The Renewable Heat Incentive Scheme provides businesses and the public sector with cash back for the generation of renewable heat. It is a government-backed measure, introduced in November 2011, to make production of heat through renewable means more financially attractive.
The scheme was developed as a result of the Renewable Energy Strategy consultation in 2008 and was announced by the Department of Energy and Climate Change (DECC) during the passage of the 2008 Energy Act. It was further announced, in October 2010, as part of the spending review, that the Renewable Heat Incentive would go ahead in July 2011. In the event the RHI was finally launched in November 2011.
The Renwable Heat Incentive Scheme will represent over £860m of investment over the spending review period, driving a more-than-tenfold increase of renewable heat over the coming decade and shifting renewable heat from a fringe industry firmly into the mainstream. This is with the ambition of increasing the total heat produced from renewable sources from 1% to 12% by 2020. This would save about 60 million tonnes of CO2 by 2020, helping to minimise heating effects on climate change.
The United Kingdom (UK) is committed, by international law, to achieving these targets under the Kyoto agreement on climate change. Failure to meet the targets will result in financial penalties for the UK.
Every country in the European Union (EU) has its own targets to meet but the UK’s could be one of the toughest, simply because so little (less than 1%) of its energy currently comes from renewable sources. It will take a massive effort in terms of building awareness, educating users and investing in technology and infrastructure in order to drive the cultural shift required in the minds of consumers, the public sector and industry.
Ultimately, though, we have no choice if we are serious about halting climate change.
How does the RHI work?
The Renwable Heat Incentive Scheme works by encouraging users to replace existing fossil fuel heating systems such as oil, coal and gas with one of the supported renewable technologies which includes Ground Source Heat Pumps, Solar Thermal Panels, Biomass Boilers and Biomethane. The onus is on the user to pay for and install the new technology and then register the system with Ofgem. Only industrial, commercial and public sector organisations in the UK are eligible for the scheme, providing they meet certain eligibility criteria. The amount of RHI payment is set at time of registration and will be adjusted upwards for inflation. Payments are then made quarterly for the next 20 years.
Who is eligible for the RHI?
Initially only UK based industrial, commercial and public sector organisations who meet the eligibility criteria will receive the RHI. A second phase of the RHI scheme will see households moved to a similar form of long term tariff support. The second phase will be timed to align with the Green Deal which is intended to be introduced in October 2012. In the mean time householders can sign up to the RHI Premium Payment Scheme.