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64 Box 5 Innovative Instruments – fixed-heat tariffs and renewable heat certificates To date there have only been discussions surrounding the possibilities of designing policy instruments for renewable heat based on a feed-in tariff system. However, it may become an option to consider as renewable heating becomes a higher priority. a) Feed-in tariff systems are price-driven policies which historically have been designed to support renewable electricity. Much of the capacity installed has resulted from their implementation, most notably in Germany, Spain, and Denmark. Under such a system, electricity generated from RES is paid a premium price for delivery to the grid. The government sets the price per kWh and utilities are then obligated to purchase a given amount of this energy at this premium price which they then pass on to consumers. A similar fixed heat tariff would require additional practical measures because of the distributed, local nature of the heat market. For district heating systems the heat is metered after distribution and there is a central operator upon which the obligation can be placed. This is not the case for the majority of heating systems as they are individually owned and widely distributed. District heating systems compete with these and any obligation placed on them should not negatively affect its competitive position. Ideally an obligation, if and when employed, should be placed on parties that are actively involved in the heat market and relatively few in number; for example, the suppliers of conventional fuels (e.g. natural gas suppliers) based on their market shares. The specific actors involved will vary by country and by the variable composition of the conventional fuel markets. b) Heat can be measured by meters similar to those used to monitor and reconcile the generation and sale of electricity that is ultimately fed into the grid. Based upon the verified data from heat meters, a renewable heat certificate system could be introduced as has been successfully achieved in Australia, the UK and elsewhere for renewable electricity purchasing. Owners of renewable heat installations would receive a certificate for the amount of heat generated. Suppliers of conventional heating fuels would then purchase these certificates, priced at an amount per kWh usually set by an authority in order to fulfil their mandated obligation. This type of system could also be designed to promote long-term structural changes in the heating market. For example, a higher compensation rate could be set for certificates based upon renewable heat fed into district heating systems, thus offering additional incentives to develop more community- scale heat projects (Nast et al., 2007). However the unpredictability, complexity and risk of implementing a certification system for distributed heat could inhibit successful REHC deployment. Verifying the production of renewable heat is a challenge to fulfilling either a feed-in tariff or certificate scheme. Staff will need to be trained to collect and verify data, provide payments, and feed the data into a register of certificates. Design features of the proposed German Renewable Energies Heating Act (Annex B4) have been suggested including establishing variations for different capacities. For example, smaller size systems might be given a simple rated output level, therefore removing the requirement for regular data collection and monitoring. Then, it would only be necessary to verify that the system is still operating, possibly on an annual basis (DLR, 2006). In Australia, domestic solar water heaters have each been allocated a single annual 1 MWh certificate given in bulk to suppliers to represent the assumed average avoided power demand. They can then trade these certificates into the renewable electricity scheme. Soft loans and loan guarantees Financial assistance in the form of low-interest or no-interest loans, long-term loans, and/or loan guarantees effectively lowers the cost of capital. Since the high up-front cost is often an importantPDF Image | RENEWABLES FOR HEATING AND COOLING
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