Overview of the Renewable Heat Incentive

On 10 March 2011, the Government announced the details of the Renewable Heat Incentive policy to revolutionise the way heat is generated and used in buildings and homes.

The Renewable Heat Incentive(RHI) policy document, sets out the detailed arrangements for this scheme, which will provide long-term financial support to renewable heat installations to encourage the uptake of renewable heat .

Scheme details

The scheme will be introduced in two phases.

In the first phase, long-term tariff support will be targeted in the non-domestic sectors, at the big heat users – the industrial, business and public sector – which contribute 38% of the UK’s carbon emissions. Under this phase there will also be support of around £15 million for households through the Renewable Heat Premium Payment.

The second phase of the RHI scheme will see households moved to the same form of long-term tariff support offered to the non-domestic sector in the first phase. This transition will be timed to align with the Green Deal which is intended to be introduced in October 2012.

 Key aspects of the RHI from 2011

• Support for a range of technologies and fuel uses including solid and gaseous biomass, solar thermal, ground and water source heat-pumps, on-site biogas, deep geothermal, energy from waste and injection of biomethane into the grid
• Support for industrial and the commercial sector; the public sector; not-for-profit organisations and communities in England, Scotland and Wales through the RHI tariffs
• Support for households through the Renewable Heat Premium Payment in the first year of the scheme until the Green Deal is introduced in October when households will become eligible for RHI tariffs
• The RHI will be funded from general Government spending, not through the previously proposed RHI levy

Key aspects of the non-domestic sector

• RHI payments to be claimed by, and paid to, the owner of the heat installation or producers of biomethane for injection
• Payments will be made quarterly over a 20 year period
• For small and medium-sized installations (up to and including 45kWth), both installers and equipment to be certified under the Microgeneration Certification Scheme (MCS) or equivalent standard, helping to ensure quality assurance and consumer protection
• Tariff levels have been calculated to bridge the financial gap between the cost of conventional and renewable heat systems, with additional compensation for certain technologies for an element of the non-financial cost
• Heat output to be metered and the support calculated from the amount of heat used for eligible purposes, multiplied by the tariff level
• Biomass installations of 1 MWth capacity and above will be required to report quarterly on the sustainability of their biomass feedstock for combustion and where they are used to produce biogas
• Eligible non-domestic installations completed after 15 July 2009, but before the start of the RHI, will be eligible for support as if they had been installed on the date of its introduction
• The Gas and Electricity Market Authority (Ofgem) will administer the RHI including: dealing with applications; accrediting installations; making incentive payments to recipients; and monitoring compliance with the rules and conditions of the scheme