Renewed launch in November for renewable heat payment scheme
Date of Article
Oct 17 2011

Keep informed

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

Sign up now
On the day (Monday 17 October) which has seen the Prime Minister convene an energy summit and call for action to cut energy bills, specialists from Carter Jonas’s Energy Team - which has its headquarters in the property consultancy’s Peterborough office – are looking to a new, November launch date for a Government-backed scheme which supports a range of renewable heat technologies and which has tax advantages available in the present financial year.

The scheme – the Renewable Heat Incentive (RHI) – was due for launch on 30 September (2011) but the first phase launch was suspended by the Government, just days before, in order to review compliance with European Union rules about state-aid for such schemes.

However, as Carter Jonas explains, the conclusion of the review is expected at the end of next month (November) when it is hoped that the RHI scheme will get back on track with its phased launch for the non-domestic sector in the first instance, followed by a scheme for mainstream, domestic householders in October 2012.

In a further development of the RHI - which will be administered by energy watchdog OFGEM – heat generation schemes which qualify can benefit from enhanced capital allowances (ECAs) up until April 2012.

This permits businesses operating RHI-qualifying equipment to claim 100 per cent first year capital allowances – for example, on equipment and installation costs.

This means that the whole of the capital cost of the investment – which is mainly made in the first year of operation - can be off-set against taxable profits for the same period. But the Government is reviewing the future availability of ECAs beyond April next year given it, in combination with the RHI, represents a form of double-funding.

A range of renewable heat technologies are eligible for funding under this first RHI phase including biomass, municipal solid waste (CHP), ground and water source heat pumps among others. These are technologies – whether larger or small-scale systems – which can be installed on a range of premises which could be farms or estate with commercial or industrial premises or those which are in use in the not-for-profit or public sectors.

Iain Nott, who is based at Carter Jonas in Peterborough, said: “In selecting non-domestic schemes for the first phase of RHI funding, the Government sees that this sector represents the most effective way of increasing the levels of heat generated from renewable technology.

“The RHI presents a significant opportunity for rural and urban businesses and eligible properties to generate income from their non-core activity.

The payment of the RHI and the guaranteed availability of ECAs just until April 2012 represent a significant window of opportunity.

“So for those keen on developing a qualifying renewable energy scheme, there’s an imperative to act sooner rather than later.