending Round.

Position paper on tariff guarantees

Evidence gathering on potential renewable heating technologies

DECC commissioned research into the cost and performance of technologies which are not currently eligible for the RHI but could be considered for future inclusion. DECC identified five technologies that could offer the potential to increase deployment of renewable heat, but which were not underpinned by robust independent evidence to inform whether they should be included in the RHI. The research publications provide an overview of the technologies as well as additional clarification on the scheme’s evidence requirements.

Consultation on the Biomethane injection tariff review

The RHI was introduced to help meet the UK’s target of 15% of our energy coming from renewables by 2020. When the scheme was first launched in 2011, the biomethane to grid support was a ‘one sizes fit all’ tariff based on a relatively small scale 1MW waste feedstock biomethane plant. It was recognised that over time, this level of support might need adjusting.

On 28 February 2014 we announced a review of the biomethane to grid tariff in response to market intelligence, stakeholder representations and updated evidence indicating that plants of much higher capacities than 1 MW are planned or in the pipeline; and that the costs of those larger plants (that could achieve significant economies of scale) may not justify the current level of RHI support. DECC ran a four week consultation from 30 May - 27 June 2014, seeking evidence and input from industry to ensure that the RHI continues to support sustainable growth in the biomethane to grid market.

In light of the volume of consultation responses received and our wish to provide industry with more certainty, we published a consultation update on 8 July 2014, which included confirmation that any changes to the biomethane to grid tariff will not take effect before 1st December 2014.

Tiered Biomethane injection to grid tariff introduced

In May 2014, we published a formal consultation setting out our proposals to review the biomethane injection to grid tariff under the Renewable Heat Incentive (RHI). Since then DECC has engaged extensively with stakeholders on our proposals and received over 60 responses to the consultation. This is the formal Government response to our consultation which sets out how we will revise the biomethane injection to grid tariff.

A tiered ‘biomethane injection to grid’ tariff was introduced on 12 February 2015. The biomethane tariff will be protected from a degression in April 2015 which will provide a period of tariff stability. The new tariff will be subject to degression again from 1 July 2015 reflecting the need to balance certainty with effective budget management of the RHI scheme.

Minor Amendments to the Non-domestic RHI Scheme

On 12 February 2015 a number of minor changes came into force for the Non-Domestic RHI.

We have introduced greater flexibility into the scheme rules including:

  • CHP systems – Changes to heat loss calculations for biomethane and biogas plants to allow for greater flexibility

  • Underground piping – a heat loss calculation will now not have to be made if underground piping meets the relevant British Standard

  • Sanctions – Clarification on when the scheme administrator can carry out its assessment of whether scheme eligibility criteria have been met and apply sanctions

  • Metering – Introducing flexibility in cases where meters don’t exactly meet manufacturers’ instructions, but which would make no material difference to their payments

The regulation change also makes amends to the financial control mechanism to reflect changes affecting biomethane plants, together with some minor improvements.

Air quality emissions limits for biomass boilers and CHP

In March 2011 the Government published its policy for the non-domestic RHI, including the intention to introduce air quality emission limits for biomass boilers (including CHP) that participate in the scheme. Proposed limits were first published for consultation in 2010. These limits were confirmed earlier this year, with the maximum permitted emissions being 30 grams per gigajoule (g/GJ) net heat input for PM and 150g/GJ for NOx.

As of 24 September 2013, if you are planning to apply for the non-domestic RHI with a biomass boiler (including CHP) your installation will need to have emissions levels no higher than 30 grams per gigajoule (g/GJ) net heat input for PM and 150g/GJ for NOx. Proof that your system does not exceed these limits will need to be provided to Ofgem on application and be in the form of either an RHI emissions certificate or an environmental permit. Ofgem will contact you if this certificate is incomplete, which could delay your accreditation process. Ofgem will also retain the information on the certificate to support their auditing process in the future.

Our air quality factsheet answers a number of frequently asked questions and an example of an emissions certificate so you can ensure that the certificate you plan to submit meets the scheme requirements. If you submit an incomplete certificate it will delay your accreditation, therefore it may be advisable to check with your installer or boiler manufacturer to confirm your boiler’s RHI emissions certificate meets the requirements of the scheme.

Air quality factsheet

When these regulations first came into force on 24th September, there was a minor discrepancy that meant that it was not possible for every type of boiler to meet the standards as originally drafted.

The regulations have now been rectified so that they deliver the full policy intent. The amending regulations have completed their passage through Parliament and came into force on 13th December 2013.

Metering and minor regulatory changes

As of 24 September 2013, there are new regulations in place that modify the eligibility requirements regarding metering in the non-domestic scheme, which also provide flexibility in the way in which heat loss in a heating system can be calculated.

