A Warm Welcome for RHI Ireland

A Warm Welcome for RHI Ireland, by Steve Luker, Principal Consultant

Steve Luker, Principal ConsultantMinister Naughten has just announced details about the RHI in Ireland, and we now know there are going to be four bands of payments for biomass produced heat.

The first 300/MWh will be paid at €56.60/MWh, the next 700MWh will be at €30.20/MWh, the next 9,000/MWh at €5.00/MWh and a final 40,000/MWh at €3.70/MWh. There are no payments above 50,000/MWh.

This is quite different from the GB and Northern Irish RHI schemes. To me this seems to be a sophisticated and sensible approach as there is no incentive to over or under size systems, or ‘sweet spots’ that have undermined schemes elsehwere. The size of systems can be dependent upon the heat load and its profile, as it should be. It is clear that the designers of the Irish RHI have learnt the lessons from the GB and Northern Ireland schemes, we should welcome this.

When thinking about the market opportunities, applications such as hospitals, hotels, schools and care homes should represent good places to start. Even better will be swimming pools that have lower peak loads, and base load applications should be attractive in all circumstances.  The trick will be to maximise the 1,000MWh covered by the two highest tariffs and make best use of the capital invested through running installations of around 300kW to 400kW at about 3,000 full load hours. Installations such as this can secure the €38,000 annually offered by the two highest tariffs, whereas a year a MW of capacity running at 1,000 full load hours only secures the same income – but would clearly cost a lot more to install.

Although the devil will inevitably be in the detail, this scheme should be warmly welcomed by the industry and its potential customers. It is great to say it should help drive sensible design and investment choices and maximise the cost effective replacement of fossil fuel heat.