Renewable Energy

Energy is considered to be renewable energy when its source is not depleted as it is used (such solar power and wind power) or when it can be naturally and sustainably replenished (as in the case of biomass energy).  Biomass fuel which is grown from plant material such as trees is considered to be renewable as long as it is from sustainable sources because the amount of carbon dioxide released into the atmosphere when it is burned is no more than that which the tree would have absorbed whilst it was living. If a tree dies and is allowed to rot away, the organic material will eventually break down and it will release exactly the same amount of carbon dioxide as would have been released had the tree been converted to biomass fuel and burned.

Fossil fuels like oil, coal and gas are not considered to be capable of generating renewable energy because they take a very long time to be created. Existing, usable supplies of fossil fuels are limited by this and they cannot therefore be sustainable at our current level of usage. Without fuel meeting the sustainability criteria, it cannot be deemed to be capable of generating renewable energy.

Why is renewable energy so important?

The average temperature across the earth’s surface is increasing and whether we consider it to be global warming, climate change or a normal cyclical increase, many governments around the world have decided that we need to do something about it. More than 30 billion tonnes of carbon dioxide is emitted into the atmosphere each year as a result of burning fossil fuels and there is a scientific link between these carbon emissions and rising temperatures. We are constantly being reminded that there is a danger of melting ice caps at the poles resulting in rising sea levels and dramatic changes to global weather patterns. All of which could potentially lead to the severe flooding of major coastal cities, droughts resulting in crop failure on every continent and catastrophic disruption for the world’s population.

The increased use of renewable energy such as solar, wind and biomass to provide energy for homes and businesses is seen as a positive step towards trying to reduce the effects of global warming. Most of the western world’s politicians and scientists accept the basis of climate change arguments and although there are still many sceptics who believe that promoting renewable energy is a cynical attempt to justify tax increases, the vast majority would admit that ‘doing nothing’ is not an option.  Governments are therefore introducing financial incentives such as the Renewable Heat Incentive to promote the generation and use of renewable energy.

Legislation to encourage the use of renewable energy and reduce carbon emissions

Most western governments are introducing financial incentives to increase the use of renewable energy and to improve the energy efficiency of homes and businesses in order to reduce the emissions of so-called ‘greenhouse gases’ and at least slow down, if not reverse, the effects of climate change. The UK Government’s Climate Change Act of 2008 legislated for a reduction in carbon emissions and for the first time set legally binding ‘carbon budgets’ which would apply to all sectors of the economy.

With UK carbon emissions in 1990 used as a base figure, the Government is committed to a 34% reduction by 2020 and at least 80% by 2050 and according to the Department of Energy and Climate Change (DECC), domestic housing stock is responsible for 24% of the UK’s total carbon dioxide emissions. The UK Government has therefore introduced a number of initiatives to encourage householders to use renewable energy and improve the energy efficiency of their homes.  These include the Green Deal, the Energy Company Obligation, Solar PV Feed-in Tariffs and now the Renewable Heat Incentive.

Renewable Heat Incentive

To help meet its carbon emission reduction targets the UK Government has proposed that 12% of heating should be sourced from renewable energy and in support of this has introduced the Renewable Heat Incentive (RHI). The Renewable Heat Incentive is the first scheme of its kind anywhere in the world and encourages households and businesses to install renewable energy technologies instead of those run on fossil fuels.

Phase 1 is the Non-Domestic RHI and it promotes renewable energy by providing financial incentives to industrial, commercial, public sector and ‘not-for-profit’ organisations to encourage them to install:

• renewable heat generators or
• to produce bio-methane.

For those businesses which meet the relevant criteria, non-domestic RHI tariffs are paid every three months for 20 years following the installation.

Phase 2 is the Domestic RHI.  Domestic RHI was launched on 9th April 2014 and it promotes renewable energy by paying RHI tariffs for the installation of:

biomass boilers,
biomass pellet stoves with integrated back boilers which provide hot water,
• solar thermal water heating systems which provide hot water only, not heat for distribution in your home
• ground source heat pumps and
• air source heat pumps.