This includes the use of heat loss calculations where it is not appropriate to install meters, and participants will also be able to disregard heat loss from external pipes that are less than 10 meters in combined length providing they are insulated to the specified standards. Equivalent pipes over 10m in length will be able to use heat loss calculations in place of metering.

In addition, the regulations make a number of small amendments which include:

  • allowing accredited installations to be moved to different locations
  • clarifying that water in the ground may be used as an energy source by a ground source heat pump
  • making outdoor commercial cleaning and drying processes eligible for the scheme nd
  • allowing RHI installations to be used as the assessment installation when installers join the Microgeneration Certification Scheme (MCS)

Consultations on the non-domestic RHI

It is vital that we get the level of support right so that the market can invest with confidence, cost reductions can be achieved and the market can grow sustainably. Since the start of the scheme we have been able to collect more data and gather additional evidence from industry on heat usage assumptions, appropriate tariff levels and the practical application of the scheme. We have held a number of public consultations to gather feedback on improvements to scheme design, inclusion of more technologies and an increase in some tariff levels. These are summarised in the table below:

Title Consultation launch Aim Government response Link to policy
Providing certainty, improving performance July 2012 Providing greater certainty to participants and improving the application process February 2013 Government response
Expanding the non-domestic RHI September 2012 Expanding the scheme to include additional technologies December 2013 Consultation
Air-water heat pumps and energy from waste September 2012 Collect views on including AWHP in RHI and broadening eligibility criteria for EfW December 2013 Consultation
Calls for evidence - biopropane, ground source heat pumps and landfill gas and large biomass September 2012 Collecting evidence and information to confirm or inform assumptions for support in the RHI December 2013 Consultation
Revising certification criteria for renewable Combined Heat and Power schemes December 2012 Revising certification criteria for biomass, bioliquid, biogas and waste fuelled Combined Heat and Power (CHP) schemes July 2013 Government response
Early Tariff Review May 2013 Reassessing tariff levels through new evidence and intelligence on cost data and heat usage assumptions December 2013 Consultation

Further details on how the non-domestic RHI scheme has developed over time is available in Key milestones in the history of the non-domestic RHI.

Non-domestic RHI review

In February 2013 we made a commitment to review the non-domestic RHI and in summer 2013 we started work to scope the extent of such a review. Following constructive stakeholder feedback to our proposals, we are now focusing on eight key areas for change and improvement. The policy paper below summarises stakeholder feedback and our plans for the future. Any comments on the Review can be fed back via rhi@decc.gsi.gov.uk

Biomass sustainability

New sustainability criteria for the Renewable Heat Incentive (RHI) have been introduced to ensure all installations using biomass fuels meet the government’s environmental objectives. This affects domestic and non-domestic RHI participants as well as producers and traders of biomass fuels.

The biomass sustainability RHI regulations came into force on 5 February 2015, with the obligation on RHI participants to meet the sustainability requirements from 5 October 2015. This is to help provide sufficient lead time for participants to fully understand the requirement and how to demonstrate compliance, and for suppliers on the BSL to ensure they have the necessary supply chain evidence in place to demonstrate they meet the land use criteria.

For more information on the new RHI biomass sustainability requirements and how to meet them please read our information leaflets.

Updated Biomass and Biogas Carbon Calculator (B2C2) User Guidance

The UK Solid and Gaseous Biomass Carbon Calculator (B2C2) is designed to help companies and individuals calculate the carbon intensity of the electricity, heat or biomethane produced from solid biomass or biogas. The B2C2 user guidance has been updated providing additional guidance to the different types of users, including biomass producers and traders and RHI participants, who may be required to use the tool to demonstrate compliance with the greenhouse gas criteria. The B2C2 calculator and updated B2C2 user guidance can be found on the Ofgem website.

Biomass and Biogas Carbon Calculator and Land Criteria Workshops

All current and future RHI participants will need to demonstrate compliance with the criteria from October 2015. We are running a series of workshops for RHI participants, biomass producers and traders across the UK. The aim of the workshops is to train participants: how to use the Biomass and Biogas Carbon Calculator (B2C2), which can be used to demonstrate compliance with the greenhouse gas (GHG) emissions savings criteria; and how to ensure that biomass used in heat generation complies with the land criteria and is legal and sustainable.

We are hosting four workshops running from 09:00 to 16:30 on the following dates and locations:

  • 11 March – Glasgow;
  • 12 March – Leeds;
  • 26 March – London; and
  • 31 March – Cardiff

Please contact rhi@decc.gsi.gov.uk with the subject ‘renewable heat incentive – b2c2 and land criteria workshops’ for more information.

