Approved by Parliament but awaiting State Aid clearance (hopefully due in September) are the Renewable Heat Incentive Regulations 2011, which will introduce the Renewable Heat Scheme Incentive from late 2012.
The scheme is a world first: it aims to cut the UK’s reliance on fossil fuels and greenhouse gas emissions. Its intent is to encourage owners of domestic or commercial/industrial buildings to install biomass boilers, ground source heat pumps, bio methane and solar and/or thermal panels.
The scheme is to be exercised in two phases. First, tariff support for industrial, business and public sector. The domestic sector can currently utilise the interim Renewable Heat Premium Payments. These subsidise the cost of installing qualifying renewable heating systems. Second, the support under the RHI will be extended to domestic properties on October 2012 as part of the Green Deal.
The RHI scheme lends itself quite well to agriculture. For livestock farms, heat can be generated from slurry and silage. Wood coppice or straw could be used in biomass boilers, ground source heat pumps could be used. Heat provided could be for farmer’s own use or for local communities.
Solar thermal is another heat producing system that could be used in a domestic, commercial/industrial or agricultural buildings. All of this does prompt some legal issues. How will the landowner allow the energy company to use a roof space in regards to solar thermal? If the equipment is to be the landowners then there is no problem. If the roof space is to be leased by the energy company, then it will be a business lease that should be contracted out of the security tenure provisions of Part II of The Landlord & Tenant Act 1954.
What if an agricultural tenant wants to install the equipment on a roof of a farm building or farmhouse? He will need the landlord’s consent. If he is to lease the roof to an energy company, then the energy company will be a sub-tenant and a landlord will have to watch the term dates of the sub-lease carefully.
If the equipment is to belong to the tenant, then perhaps the landlord should resist that, pay for the equipment and then reflect that at rent review. Otherwise, a landowner could provide consent to the tenant’s improvement and this would need to be reflected at the end of the tenancy in tenant’s compensation.
For a landowner or householder who installs the equipment and then sells on the property on which is it sited, valuation could be an issue. This is particularly so when a landowner has outlaid the installation costs, but has not yet recouped them. However, that is a question best answered by surveyors.
To summarise, the Renewable Heating Incentive Scheme is an opportunity for property owners, but there are future land and property managing issues that must be thought through first.