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Renewable Heat Incentive
Posted by Ewan McClymont on 11/7/2011
The Government is aiming for 12% of the UK's heat demand to come from renewable sources by 2020, a major increase from the current level of just 1.5%. Of the 12%, it is anticipated that only 1% will come from the domestic sector, which may help to explain why the Renewable Heat Incentive (RHI) is being launched in two phases. The RHI was meant to have been finalised and launched on 30th September 2011 but has been delayed as the European Commission expressed concerns that the large biomass tariff was set too high. This has now been reduced and subject to Parliamentary approval, Ofgem plan to open the RHI scheme before the end of November 2011.
There are however, certain elements of the scheme that can be reported on. As with the FITs, DECC is responsible for the policy and regulations underpinning the RHI scheme, with Ofgem in charge of development and administration.
In the first instance, the scheme is open to non-domestic sectors with eligible installations. Non-domestic includes industry, business and commercial, charities and not-for-profit organisations, public sector organisations, as well as a renewable heating installation serving multiple residential dwellings, and residential premises that have been converted for non-residential use.
The non-domestic installations cover solid biomass & municipal solid waste, ground source & water source heat pumps, deep geothermal, solar thermal, biomethane injection & biogas combustion (except from landfill gas). Air sourced heat pumps have been excluded at the moment and there is a requirement for the RHI payments to be metered rather than have a deemed heat output.
A domestic incentive will be launched in October 2012 as part of the Green Deal initiative. In the interim, the domestic sector is supported by the Renewable Premium Payment, which is a separate complementary grant (voucher) scheme of up to £1,250. The Premium Payments apply to eligible domestic installations from 1st August 2011 to 31st March 2012. However, there is a limited budget of £12m and once this is reached, vouchers will no longer be issued.
Householders can apply for their voucher at the Energy Saving Trust's website, http://www.energysavingtrust.org.uk.
The RHI will be funded from a total budget of £800m (rather than raising a levy on heating bills) over the period 2011-2014. It will last until 2020 with payments guaranteed for 20 years from entry to the scheme. Like the Feed-in Tariffs, tariff rates will be adjusted annually in line with inflation but will degress after 2012. Anyone who has installed renewable heat since 15th July 2009 will qualify for RHI payments, provided they meet the eligibility criteria. Proposed tariff rates for non-domestic installations range from 1.0p per kWh to 8.5p per kWh depending on the type of technology.
Further details on the RHI scheme can be found at the Ofgem website, http://www.ofgem.gov.uk.
All information correct at time of posting.