Biomass Suppliers List

The Biomass Suppliers List (BSL) was launched to applications from producers and traders of woodfuel and Short Rotation Coppice, as well as self-suppliers on 30 April 2014. Producers and traders who wish to access the growing RHI market, and RHI participants who supply their own woodfuel are encouraged to to apply in good time before the requirements are enforced next Spring.

The BSL will provide a simple, light touch way for RHI participants to comply with biomass sustainability criteria. The list is now publically available online to enable consumers to find suppliers selling woodfuels that meet the forthcoming RHI sustainability criteria. The BSL is operated by the BSL Administrator. DECC has appointed Gemserv, partnering with Woodsure, HETAS and Borough IT, to act as the BSL Administrator.

Budget management

Funding the RHI

After consulting in summer 2012, in April 2013 we implemented a transparent budget management mechanism in the non-domestic scheme, called degression. This ensures that budgets are sustainable over the period April 2013 to March 2015.

We publish monthly data on scheme uptake and reduce tariffs, where necessary, on a quarterly basis.

Following further consultations in 2013 and agreement of DECC’s budget for the RHI in 2015/16, we have made adjustments to our approach to budget management.

This recognises decisions to increase tariffs (proposed in the 2013 Tariff review consultation) and the expansion of the current non-domestic scheme (proposed in September 2012 consultation).

Budget management of domestic RHI

The budget for the domestic RHI is also managed using degression. This is a gradual reduction of tariffs for new applicants once certain trigger levels of spend are reached.

Details on how the domestic scheme degression mechanism operates are available in our Domestic degression factsheet, published in June 2014.

DECC publishes monthly and quarterly forecasts for the domestic RHI. The first monthly forecast was published in June 2014 and quarterly announcement by 1st September 2014.

Budget management of non-domestic RHI

Through degression we will reduce the tariffs paid to new RHI recipients if uptake of the scheme is higher than expected, and more than is affordable.

The expenditure thresholds (or triggers) which can lead to reductions to tariffs are set out in Regulations. New degression triggers will take effect from 31 July 2014.

The Expenditure Schedules are available here: Amended Regulations and Expenditure Schedules.

Quarterly forecasts, including previous publications, and monthly updates are available on the ‘RHI mechanism for budget management: estimated commitments’ page. You can also find the methodology which DECC will use to determine whether any tariff reductions are needed.

The Department of Energy & Climate Change (DECC) produces monthly and quarterly statistical updates on uptake of the RHI and Renewable Heat Premium Payment schemes.

See our statistics on RHI and RHPP uptake.

The Office of the Gas and Electricity Markets (Ofgem) also provides information on actual payments to date and numbers of accredited installations.

Further information and how to apply

The RHI scheme is delivered by Ofgem, who have a range of information and guidance available on their website, including how to apply and eligibility.

For pre-application enquiries regarding the domestic RHI please contact ESAS in England & Wales (0300 123 1234) or Home Energy Scotland: (0808 808 2282).

Domestic RHI Non-domestic RHI
Ofgem Domestic RHI website Ofgem Non-domestic RHI website
Once you’ve started the application process and afterwards, contact the Ofgem Domestic RHI Applicant Support Centre with any queries: Contact Ofgem’s Non-Domestic RHI team if you would like to apply for the scheme, if you require support with the application process, or if you have queries regarding the progress of your application, the eligibility requirements or Ofgem’s published guidance
Tel: 0300 003 0744 (Mon to Fri 8am to 7pm, Sat 9am to 2pm) Tel: 0845 200 2122, Monday to Thursday 8.30am to 5pm and Friday 8.30am to 4:30pm. (call charges apply)
DomesticRHI@ofgem.gov.uk rhi.enquiry@ofgem.gov.uk

Contact

Telephone: Ofgem E-Serve RHI Enquiries: 0845 200 2122, Monday to Thursday 8.30am to 5pm and Friday 8.30am to 4:30pm.

Email: rhi.enquiry@ofgem.gov.uk

You can also sign up for RHI email alerts

Appendix 7: carbon capture and storage (CCS)

This was a supporting detail page of the main policy document.

CCS is the only way we can reduce carbon dioxide emissions and keep fossil fuels (coal and gas) in the UK’s electricity supply mix. Fossil fuels are an important part of the electricity mix (and will remain so for some time to come) because they let us balance the intermittency of wind and the inflexibility of nuclear.

If developed at scale CCS could:

  • allow the safe removal and permanent storage of carbon dioxide emissions from coal and gas power stations
  • remove and permanently store emissions from large industrial sources such as steel or cement factories

The technologies used in CCS (capture, transport and storage) aren’t particularly new or unique. They have been used for many years individually (notably in the oil and chemical sectors) but there are no projects that use all 3 together at commercial scale to capture and store carbon dioxide from a power station.

