Summary and implications  

On 10 March 2011, the Coalition Government announced details of the Renewable Heat Incentive (RHI) scheme, claimed to be the first financial support scheme for renewable heat in the world. The Government's aim is to revolutionise the way heat is generated and used in buildings and homes. The proposal will put in place a subsidy to incentivise the use of renewable energy to create heat. The scheme aims to lessen our dependence on fossil fuels, reduce carbon emissions and increase energy security.  

The RHI includes support for:

  • The generation of heat using biomass (solid and gaseous); solar thermal; on-site biogas; geothermal; energy from waste; injection of biomethane into the grid; and ground and water source heat-pumps;
  • The generation of heat by public, industrial and commercial sectors; not-for-profit organisations; and communities throughout the UK, through the RHI tariffs; and
  • The generation of heat by households, through the Renewable Heat Premium Payment in the first phase, until the RHI tariffs become available in October 2012.

Overview of the RHI

Chris Huhne, Secretary of State for Climate Change and Energy, aims to have Parliamentary approval of the regulations by this summer, with the scheme introduced shortly after, in two phases:

  • First phase: the non-domestic sectors, specifically the big heat users within the industrial, business and public sectors, who contribute 38 per cent of the UK’s carbon emissions, will be targeted by the long-term RHI tariff support. Households will receive support of around £15m, as part of a transitional Renewable Heat Premium Payment.  
  • Second phase: households will then be moved onto the same long-term tariff support as the non-domestic sector. The Government intend for the transition to occur in line with the Green Deal, which is expected to be introduced in October 2012.

Funding will be provided for the scheme from general taxation and not through a specific RHI levy (as had originally been proposed).