Under the 2009 Renewable Energy Directive, Ireland is committed to ensure that by 2020, 12% of our heating demand will come from renewable sources.
Bioenergy is expected to continue to contribute significantly to our renewable energy target. Nevertheless, meeting our EU binding targets in the renewable heat sector will be particularly challenging.
The Draft Bioenergy Plan drawn up by the Department of Communications, Energy and Natural Resources identifies an additional bioenergy-focussed measure in the heat sector as representing the most cost effective means of meeting a number of different policy goals, including reducing the emerging gap anticipated in the heat sector. The analysis considered various policy options, including increased carbon taxes. It indicated that the option with the least modelled cost is an appropriately focussed Renewable Heat Incentive (RHI). This would provide stability and long term security for investors, ensure better value for money for consumers, and have a significant positive impact on non-Emissions Trading System (non-ETS) sector emissions.
The Draft Bioenergy Plan recommends, subject to further Government and EU Commission State Aid approval, the introduction of a Renewable Heat Incentive (RHI) in 2016 for larger heat users. It would be aimed at larger industrial and commercial installations outside of the EU Emissions Trading System (ETS) to change to heating solutions that produce heat from renewable sources.
The renewable heat support would be based on the principle of providing an incentive payment rewarding users for each unit of renewable heat produced and used, based on a unit rate of payment (tariff) applied to metered renewable heat output. The tariff would be calculated to compensate for the additional capital cost and perceived barriers (including non-financial barriers) for the renewable technology (which could include technologies other than biomass e.g. heat pumps) relative to fossil fuel heating.
It is envisaged that the RHI would be funded by the Exchequer.
Work on the design of the RHI scheme has been commenced by the Department of Communications, Energy and Natural Resources. It will include public consultation, the first stage of which will be launched shortly. The consultation process will seek views on a range of issues including the technologies that should be included.
Once designed, the scheme will require State Aid clearance from the European Commission and further Government approval. Subject to these approvals, it is proposed to have the scheme in place in 2016.