The Department for Energy and Climate Change (DECC) has published a new consultation seeking views on the introduction of a Renewable Heat Incentive (RHI) scheme. The RHI scheme will provide financial and other support for those who install renewable heating, in so far as that heating qualifies under the scheme. The RHI consultation proposes that a range of technologies should be supported. This would include air and ground-source heat pumps, solar thermal, biomass boilers, renewable combined heat and power, biogas and bioliquids. It also proposes that all scales of heating should be covered: households, businesses, offices, public sector buildings and large factories.

Basic tariff levels have been set at a level which is designed to bridge the gap between the cost of conventional and renewable heat systems at all scales, but additional compensation will be available for certain technologies in relation to an element of non-financial cost. The example given in the consultation paper is the disruption of digging up gardens to install ground source heat pumps.

Further, there is a proposal for the payment of an investment return, set at 12% across all technologies other than solar, which gets only 6%. This payment reflects the potentially considerable up-front investment that may have to be incurred in installing renewable technologies.

Statutory powers under the Energy Act 2006 allow for an RHI scheme to be introduced throughout the UK. The DECC has been working closely with the Scottish Government to ensure that the RHI scheme is compatible with other renewables initiatives being undertaken in Scotland, most notably the Renewable Heat Action Plan launched in November 2009.

The intention is that the scheme will be introduced in April 2011, and the deadline for responses to the consultation is Monday 26 April.