Heating a new era

The announcement by the Department for Energy and Climate Change that it plans to push ahead with the Renewable Heat Incentive (RHI) in June is great news for property owners and managers. Although at the time of writing the details are not clear, the scheme aims to provide financial support for landlords who install renewable heating in their properties – whether it be commercial offices, factories or public buildings.

The Government has set aside £850m of funding for the scheme which it hopes: “will drive a more-than-tenfold increase of renewable heat over the coming decade, shifting renewable heat from a fringe industry firmly into the mainstream”. Designed to bridge the funding gap between the cost of installing renewable technology and that of installing conventional heating, the RHI is a carrot among the many sticks in the Government’s strategy to ensure that it meets its legally binding carbon reduction target by producing 12 percent of it’s total heating output from renewable sources by 2020.

Despite all the legislation already in place to encourage carbon reduction, such as the CRC Energy Efficiency Scheme, EPCs, DECs, and changes to Part L of the Building Regulations, the proportion of the nation’s heat produced from renewable sources currently stands at a miserable one percent. So in order to increase that figure 12-fold, it is clear that some form of incentive scheme is extremely necessary.

Although the final details of the scheme have yet to be published, it looks as though qualifying renewable technologies will include air and ground source heat pumps, solar thermal, biomass boilers, renewable combined heat and power, use of biogas and bioliquids and the injection of biomethane into the natural gas grid.

The scheme looks set to operate for heating technologies in the same way as the feed-in tariff operates for the generation of electricity and will likely take the form of credits intended to compensate users for the differences between up-front and on-going costs of generating heat by renewable technologies, compared with traditional fossil fuel systems.

For property owners, managers and developers, the RHI offers the opportunity to set themselves apart from their competitors and offer a genuine selling point to tenants and investors. By installing renewable heating technologies in their buildings they can offer end users both the ability to heat their property with a sustainable resource and reduced energy, safe in the knowledge that the RHI will provide the funding to cover the extra cost of installation.

Although we do not yet know exact figures, it has been mooted that for renewable energies, such as commercial heat pumps around 4.5 pence per kWh will be credited, for the lifetime of the equipment (18-20 years). This is quite a significant sum and will further encourage property owners to make the big leap to renewables.

Although the RHI will enable those who install renewable heating technologies, such as heat pumps, to recoup their outlay and shorten payback periods, many may still question whether the move to renewables is really worth it. Well we feel the answer is a resounding, yes. For tenants or prospective investors the installation of renewable heating technologies will offer them the added advantage of lowering carbon emissions, lower fuel bills and, where it applies, helping with their CRC figures.

Take, for example, air source heat pumps. Progress in the industry over the last 20 years, including technological breakthroughs and further energy saving through heat recovery techniques, have had a huge impact on the efficiency of internal climate control systems. So these latest innovations in heating and cooling could provide a major boost to an energy manager’s ability to control a building’s carbon footprint and reduce fuel bills – thus increasing the company’s bottom line.

The RHI will only apply to whole heating schemes. Small individual heat pumps will not be eligible but large whole building schemes will. It has not yet been decided if a heat/cool system will qualify, but there is equipment available that will provide heat pump heating with no cooling circuit.

The latest heat pump technology provides a highly energy efficient solution for the commercial environment, while also being a low carbon alternative to more traditional heating, ventilation and air conditioning (HVAC) systems.

They can achieve up to 50 percent energy cost savings, compared to traditional fossil fuel boiler systems, by using solar heated air to produce around 65-75 percent renewable heat for buildings and services.

Variable refrigerant volume (VRV) heat pump systems vary the heating/cooling to exactly match the buildings need at any instant, saving both money and carbon emissions, while allowing each area to maintain its set temperature.

The effectiveness of a VRV heat pump can be increased further by the use of multiple zones on one circuit. With only one outdoor unit connected to a multitude of indoor units, VRV technology can be used to create integrated building systems which provide the greatest savings for managers in the long term.

So, for those owners, developers and managers who have not yet bought in to the renewable heating market, the introduction of the Renewable Heat Incentive may well encourage them to take a fresh look at the way they heat their buildings. Forward thinking developers are already reaping the benefits of reduced fuel bills and lower carbon emissions, and the RHI will provide the perfect opportunity for more in the industry to follow in their (low carbon) footsteps.