Education and Care Services / LBB Circular No: 053/12
/ Renewable Heat Incentive: Advice for Schools
 / Organisation and Management
 / Administration and Management
 / Procedures
Audience: / Head Teachers of all Bromley Maintained Schools
Kingswood Centre/Grovelands Centre
Head of Specialist Support and Disability Services,
Phoenix Children’s Resource Centre
Action required: / None
Timing: / N/A
Also sent to: / Secretaries of Staff Associations
Councillor Stephen Wells, Executive Member for the Education Portfolio
Councillor Pauline Tunnicliffe, Children’s Champion
Councillor Robert Evans, Executive Member for the Care Services Portfolio
Councillor Stephen Carr, Leader of the Council
Doug Patterson, Chief Executive
Kay Weiss, Assistant Director (Children’s Social Care) (ECS)
Bob Garnett, Interim Assistant Director (Education) (ECS)
Mike Barnes, Deputy Assistant Director (Education) (ECS)
Anne Watts, Assistant Director (Strategic and Business Support Services) (ECS)
Lorna Blackwood, Assistant Director (Commissioning) (ECS)
David Bradshaw, Interim Head of Children and Young People Finance (ECS)
Angela Huggett, Human Resources Manager (CEX)
Luis Remedios, Deputy Chief Internal Auditor (CEX)
Alastair Baillie, Environmental Development Manager (ES)
Jon Channon, Senior Lawyer (Resources)
Dave Starling, Head of Corporate Procurement (Resources)
Cathy Pimm, Asset Management Team Manager (Resources)
Gerry Kelly, Property Energy Manager (Resources)
Jim Kilgallen, Senior Lawyer (Resources)
Type: / Guidance.
Description: / Information and advice on the Renewable Heat Incentive scheme.
Relates to: / N/A
Date Issued: / 8 June 2012
Contact: / Robert Bollen, Strategic Property Manager (Education and Care Services)
Tel: 020 8313 4697Email:
For reader’s use:
Education and Care Services / LBB Circular No: 053/12
/ Renewable Heat Incentive: Advice for Schools
  1. Background

Schools will be familiar with the Government’s drive to encourage renewable energy by making payments to those generating energy through approved technologies installed by accredited companies. The Council has already issued advice on the Feedin Tariff (037/11 and 080/11), a scheme which pays installers an agreed rate for every unit of clean electricity produced through technologies such as photovoltaic panels (PV).

This advice relates to a similar scheme, designed to incentivise the production of heat from renewable sources such as biomass boilers, solar thermal panels and groundsource heat pumps. This scheme is called the ‘Renewable Heat Incentive’ (RHI) and this Circular provides schools with an overview of the RHI scheme and advice on some of the main issues to consider.

The Council supports the sustainable use of resources and the appropriate use of renewable energy. However, it should be noted that this approach to rewarding renewable energy is relatively new and there are some areas which you will need to actively consider to ensure you make informed decisions.

This Circular is advisory only and is not a substitute for schools taking advice from appropriate agencies in the light of the specific circumstances affecting any intended scheme.

  1. Basics
  2. RHI payments are claimed by, and paid to, the owner of the heat installation (equipment).
  3. Payments are made on a quarterly basis over a 20year period.
  4. Heat output from the technology is metered and the RHI payment is calculated from the amount of eligible heat, multiplied by the tariff level.
  5. Schools which have accredited installations completed after 15July 2009are able to participate in the scheme and receive payments from the date of registration.
  6. Description of Eligible Technologies
  7. BiomassBoilers

Biomass boilers generate heat by burning organic matter, primarily wood. The heat is usually used to produce hot water or steam, the latter being more suitable for industrial applications. The wood, derived from forestry or forestry byproducts, may be supplied in the form of wood chips, logs or pellets.

  • HeatPumps (Ground or Water)

Heat pumps are electrically (or occasionally gas) driven heat exchangers that extract solar heat from the air, ground or water. The heat pump extracts low level heat from outside and upgrades the temperature so that it is warm enough to heat space and water inside the building. Ground and water source heat pumps are eligible for the RHI, provided they meet the criteria. However, air source heat pumps will not be eligible at the start of the RHI (but may be added at a later date).

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  • SolarThermal

Solar thermal technologies collect heat from the sun onto a collector which transfers the heat energy to a working liquid. This liquid can then be used directly to provide hot water within a building, or an exchanger can transfer the heat from the working liquid to the hot water system. Solar thermal panels (liquid filled flatplate or evacuated tube solar collectors) will be eligible for support.

  • Heating from Biogas Combustion

Biogas is gas produced from renewable materials such as food waste, commercial waste, farm waste or sewage, most commonly through the anaerobic digestion of those materials. For the purpose of heat generation, biogas can be burned and used to create heat directly or to boil water and produce steam.

Generation of heat from the biogas combustion in boilers or engines will be eligible for the RHI.

Tariff Rates for Eligible Technologies
Tariff name / Eligible technology / Eligible sizes / Tier / New rounded tariff (pence/kWth) from 1 April 2012
Small commercial biomass / Solid biomass including solid biomass contained in municipal solid waste (incl. CHP) / Less than 200 kWth / Tier 1 / 8.3
Tier 2 / 2.1
Medium commercial biomass / 200 kWth and above; less than 1,000 kWth / Tier 1 / 5.1
Tier 2 / 2.1
Large commercial biomass / 1,000 kWth and above / N/A / 1
Small commercial heat pumps / Groundsource heat pumps; water source heat pumps; deep geothermal / Less than 100 kWth / N/A / 4.7
Large commercial heat pumps / 100 kWth and above / N/A / 3.4
All solar collectors / Solar collectors / Less than 200 kWth / N/A / 8.9
Biomethane and biogas combustion / Biomethane injection and biogas combustion, except from landfill gas / Biomethane all scales, biogas combustion, except from landfill gas / N/A
  1. Legal and Financial Duties

Before commencing any activity, you should establish your legal rights and responsibilities in relation to the installation of renewable heat technology and, in particular, the Council’s role as either the owner or landlord of the premises on which the equipment is to be sited, and also as the relevant planning authority.

