Support of Renewable Heat in the UK and in Germany
Great Britain is introducing the 'world’s first†scheme for the support of renewable heat which relies on periodic payments being made to accredited generators of renewable heat. The main features of this support scheme are discussed in this article and contrasted with the German approach, which is essentially based on quota obligations and a market incentive programme.
While the share of renewable energy generation in the power sector has experienced intensive growth over recent years - with the share of renewable energy sources reaching 20 % in the first half of 2011 in the German power sector - the growth rate of renewable heat has been considerably lower. In the UK, just 1.5 % of heat is produced from renewable sources. In Germany, 10.2 % of heat was produced from renewable sources in 2010.
Renewable energy sources in the heat sector therefore need to be, and are being, promoted by both the UK and Germany. In the UK, the heat sector accounts for 47 % of final energy consumption and for 46 % of carbon emissions. In Germany, the heat sector accounts for about 55 % of the final energy demand.
The need to reach a higher share of renewable energy in the heat sector derives from Directive 2009/28/EC on the promotion of the use of energy from renewable sources. The Directive obliges EU Member States to reach a mandatory share of energy from renewable sources by 2020. Importantly, this share is calculated on the gross final consumption of energy. The target for the UK is 15% and for Germany is 18 %. Due to the large amount of heat used in proportion to the gross final energy consumption, reaching these aims with renewable energy in the power sector alone appears to be impossible.
Therefore, both the UK and Germany have recently worked on their legal frameworks for the promotion of renewable heat. In 2011, the UK announced the Renewable Heat Incentive (RHI) - the 'first incentive of its kind worldwideâ€. The scheme will assist the UK in reaching a 12 % target of renewable heat by 2020. The RHI is being introduced in two phases. In the first phase, which is now open for applications, owners of an eligible installation in the non-domestic sector can claim periodic support payments for 20 years. Participants in the scheme have to comply with ongoing obligations to continue to be entitled to payments. The domestic sector will also be able to claim quarterly support payments in the second phase (from summer 2013), and in the meantime is entitled to one-off Renewable Heat Premium Payments (RHPP). RHPPs are one-off payments which subsidise the cost of installing qualifying renewable heating systems. Making homes more energy efficient will be incentivised by the 'Green Deal†which is intended to start up this autumn.
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