To bring down costs and allow CCS to be more widely used, the full chain of capture, transport and storage needs to be built and operated on a commercial scale at power stations that are already generating electricity.

What we are doing

We are working with industry to create a cost-competitive CCS industry in the 2020s. On 7 August 2014, we published “Next Steps in CCS: Policy Scoping Document”, which summarised the policies and actions that the government has taken to become a world leader in Carbon Capture and Storage. This document also sought views and evidence on a possible Phase 2 of CCS deployment. A summary of the responses is published alongside the scoping document.

Our support for the development of CCS includes:

We are also:

Ministers from the Department of Energy & Climate Change (DECC) also chair the CCS Development Forum to help overcome barriers to CCS by bringing government and stakeholders together.

Further information

Read more about our CCS strategy in the UK CCS roadmap and associated documents.

You’ll find more information about how CCS works at:

DECC has developed the 2050 Calculator to allow audiences to explore the fundamental question of how the UK can meet its energy needs whilst reducing emissions. Fossil fuels currently provide around 60% of our electricity generation; power stations burning fossil fuels that have been fitted with CCS could provide secure low-carbon energy as up to 90% of the carbon dioxide emissions are captured. Why not try out the different ways of securing a low carbon future for the UK by creating your own pathway?

Appendix 8: Feed-in Tariffs scheme

This was a supporting detail page of the main policy document.

We introduced the Feed-in Tariffs (FITs) scheme on 1 April 2010.

FITs support organisations, businesses, communities and individuals to generate low-carbon electricity using small-scale (5 megawatts (MW) or less total installed capacity) systems.

How the FITs scheme works

  1. An organisation, business, community or individual installs a small-scale low-carbon electricity generation system (solar photovoltaic (PV), wind, hydro, micro-CHP or anaerobic digestion).
  2. The generator registers the installation with a licensed electricity supplier (if 50 kilowatts (kW) or less) or with the Office of the Gas and Electricity Markets (Ofgem) (if over 50kW).
  3. The licensed supplier or Ofgem checks the generator is eligible for the FITs scheme and processes the generation data.
  4. The supplier pays the generator a generation tariff for any electricity generated and, where applicable, an export tariff for any surplus electricity exported to the grid.

Find out more about the application process for the FITs scheme.

Green Deal/FITs Quick Guide

DECC has produced a quick guide on how the Green Deal and Feed-in Tariffs can work together, including a worked example for a 4kW domestic solar PV installation.

Community ownership models under the FITs scheme

DECC has produced Guidance on community ownership models under the Feed-in Tariffs scheme. This gives a summary of the scheme’s new community provisions from 1 April 2015, and an assessment of how they apply to the main types of community and shared ownership models. It also signposts other guidance on partnership working between commercial and community organisations relevant to applying for support under the FITs scheme.

Administration of the FITs scheme

Ofgem is responsible for administering the scheme. It makes sure suppliers comply with the scheme’s conditions and maintains the Central FITs Register (CFR).

Ofgem also accredits all hydro and anaerobic digestion schemes, and wind and solar PV schemes over 50kW (ROO-FIT installations) and checks community/school status.

Dispute resolution

The Department of Energy & Climate Change (DECC) has produced a guide to the complaints procedures for each of the organisations involved in the FITs scheme. This addresses the different types of issues people who are generating, or intend to generate, electricity (FITs generators) may experience.

How the FITs scheme is funded

The FITs scheme licensee (electricity supplier) makes quarterly payments to the generator. Licensees recoup these payments through the electricity bills of their customers.

Levelisation

Levelisation is a process to ensure suppliers make a fair contribution to the FITs scheme based on their share of the market. The larger the supplier’s market share, the greater its share of payments to generators should be.

A supplier is required to make a payment to Ofgem if it has not made an appropriate level of FITs scheme payments in relation to its market share. Ofgem will then redistribute the payment to suppliers that have paid more than their fair share.

FITs scheme uptake

Each quarter Ofgem provides data on how many generators have joined the FITs scheme.

DECC produces a summary of the number and capacity of installations based on this data and on data from the Microgeneration Certification Scheme.

The Ofgem website has further information on the FITs scheme, including:

FITs cost control mechanism for solar PV: quarterly degression

As announced in the government’s response to Phase 2A of the FITs Comprehensive Review, a system of quarterly tariff degression has applied for solar PV from 1 November 2012.