In addition, you need to observe the requirements set out in the Schools’ Finance and Governance Regulations, especially in respect of obtaining valueformoney, ensuring health and safety, and correct accounting treatments.

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In practice, and before you proceed with any scheme, you will need to:

  • obtain the consent of the Council (and/or Diocese) as owner or landlord (asappropriate);
  • enter into preapplication discussions for planning permission (a development consent will generally not be required but may be needed for large solar hot water installations);
  • ensure that your business case and procurement strategy complies with relevant financial regulations and governance requirements;
  • consider the liabilities taken on by the School in the event of change (for example, see sections 10 and 11), default or early termination (if entering any agreement including with a third party). It is likely that any early termination of the contract will have significant legal and financial implications.
  1. Funding Options and Financial Considerations
  2. It is strongly advised that you complete a business case which sets out what the school wishes to achieve, the justification for the project, and considers issues relating to the outright purchase or lease of any equipment and the payback periods involved.
  3. There are various financing models available but it will generally best to use your own capital if available.
  4. If you choose a third party finance option, the company installing the technology will sometimes offer to finance the capital. You should ensure you know whether the RHI payments will go to the school or to the third party as part of the finance agreement.
  5. You should verify whether the financial arrangement amounts to a ‘finance lease’ requiring the Secretary of State for Education’s consent.
  6. You should consider in the development of your business case that some technologies will have associated ongoing fuel costs; a biomass boiler, for example, will need wood chips or pellets throughout the year.
  7. If the property at which the equipment is installed may be transferred to another body, this may have contractual implications with the supplier of the equipment or the funder.
  8. You will need a firm estimate of how much energy the system will generate at your site - this is a requirement for any Microgeneration Certification Scheme approved quote.
  9. Choosing a Contractor

You should:

  • ensure that both the installer you use, and the technology they are installing are accredited under the Microgeneration Certification Scheme (MCS) or you will not receive RHI payments;
  • obtain valueformoney by actively seeking competitive quotations or tenders in compliance with Schools’ Finance and Governance Regulations;

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  • ascertain how long the supplier and/or funder have been operating and how reputable/experienced they are:

identify who will be responsible for installing the equipment;

ask technical questions: is the recommended system appropriately sized, based on criteria such as occupancy, efficiency, and energy demand;

ensure the supplier provides detailed instructions on how to get the best out of the system; eghow do the controls work, how it interacts with your existing heating systems and plumbing?

check whether warranties and/or maintenance are offered by the supplier;

identify, as part of the market testing exercise, whether there are any reference sites to which the supplier/s can refer you.

  1. Making an Application
  2. Applications are submitted to Ofgem. Most of the early applications contained errors and omissions and could not be approved.
  3. Ofgem is considering simplifying the application process but, for the time being, Ofgem urges applicants to read Volume 1 of the RHI Guidance documents before applying, specifically the criteria determining whether a system is "simple" or "complex".
  4. Ofgem has a "Summary of Supporting Information" document, which explains what information applicants will need to have to hand in order to submit a complete application.
  5. Practical Considerations
  6. Ensure that any contract stipulates maintenance and repairs are paid by the company installing the equipment.
  7. Ensure you have any necessary insurance for the equipment against fire, theft, wind damage, etc.
  8. Structural Integrity (Solar thermal): Has your roof been assessed to ensure it is able to support the array? Some roofs may require structural reinforcement before installation.
  9. Roof Replacement (Solar Thermal): Have you considered when your roof may need to be replaced? There could be extra financial liabilities for the removal and reinstallation of the solar collector.
  10. Changes to Ownership
  11. Under the terms of the RHI, the owner of the renewable heat technology is eligible for regular payments over a guaranteed 20 year period.
  12. In the majority of instances, if the ownership of the installation changes hand, the tariff payments will transfer to the new owner for the remaining period of the agreement.

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  • The original owner of the technology needs to provide information of the ownership change to Ofgem before the transfer, in order for the RHI payments to continue as before.
  • If the original participant tried to continue receiving the payments when they are not eligible then this will be treated as fraud and legal action may be taken.
  1. Changes to School Buildings
  2. It is also important to be aware that any changes made to a registered installation may result in the reduction or removal of the tariffs. For instance, if your school adds additional heating equipment you will need to inform Ofgem of this change (Ofgem will determine whether the eligibility criteria are still being met). You may also be liable for any costs relating to dismantling and reinstalling any equipment and/or for loss of income which would otherwise be payable to the lessor / supplier of the equipment. You should check the terms of any lease / supply agreement to verify your liabilities in such circumstances.

11.Further information

  • Department of Energy & Climate Change RHI pages
  • Renewable Heat Incentive Scheme: frequently asked questions(DECC)
  • Energy Saving Trust
  • Ofgem
  • Ofgem - First Quarterly Report on RHI

If you would like to speak further on this subject, please contact either of the following:

  • Robert Bollen

Education Strategic Property Manager

Education & Care Services

Tel:020 8313 4697

Email:

  • Alastair Baillie

Environmental Development Manager

Environmental Services

Tel:020 8313 4915

Email: