The aim of the RHI is to provide an incentive to people to generate usuable heat without consuming carbon.
This incentive is planned to be paid where a unit of heat is created that avoids the burning of carbon (oil/coal/gas) or multiplies the amount of heat rather than having a direct generation of heat. An example of this being the use of a heat pump.
The ideal technology for RHI is Solar Water Heating, once installed (apart from the pump) a totally carbon free means of heating water. With a heat pump, the heat that is accounted for on the RHI is the difference between that which would be generated by heating air or water directly using electricity and the actuall heat given out. So a heat pump that has a conversion ratio of 3 to 1 could be said to provide 2 units of carbon free heat for every 1 that uses carbon.
The unit of heat is nominally going to be measured in MWhr under the RHI.
The RHI committee are looking at the ROI (Return on Investment) and how to measure. One of the ways of measurement will be to set a nominal effectveness for a technology and work out an annual incentive payable on an installation.
Potential for Fraud within the RHI
I can see this being wide open to abuse. Lets say I have a Heat Pump that runs for the 1st two or three years, it means I don’t have to use my boiler and I get an annual incentive for using what is a marginally cheaper system.
Once the system is beyond the warranty period, lets say it fails and repairs will cost the equivalent of 2 years worth of incentive. With a failure I will anyway switch on my boiler, I need heating, then I must arrange a repair. But the RHI continues to be paid as it is not based on a meter. Even if there is some facility for inspection, all I have to do is say it failed last week and I am arranging a repair.
The same will apply to any system that is not metered in a verifiable way.
As a solution, perhaps include a mandatory insurance policy that is paid out of the RHI. This can be open to competition as with car insurance, but the payment of RHI is dependent on the equipment being insured. This will have an additional bonus in that reliable systems will cost less to insure and therefore challenge the market to improve quality. To an extent, as with the motor insurance trade, this will represent an unofficial but effective additional regulation of the RHI.
Now, the RHI is there to pay an incentive to reduce the use of carbon in heating. But lets say I have a house with an energy bill of £1,000 to heat it. I switch to a Heat Pump and with incentives covering my 2/3rds heating that is carbon free my heating bill comes down to about £300.
But what if I super insulate my house such that I match that reduction in energy use. Or turn my thermostat down by a notch and put on a jumper and save £500? It seems the RHI is focused on making money for people who both have money and choose a technical solution.Perhaps the granting of RHI for space heating should also be dependent upon the house being as efficiently insulated as possible. Not just the minimum loft insulation and cavity wall, but really well insulated, triple galzing, additional insulation over and above cavity wall, even more loft insulation than minimal!
I would exclude water heating from this as this kind of heating requires a proactive response rather than preservation of existing heat.