FITs deployment data for solar PV will be published here on a quarterly basis. This deployment data will be used by Ofgem to determine the FITs payment rates for solar PV installations with eligibility dates in the following quarter,i.e. deployment data for 1 October 2014 – 31 December 2014 (published at end January 2015) will determine the tariff rate from 1 April 2015 – 30 June 2015.

Secretary of State’s determination of quarterly solar photovoltaic deployment: January 2015

Potential generators have until 30 September 2014 to submit their application to Ofgem for pre-accreditation for the current tariff.

Previous determinations

Secretary of State’s determination of quarterly solar photovoltaic deployment: October 2014

Secretary of State’s determination of quarterly solar photovoltaic deployment: July 2014

Secretary of State’s determination of quarterly solar photovoltaic deployment: April 2014

Secretary of State’s determination of quarterly solar photovoltaic deployment: January 2014

Secretary of State’s determination of quarterly solar photovoltaic deployment: October 2013

Secretary of State’s determination of quarterly solar photovoltaic deployment: July 2013

Secretary of State’s determination of quarterly solar photovoltaic deployment: April 2013

Secretary of State’s determination of quarterly solar photovoltaic deployment: February 2013

Secretary of State’s determination of quarterly solar photovoltaic deployment: November 2012

Secretary of State’s determination of quarterly solar photovoltaic deployment: August 2012

FITs cost control mechanism for non-solar PV: annual and six-monthly degression

As announced in the government’s response to Phase 2B of the FITs Comprehensive Review a system of annual tariff degression has applied for non-solar PV technologies from 1 December 2012.

FITs deployment data for non-solar PV technologies (wind, hydro and AD) will be published here on an annual (and six-monthly basis). This deployment data will be used by Ofgem to determine the FITs payment rates for non-solar PV technologies with eligibility dates in the relevant FIT Year (subject to any mid-year adjustments to generation tariffs).

Secretary of State’s determination of annual non-solar photovoltaic deployment: 2014

Secretary of State’s determination of half-year non-solar photovoltaic deployment: July 2014

Secretary of State’s determination of half-year non-solar photovoltaic deployment: January 2014

In response to a number of queries about the timing of the application of the Retail Price Index (RPI) adjustments to export tariffs and PV generation tariffs, and one–off 2-month degression “quarter” for PV generation tariffs, we have produced the following fact sheet.

FITs Factsheet on RPI Link, Export Tariffs

FITs scheme review

DECC carried out a comprehensive review of the FITs scheme in 2011 to 2012.

One of the aims of the review was to determine how we can improve the scheme’s efficiency to save £40 million (around 10%) in 2014 to 2015 to meet the commitment we made in the 2010 Spending Review.

The review considered all aspects of the scheme including:

  • tariff levels
  • how the tariffs will change over time depending on deployment levels (degression)
  • eligible technologies
  • arrangements for exports
  • administrative and regulatory arrangements
  • interaction with other policies
  • accreditation and certification issues

DECC split the review into 4 phases and ran a consultation for each:

The comprehensive review is now complete.

We will monitor how the changes impact the scheme during 2013 and 2014, but we do not envisage a further review until late 2014 to early 2015, in preparation for the end of the Spending Review period in March 2015.

How Solar PV Total Installed Capacity (TIC) is calculated in the Feed-In Tariff Scheme

  • The Feed-in Tariff policy determines generation tariffs based on technology and the Total Installed Capacity (TIC) of the installation
  • In the case of PV, the TIC is calculated by multiplying the rated output of the solar PV modules used by the number of modules
  • We are aware that there are other ways to calculate the TIC of a system (such as using the inverter rating), however, the above method is the only applicable approach for the purposes of determining eligibility of PV installations within the FITs scheme
  • We have decided on this approach as it minimises the potential for fraudulent activity and is in line with the manner with which we developed the FIT PV tariffs
  • The Declared Net Capacity (DNC) is relevant in determining the route of accreditation (MCS or ROOFIT) an installation must take when applying for the FIT scheme – for further details on MCS Certification contact MCS and for ROOFIT accreditation see Ofgem’s generator guidance document

State Aid approval for Phase 2B changes

On 15th March 2013, the European Commission gave formal approval for the changes to the FITs scheme resulting from Phase 2B of the Comprehensive FITs review. This means that the new hydro band for 100 – 500kW schemes and the small increase in the tariff for micro-CHP schemes can be introduced for new schemes accrediting after that date.

Secretary of State FITs determinations

In accordance with the Feed-in Tariffs Order 2012, Articles 37 and 38, the Secretary of State has made the following determinations legally required for administration of the scheme. These relate to (a) the percentage of electricity from each technology deemed to be exported, (b) the value to FITs licensees of deemed export payments, (c) how we recompense licensees’ administrative costs (QFCs), and (d) the collar and cap range for mutualisation payments. Generation tariffs are not affected by this administrative process.”

