Renewable Heat Incentive in Ireland

On Sep 4, 2017 by ghadmin.

RHI for short – In Northern Ireland it is referred to as “Cash for Ash” and contributed to the downfall of their government executive – and will cream of c. €500 million of government funds that could be used elsewhere.

However, when it is launched in Ireland it will be much better managed and the more energy you produce the less the funding will be and there will be checks and balances to ensure that you don’t have a boiler in a field burning wood and wasting heat.

Why?

Because Ireland Inc. is failing in our commitments to reduce carbon emissions.  This failure ca be laid fairly and firmly at the feet of our political and business leaders.  They are not leading and they will be responsible for all energy users – domestic and commercial – paying increase energy costs.  But that is another days discussion.

What is it designed to do?

Encourage the use of Renewable Technologies and Energy Supplies to reduce our carbon footprint.  There is a huge focus on heating (Incl DHW – Domestic Hot Water) and this means that new technology will have to be installed.  This requires a capital cost and the RHI is designed to make this investment more palatable and deliver good ROI’s – so that businesses will engage.  How good?  Potentially businesses could see between 50-80% reductions in annual energy costs with 2-5 year paybacks.

How will it work?

It is not fully published yet but broadly this is how it will go – for every kWh of energy produced through the use of renewable technology the Government will pay a tariff or subsidy to the producer.  How much will the tariff be?  Not sure yet and discussions are underway to agree it.  A figure of 6c/kWh has been mooted. If a hotel is using 1,000,000 kWh of oil for heating and replaces their boiler with a Biomass Wood Chip Boiler the indicative figures would suggest – Annual RHI payment of  €60,000 plus an annual cost of fuel reduction of c.€30,000 = €90,000 per annum (Oil Cost was €55,00 pa) available towards the new Biomass Boiler.  If the Biomass installation cost €250,000 the payback would be 2.8 years – an attractive ROI.

How long will the tariff payment last?

It is proposed that it will run for 15 years.

If I don’t engage, so what?

There are 2 taxes included in our energy costs – a Carbon Tax and a PSO Levy.  The more RHI is paid out the higher these will go – so those who don’t engage will pay higher and higher energy prices.  Conversely those who engage and still use some fossil fuels will see their price increase but the “tariff” payments will ore than offset these increases.

I am interested – what should I do?

Contact GreenHospitality.ie and discuss your plans and the options available and how we can support your hotel.

I don’t want to spend capital on Back of House

Don’t – the market is changing and there are companies offering Pay-as-you-Save off-balance sheet solutions so that you can keep your capital for Front of House upgrades – whilst reducing your energy costs.  It is a Win Win solution

More Information

SEAI – Achieving Ireland’s 2020 Renewable Heat Target 

 

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