Official confirmation: All you need to know about the RHI Scheme

The details of the national Support Scheme for Renewable Heat were announced this morning by the Minister for Communications, Climate Action and Environment, Denis Naughten.

Having received government approval earlier this week, the scheme is designed to financially support the replacement of fossil fuel heating systems with renewable energy for large heat demand non-domestic users. But the scheme will still need to receive EU state-aid approval before being launched later in 2018.

This covers commercial, industrial, agricultural, district heating, public sector and other non-domestic businesses and sectors (in the non-emissions trading sector), according to the department.

Commenting on the scheme, Minister Naughten said: “The Support Scheme for Renewable Heat is a tangible and viable measure that will kick-start the biomass and biogas sectors.

Crucially it will provide the basis to create new commercial opportunities for farmers in heat technologies, including biomass boiler installations and new opportunities for foresters. It will also contribute to meeting Ireland’s 2020 renewable energy and emission reduction targets.

Under the 2009 Renewable Energy Directive, Ireland has a target of 12% of energy consumed in the heat sector to come from renewable energy sources by 2020. Currently 6.8% of energy consumed in the heat sector is from renewable energy sources, the department explained.

In Budget 2018, a total of €7 million was allocated to fund the initial phase of the Support Scheme for Renewable Heat in the coming year. The scheme is designed to ensure that air quality impacts will be addressed to support sustainable biomass use in installations, using best available technology and emission abatement.

Details of the scheme

The development of the scheme involved detailed economic analysis, extensive engagement with industry and the publication of two public consultations on the design and implementation of the scheme.

Minister Naughten added: “My department received almost 200 submissions from the public and the final design of the scheme incorporates the findings from these submissions.”

The Support Scheme for Renewable Heat will consist of two types of support mechanisms:
  • An ongoing operational support (paid for a period up to 15 years) for new installations or installations that currently use a fossil fuel heating system and convert to using biomass heating systems or anaerobic digestion heating systems;
  • A grant (of up to 30%) to support investment in renewable heating systems that use air, water and ground-source heat pumps.

According to the department, the maximum tariffs paid will be 5.66 cents per kilowatt hour (c/kWh) of energy produced from biomass heating systems and 2.95 cents per kilowatt hour (c/kWh) of energy produced from anaerobic digestion (AD) heating systems.

The tariffs paid will reduce with increasing output, reflecting the economy of scale associated with larger systems, the department explained. The scheme is split into six tiers with the limits and proposed tariff rates detailed below.

Proposed tariff rates for the scheme

Each tariff will set the amount of support that the scheme participant will receive in respect of each unit of heat energy used for an eligible purpose. The tariff level for a particular project will generally be fixed for the period of support and tariff levels will not be linked to indexation.

However, adjustments may be applied to prevent windfall gains, the department explained.

As well as this, projects that are in receipt of supports under the Renewable Energy Feed-in Tariff (REFIT) Scheme will not be eligible for operational support under this scheme.

Biomethane grid injection from AD not included

Under this phase of the scheme, the production of biomethane from anaerobic digestion (AD) and its injection into the natural gas grid will not be covered.

The economic analysis carried out during the development of this scheme, indicated that biomass and anaerobic digestion (AD) have a significant role to play in Ireland’s renewable energy future, the minister said.

Other technologies and methods of support are under consideration, including biomethane grid injection, for subsequent phases of the scheme.

“The production of biomethane from anaerobic digestion and its injection into the natural gas grid has significant potential in Ireland. In addition to being a source of renewable energy, it can also provide an outlet for farm wastes.

“My department continues to examine how best to support biomethane production and, as part of this work, we will be holding a workshop with industry early in the new year,” he added.

Lessons learned

The lessons learned from schemes in other jurisdictions have been included in the design of this support scheme, Minister Naughten said while addressing the budgetary control measures in place.

In particular, there are eligibility criteria that projects must conform to over the period of support payments. These criteria will ensure that heat generated under the scheme is applied to useful purposes only.

“In addition, there are a number of budgetary controls in order to control overall costs – including project budget caps, a scheme budget cap and periodic reviews to prevent windfall gains,” he said.

It has been confirmed that the Sustainable Energy Authority of Ireland (SEAI) will administer the scheme and develop the detailed terms and conditions; these will include eligibility and sustainability criteria – which must be then approved by the minister.

Concluding, Minister Naughten said: “Securing cabinet approval this week was a key milestone in order to move to the next stage of the Support Scheme for Renewable Heat which will provide an opportunity for growth in the domestic biomass sector.”