Feed in Tariffs (FITs) determinations

Contact

For information on home and business electricity generation and how to join the FITs scheme, contact the Energy Saving Trust on 0300 123 1234.

  • For information on MCS accreditation of wind and solar PV installations below 50kW contact Gemserv on 020 7090 1082.

  • For general queries regarding FIT accreditation of wind and solar PV installations between 50kW and 5MW and all hydro and anaerobic digestion installations, email ROOFIT@ofgem.gov.uk or phone 020 7901 7310 (option1).

Appendix 9: onshore wind

This was a supporting detail page of the main policy document.

The UK has some of the best wind resources in Europe and onshore wind is one of the most cost-effective large-scale renewable energy technologies.

We are committed to using onshore wind as part of the UK’s energy mix.

Onshore wind and the Renewables Obligation (RO)

The cost of onshore wind has fallen and we have been able to cut the subsidy accordingly. In 2012 we announced we would reduce support for onshore wind under the RO by 10% to 0.9 Renewable Obligation Certificates (ROCs) between 2013 and 2017.

Read our detailed guide on Calculating ROCs.

Onshore wind call for evidence

We have launched a call for evidence on onshore wind to look at how to engage local communities and explore the benefits of them hosting. It concentrates on:

  • how windfarm developers consult with local communities about their plans
  • ways of investing in local economies
  • whether there are innovative ways of making sure local energy consumers benefit

The call for evidence is also looking at the cost of onshore wind. We will formally review the costs if the evidence shows a review is justified. Any new arrangements arising from a review would not take effect before April 2014.

We expect to publish our response in the Summer of 2013

If the findings of the call for evidence show that one or more of the statutory grounds for a further review exists - for example, that the costs of onshore wind have come down - the Government will expect to initiate an immediate review of support levels for onshore wind. As we set out in the banding review response last summer - available on the GOV.UK website - see page 30, we would expect to protect from a fall in support levels those projects where significant financial commitments had been made. In this way we will ensure that pressures on household bills are kept to the absolute minimum while also ensuring that investors have the policy stability that they require to continue to invest in the UK economy. The Secretary of State has provided more information about our proposed grace period policy in the event of a tariff change.

Letter from Edward Davey to Maria McCaffery at Renewable UK on grace periods for onshore wind

The impact of wind turbine noise on planning decisions

Wind turbines do make noise, but it is important to put this in context. The indicative maximum noise level of a wind farm at 350m is in the region of 35-45 dB. This is a much lower level than is made by road traffic on a country road, for example.

Noise impacts are considered within the planning process before any decision is taken whether or not to grant consent to a project.

The method of assessing the noise impact of a wind farm is described in ETSU-R-97: The assessment and rating of noise from windfarms, by the Working Group on Noise from Wind Turbines (Final Report, September 1996) for the Department of Trade and Industry.

The method requires the likely impact of noise from wind turbines on local residents and those working in the vicinity to be considered in relation to the existing background noise levels taking into account the characteristics of particular locations.

Analysis of how noise impacts are considered in the determination of wind farm planning applications

In response to concerns about the current appropriateness of some of the measurement methods set out in ETSU-R-97, DECC commissioned acoustic experts at Hayes McKenzie to review the measurement and prediction aspects used to determine noise impacts as part of the planning application process. Their report was published in June 2011 and found that good practice guidance was needed to update, confirm, and where necessary clarify the way the measurement and prediction aspects in ETSU-R-97 should be implemented in practice.

Good practice guide to the application of ETSU-R-97 for wind turbine noise assessment

DECC asked the Institute of Acoustics (IOA) to develop this additional good practice guidance. This was published by the IOA on 20 May 2013.

The Secretary of State for Energy and Climate Change wrote to the IOA on 20 May 2013 to “accept that the Good Practice Guide represents current industry good practice, and to endorse it as a supplement to ETSU-R-97 .” The good practice guidance will provide a valuable technical supplement to ETSU-R-97 (the method for assessing noise impacts from wind turbines), and in turn help to improve the consistency of its application in the consideration of wind farm projects.

Letter from Edward Davey to the Institute of Acoustics

The guidance has been produced independently of Government by the IOA. They have drawn on the expertise of a range of represented members, including local authorities, acoustic consultancies, developers, and a range of other interested parties, to produce and peer review the guidance. The guidance was subject to a 12 week public consultation.

Amplitude modulation (AM)

DECC intends to appoint acoustics experts to review the evidence on wind turbine amplitude modulation (AM), with a view to providing advice on how appropriate AM thresholds might be set in planning conditions. An Invitation to Tender for the work was issued on 27 March 2015. The review, which will complement work on AM that the Institute of Acoustics is undertaking already, is expected to conclude in the summer. It will not consider other forms of noise from wind turbines, which are already addressed in planning guidance.

