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DECC unveils Renewable Heat Incentive (RHI)

Businesses, industry and public-sector organisations will be able to receive government subsidies to install renewable heat equipment from July 2011, via the long-awaited Renewable Heat Incentive (RHI).

This was first proposed over a year ago to ensure the UK meets its EU renewable energy targets.  These require the proportion of heat the UK gets from renewables to jump from its current 1.5% to 12% by 2020.

The RHI will pay the owners of equipment like biomass boilers a tariff per kilowatt-hour of heat produced.  The tariffs last for 20 years, are designed to give a 12% rate of return and will be paid through general taxation.

It is aimed at businesses and householders will not be able to receive payments until October 2012.

The tariffs cover a wide range of technologies including the burning of municipal solid waste, or refuse-derived fuel produced from municipal waste, as if they wrere biomass.  Businesses will also be able to claim the tariffs if they use heat to generate cold air for air conditioning.

The one major exclusion from the list is district heating.  The previous government was considering paying an extra subsidy to the owners of plant such incinerators to encourage them to pipe heat to homes.  This would have been available to gas plants, as well as those using renewables.  However, DECC says "further consideration is needed before any additional cost is provided to ensure this is necessary and represents good value for money".

Air-source heat pumps are also not included from the outset, although they may be added in 2012 once more cost data is available.  more

See also: Funding & Incentives