Domestic RHI tariffs are paid to eligible applicants every three months for seven years and the RHI scheme is available to homeowners and new self-build homes in England, Wales and Scotland. The Domestic RHI scheme is considered so important by the Government in promoting the use of renewable energy that the Department of Energy and Climate Change (DECC) described it as ‘the first step in transforming the way we heat our homes’.

Green Deal

The Green Deal was introduced by the Energy Act of 2012 and is designed to encourage householders to improve the energy efficiency of their homes by providing loans for certain home improvements such as new gas and biomass boilers, wall and roof insulation, solar PV, solar thermal, ground source heat pumps and air source heat pumps.
Green Deal loans are offered to householders to cover the cost of these energy efficient home improvements and they are repaid out of the resulting savings in energy bills. The ‘so-called’ Green Deal Golden Rule ensures that the initial loan is covered by forecast savings in energy bills so that not only does the homeowner avoid an up-front payment but the loan repayments are also taken care of.

Some energy-saving home improvements, though worthwhile, fall foul of this Golden Rule because of their high installation cost relative to forecast savings in energy bills. To help in these cases, the Government has introduced a cash back scheme to contribute to the installation costs. In the spring of 2014 these were extended so that a qualifying householder can get £100 cash back towards the cost of their Green Deal Assessment (GDA), up to £6,000 cash back for installing solid wall insulation and up to £1,000 cash back for installing two of the following measures:

• Condensing gas boiler (mains gas only)
• Double glazing (to replace single glazing)
• Secondary glazing
• Replacement doors
• Cavity wall insulation
• Floor insulation
• Flat roof insulation
• Room-in-roof insulation
• Replacement warm air unit
• Replacement storage heaters
• Flue gas heat recovery units
• Waste water heat recovery systems

The cash back scheme also provides an additional £500 for applicants who have purchased a property within the past 12 months.

Energy Company Obligation

The Energy Company Obligation (ECO) is intended to run alongside the Green Deal by providing assistance for the installation of energy saving home improvements for low income households and those living in properties which are ‘hard to treat’.

The three Energy Company Obligations, all of which are designed to tackle fuel poverty, are:

• Carbon Saving Community Obligation (CSCO)

CSCO is designed to ensure that at least 15% of the available funding goes towards installing energy efficient home improvements in the homes of low-income households in rural areas.

• Carbon Saving Obligation (CSO)

CSO helps to fund difficult to install insulation measures (referred to as ‘hard to treat’) which can’t be funded solely through the Green Deal initiative, such as solid wall insulation which would fail to meet the Green Deal’s ‘Golden Rule’ criteria.

• Affordable Warmth Obligation (AWO)

AWO provides funding to cover the cost of installing efficient gas boilers, cavity wall insulation, loft insulation and solid wall insulation into the private properties of low-income households. It applies to homeowners and tenants who receive certain state benefits and who live in poorly heated or poorly insulated homes. More information regarding the Affordable Warmth Obligation can be found by visiting

Solar PV Feed-in Tariff Scheme

Government incentives are also available for solar photovoltaic systems, known as solar PV, which are installed in private households. Solar PV renewable energy systems convert light from the sun (solar energy) into electricity which can be used in your home.

With Solar PV there are three ways that you can either save money or generate income:

• Savings on your energy bills – By generating electricity from solar PV you will not need to purchase as much electricity from your energy supplier to use in your home. This will naturally lead to a reduction in your electricity bills.

• Generation tariff – The Government’s ‘feed-in tariff’ will pay 14.38p (valid at 1st April 2014) for each kilowatt / hour (kWh) of electricity which the system generates and this is payable to the current homeowner tax-free for 20 years. Although the amounts per kWh payable will fall over time to new applicants, once your system has been registered the tariff levels are not only guaranteed but are even index-linked to inflation.

• Export tariff – In addition to the feed-in tariff payable for generating electricity from your solar PV system, you will receive a further 4.77p (valid at 1st April 2014) per kWh of electricity which you export back into the electricity grid. This rewards installers of solar PV for the amount of electricity which they generate but do not use themselves. At some stage smart meters may be used to measure this excess electricity but for the time being it is assumed to be 50% of the electricity your solar PV system generates.

The feed-in tariff scheme (FITs) applies to solar PV and other sources of renewable energy such as wind turbines, hydroelectricity, anaerobic digesters and micro combined heat and power systems (CHP).

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