Letter from the Institute of Acoustics to Ed Davey

Letter from Ed Davey to the Institute of Acoustics

Further information

Read our detailed guide onshore wind for further information.

Appendix 10: heat networks

This was a supporting detail page of the main policy document.

Heat networks, often referred to as district heating schemes, supply heat from a central source directly to homes and businesses through a network of pipes carrying hot water. This means that individual homes and business do not need to generate their own heat on site.

More information on how heat networks operate, can be found on the: Association for Decentralised Energy and the UK District Energy Association websites.

Heat networks are firmly established in other countries but currently provide less than 2% of the UK’s heat demand.

  • In January 2014, DECC commissioned AECOM to research on the cost, performance, and characteristics of heating provided by Heat Networks.
  • This further research was commissioned so that the findings on updated costs and detailed information on performance would enable DECC to better estimate the economic potential of heat network development: Assessment of the costs, performance, and pharacteristics of UK Heat Networks
  • The UK government has ambitious plans for heat networks in the UK. Initial results from earlier DECC modelling indicated that up to 20% of UK domestic heat demand might be served by heat networks by 2030 (currently this is around 2%).

In April 2009 the Department of Energy & Climate Change commissioned an assessment of the technical potential and costs of district heating in the UK. This showed that in the right conditions heat networks could:

  • supply up to 14% of the UK’s heat demand
  • be a cost-effective and viable alternative to individual renewable technologies while reducing the cost of energy for consumers

We have also published a heat map for England, which will assist local authorities in planning. It shows that nearly 50% of heat demand in England is concentrated with enough density to make heat networks worth investigating.

In 2012 DECC commissioned Databuild to compile a database of heat networks in the UK. Summary evidence on district heating networks in the UK from this database have been published.

On 26 March 2013 the Department set out the next steps to ensure affordable, secure, low carbon heating plays an important role in the nation’s energy mix in the publication: “The Future of Heating: Meeting the challenge”.

The actions identified for heat networks were:

  • Support local authorities in developing heat networks by establishing a Heat Networks Delivery Unit (HNDU) within the Department that will work closely with individual authorities’ project teams in England and Wales.

  • Provide funding over two financial years to contribute to local authorities’ costs in carrying out early stage heat network development. This will enable local authorities to bring forward projects to the stage where they are suitable for investment including loan finance from the Green Investment Bank or commercial lenders.

  • Work over the remainder of this year with the Low Carbon Innovation Coordination Group (which includes the Carbon Trust, BIS, the Energy Technology Institute, the Technology Strategy Board and the Scottish Government) to identify the key technological solutions that require innovation support to deliver the Government’s ambitions for heat network development out to 2020.

  • Explore the scope for extra financial incentives for renewable heat networks within the Renewable Heat Incentive (RHI) in 2014 and also access to a number of streams of capital funding provided by government.

  • Seek to endorse an industry-led consumer protection scheme for heat network users later this year, and encourage the heat networks industry to work with consumer groups in developing this practice.

  • Consult this year on options for requiring heat meters to be installed in heat network developments.

These actions build on the support we have already provided cities to develop heat network plans.

We are helping fund work in Nottingham, Newcastle, Manchester, Sheffield and Birmingham to determine the cities’ potential for heat networks. If the studies confirm the potential and the economics, the Green Investment Bank might be able to invest in development of heat networks in these cities.

The water source heat map and water source heat pumps

On 5 November 2014, the Under Secretary of State for Climate Change announced a package of actions designed to overcome the barriers to deployment of water source heat pumps at the Annual Heat Conference. These actions are the result of six months of informal consultation with a range of stakeholders. A summary of stakeholder views can be found below:

Water source heat pumps: summary of stakeholder views

On 25th March 2015, DECC launched an interactive water source heat map layer. This follows-up the high level water source heat map published in August 2014. This more detailed version will allow users to assess the heat potential at specific locations, as well as highlighting possible constraints in the area e.g. environmental sensitivities. The new map forms an important part of the National Heat Map.

We have also published a high level ‘customer journey’, mapping some of the key processes anyone wishing to install a water source heat pump may need to go through.

Both these tools are designed to be useful resources for potential developers, including community groups, local authorities and private developers.

Heat network funding for local authorities

An application and guidance pack for Local Authorities to gain financial assistance from the Heat Networks Delivery Unit Funding Stream is available on the Heat networks funding stream application and guidance pack page along with information on the dates of bidding rounds.

