Relief for renewable energy sector as world’s first renewable heat incentive (RHI) is launched.
Date of Article
Nov 28 2011

Keep informed

Sign up to our newsletter to receive further information and news tailored to you.

Sign up now
Following a series of delayed launch dates over the course of this year, the renewable energy sector is relieved by the announcement that the Government-backed Renewable Heat Incentive (RHI) scheme is back on track as of today.

Put on hold just days before its anticipated September launch in order for the Coalition to review, regulations have now been passed by parliament and from today, Monday 28 November, the first phase of the RHI scheme will open its doors to UK businesses applying for renewable heat tariff payment.

Regulated by Ofgem, this initial phase of the RHI will provide financial support strictly to commercial, industrial, public and not-for-profit and community generators of renewable heat over a 20 year period.

Henceforth, non-domestic sector applicants will be able to seek eligibility for funding to support the generation of heat from renewable technologies including biomass boilers and municipal solid waste (incl CHP), ground and water source heat-pumps, deep geothermal, solar thermal equipment (less than 200kWth), injection of bio-methane (all scales) and biogas combustion (less than 200kWth). All of which must have been installed no earlier than 15 July 2009.

Greg Barker, Climate Minister at Department for Environment and Climate Change (DECC), today commented, “The RHI will usher in a new era in clean green heat technology. It’s a world first and has the potential to put the UK at the forefront of a vibrant new green technology sector.”

“Renewable heat will be a big win for our economy – it will support thousands of green jobs, reduce our dependency on imported fossil fuels, reduce our carbon emissions and help us meet our renewable target.”

For commercial RHI applicants this first phase provides an attractive annual payment spread over 20 years, which is linked to RPI. This can produce up to a 20% return on capex, although this is dependent upon existing heat source supplies and individual site factors.

“Given the recent climate of uncertainty that has surrounded renewable energy schemes such as the Feed in Tariff (FiT), it’s reassuring to see the RHI scheme coming on-stream,” comments Andrew Watkin, Head of Energy and Marine team at Carter Jonas.

“We have been concerned over delays to the RHI introduction but the scheme presents a significant opportunity for businesses and eligible premises to generate income from their non-core activity and we hope that investor confidence will now be buoyant so that the sector can move forward positively.”

For households that install renewable heat systems, DECC has confirmed that the timing of the second phase of the RHI, which is expected to include support for domestic heating technologies, as well as the revision and expansion to the support for biogas combustion, will follow “early in the new year”, although many in the energy sector are of the view that the domestic sector will not come on line until much later in 2012 and possibly 2013.

As a short term measure for the domestic sector, Renewable Heat Premium Payments (RHPP) have been introduced. Administered by the Energy Saving Trust, this is aimed at those who are off the gas grid and currently use fossil fuel heating. The scheme allows householders to claim a one off payment towards the cost of installing an eligible renewable heat technology.

“With regards to the RHPP we feel that this is a short term pilot scheme,” affirms Mr Watkin. “It is worrying that the Government don’t appear to have undertaken any significant amount of due diligence in the sector and this begs the question of whether they could at some point in the future call a fast track RHI review along similar lines of the fast track solar (FiT) reviews.”

“Those who want to develop a qualifying renewable heating scheme should seek expert advice as soon as possible now that the RHI scheme is on track."