Thursday 7 December 2017

Renewable Heat Scheme Approved by Cabinet

The much-awaited renewable heat incentive has been approved by the Irish government. However the Taoiseach told us it needs a new name, to avoid unhelpful parallels with the Northern Ireland scheme of the same name, which eventually became known as the "Cash for Ash" scandal.

It is now being called the Support Scheme for Renewable Heat (or SSRH). Semantics aside, the approval of the scheme by Cabinet and the emergence of some detail is a welcome development and will allow the assessment of opportunities by customers and suppliers alike over the coming months.
It is expected to be open for applications towards the end of 2018, although an EU State-aid approval is required prior to this. It is worth remembering also that the UK equivalent changed significantly before and after state aid clearance, with different support levels being finally approved by the EU competition authority.
Inside a wood pellet boiler (BioXL)
The Sustainable Energy Authority of Ireland (SEAI) are charged with administering the scheme and they have to prepare a robust mechanism and T&Cs to implement the scheme.

And what of the scheme and rates proposed?
BioXL prepared an extensive piece of research and recommended rates in 2015 on behalf of the Irish Bioenergy Association. Perhaps unsurprisingly the rates announced are below the required rates that were evidenced by industry. The recommendation of tiering supports has been embraced with the introduction of five reducing-payment tiers.

The payment rates are set at a level that should be appealing for switching from oil or coal to biomass heating with wood chip or wood pellet, but will not be a competitive option for those using gas boilers or electrical heating systems. About one third of public or commercial buildings currently use some form of oil heating. It can't be expected that they would all replace their existing heating systems. A decision on heating systems is normally taken when a building is first constructed or substantially renovated, or when the existing heating system gives up. One in five making the move to green heat is perhaps a reasonable prediction over the next few years. A typical office building with a 200kW boiler could expect a support payment of €16,800/year for 15 years to make the capital investment to switch over to biomass.

Poultry shed fitted with fin radiators (BioXL)
Farm applications should also be of interest, primarily for piggeries or poultry units that have an ongoing heat requirement and wish to stop using oil. They will have the space and flexibility to adapt their business to a green heat solution and this was a popular application in Northern Ireland.

Pending legislation about near zero energy buildings (NZEB) will also make new developments consider renewable heat options more carefully.
Heat from anaerobic digestion has been included, but at a rate that will have limited material impact. The annual payment is capped at €36,500/year.
The possibility of grid injection of biogas has been considered but deferred to a later phase and subject to additional economic analysis. This will disapppoint those with projects in the pipeline.
The decision to provide grant support for heat pumps is sensible, given that the investment is almost entirely front-loaded. It will cut out unnecessary administration and allow tighter controls around the scheme.