Alternatively you can email the Heat Networks Delivery Unit for more information or to request an application pack.

The National Heat Map tool is also available to provide heat demand information to planners and Local Authorities.

Appendix 11: new nuclear power stations

This was a supporting detail page of the main policy document.

Nuclear power is low carbon, affordable, dependable, safe and capable of increasing the diversity of energy supply. New nuclear power stations will help the UK reduce its greenhouse gas emissions by 80% by 2050 and secure its energy supply.

Nuclear power has been part of the UK’s energy mix for the past 5 decades but most existing nuclear power stations are scheduled to close by 2023.

Table of past and present nuclear reactors in the UK

For more information on nuclear power and how nuclear works, visit World Nuclear Association.

New nuclear power stations

In January 2008 we published the nuclear white paper, ‘Meeting the energy challenge’. It said:

  • new nuclear power stations should have a role to play in this country’s future energy mix, alongside other low-carbon sources
  • it would be in the public interest to allow energy companies the option of investing in new nuclear power stations
  • we should take active steps to support this

Our consultation on the future of nuclear power informed the white paper, and we later published an evaluation of the consultation:

The coalition government published its programme in June 2010. This sets out our vision that nuclear should play an important role (alongside renewable energy and carbon capture and storage) in the UK’s future energy mix. Energy companies can build new nuclear power stations provided they are subject to the normal planning process for major projects and receive no public subsidy.

In a written ministerial statement on energy policy in October 2010, the Secretary of State for Energy and Climate Change confirmed there will be no public subsidy for new nuclear power. This means there will be no levy, direct payment or market support for electricity supplied or capacity provided by a private sector new nuclear operator, unless similar support is also made available more widely to other types of generation.

The National Policy Statement (NPS) for nuclear was designated in July 2011. It includes:

Read the National policy statement for nuclear power generation (EN-6): Volume I.

Read the National policy statement for nuclear power generation (EN-6): Volume II.

Regulation

The Office of Nuclear Regulation (ONR) and the Environment Agency (EA) are responsible for the regulation, licensing, permitting and Generic Design Assessment of new nuclear power stations. The independent nuclear regulators make sure that any new nuclear power stations built in the UK meet high standards of safety, security, environmental protection and waste management.

Plans for more nuclear power

The nuclear industry plans to develop around 16 gigawatts (GW) of new nuclear power.

EDF Energy intends to build 4 new EPRs (6.4GW) at Hinkley Point in Somerset and Sizewell in Suffolk.

Horizon Ltd has confirmed plans to build 2 or 3 new nuclear reactors at Wylfa on Anglesey and the same at Oldbury in South Gloucestershire.

NuGeneration plans to build up to 3.6GW of new nuclear capacity at Moorside, near Sellafield.

Map of nuclear power stations in the UK

New nuclear power station sites

Eight sites have been assessed as potentially suitable for the deployment of new nuclear power stations in England and Wales before the end of 2025.

Before a nuclear power station is built, its design must be assessed to find out if the social, economic or other benefits outweigh the health detriment of ionising radiation. This assessment process is known as regulatory justification.

All new nuclear reactor designs are subject to a Generic Design Assessment (GDA), which is also known as pre-licensing.

State Aid for New Nuclear

On 21 October 2013 we announced commercial agreement on the key terms of a proposed investment contract for the Hinkley Point C nuclear power station with EDF. In October 2013 we submitted the State aid notification for the Hinkley Point C investment contract to the European Commission. The European Commission made an initial Opening Decision on the case on 18 December 2013.

On Friday 7 March 2014, the European Commission published its official Opening Decision in the Official Journal of the European Union (OJEU) which opened a public consultation on the case which lasts for four weeks until Monday 7 April 2014. This provides an opportunity for stakeholders to contribute to the debate. You can respond to the consultation on the Europa website.

Supply chain and skills

It is important that the UK nuclear supply chain is best placed to benefit from investment opportunities. In partnership with industry, we have developed a Nuclear supply chain and skills action plan.

Read more about Supply chain and skills.

Waste and decommissioning

Under the Energy Act 2008, operators of new nuclear power stations must have secure financing arrangements in place to meet the full costs of decommissioning and their full share of waste management and disposal costs.

Read more about waste and decommissioning arrangements for new nuclear power stations.

EU and international co-operation

We are working closely with our EU neighbours to ensure close cooperation on a range of key nuclear energy issues including nuclear safety.

Read more about the informal network of EU countries that are working together on nuclear power issues.

Read more about international co-operation.

Nuclear forums

We want to make sure relevant stakeholders are able to contribute to all issues relating to nuclear and that their views are heard in a fair and transparent manner.

A number of forums are held that deal with nuclear issues. These are:

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