Ofgem begins accreditation of GSHC installations

Ofgem begins accreditation of GSHC installations - after one year of delay

Although the commercial RHI began on 28 November 2011, it has taken over a year for Ofgem to commernce accreditation for Ground Source Heating and Cooling ("GSHC") installations.

After many months of GSHPA lobbying of DECC and Ofgem, including a large meeting on 15 August 2012, Ofgem wrote to the GSHPA and other stakeholders on 5 December 2012 to say that owners of GSHC systems will be entitled to receive RHI, but only at a discounted rate:

GSHPA welcomes the news that Ofgem is now able to provide accreditation for GSHC installations. However, the logic for allowing accreditation at a discount for efficient systems, instead of at a premium defies logic and is at odds with the reason for introducing the RHI to promote systems which lead to a reduction in carbon emissions.

Why the delay?

Ofgem is charged with administering the RHI and is bound by its (and its lawyer's) interpretation of the Statutory Instrument under which the Renewable Heat Incentive was introduced for commercial systems on 28 November 2011. As Ofgem explains in its letter of 5 December 2012, "Under the RHI Regulations 2011, tariff payments for ground source heat pumps (GSHPs) can be made only for extracted heat that naturally occurs in the ground. As a consequence, heat that is injected into the ground and subsequently extracted by a GSHC system is ineligible for support payments".

In practice it has taken Ofgem (in consultation with its lawyers, DECC and DECC's lawyers) over a year to come up with a form of words which it feels allow it to make accreditations for GSHC systems.

The GSHPA hopes that DECC will be able to amend the legislation rapidly to accord with the fundamental objectives of the Renewable Energy Directive and lift the confusion and uncertainty in which the GSHP industry has been placed. Ofgem recognises the unsatisfactory nature of the present compromise by stating "This is to be reviewed after one year, or at such time as Department for Energy and Climate Change (DECC) may amend the Regulations in relation to this issue, whichever is the sooner.".

Why is Ofgem penalising efficient systems that save additional carbon emissions?

Ofgem is bound by legislation that it believes implies that recycling of heat energy produced as a by-product of cooling in summer through the ground and reusing this heat for heating in winter is ineligible for the RHI.

Ofgem recognises that Ground Source Heating and Cooling is an efficient system that saves carbon emissions, but is unable to reward this because of the wording in the Statutory Instrument which states that heat from a ground source heat pump is only eligible for RHI if the heat is generated from "naturally occurring energy stored in the form of heat from the ground".

This concept, as understood by DECC, has no grounding in physics, economics or the EU's Renewable Energy Directive and has caused confusion to the point that Ofgem has been unable to accredit ground source installations other than the simplest systems with restricted efficiency.

The ground is never the ultimate source of heat. Heat is constantly on the move (from warmer bodies to colder bodies) and it is of the essence of ground source heat pump installations that they exchange heat with the ground in a dynamic way. GSHPs can transfer heat from the ground to buildings in winter and they can transfer excess solar heat from buildings down to the ground in summer. This is how GSHPs can play a vital role in combating climate change by recycling solar energy.

The unnatural interpretation placed by DECC on requiring heat to originate from a finite source has blocked innovation in the ground source industry and caused unemployment in the sector at the same time as the Ministers in DECC have been stating that it is the intention of the RHI to support innovation and provide employment in renewable energy technologies.