The Department for Energy and Climate Change has announced the world's first Renewable Heat Incentive (RHI). The £860m scheme is "expected to increase green capital investment by £4.5 billion up to 2020, stimulating a new market in renewable heat", according to the press release.
The RHI is intended to "support emerging technologies and businesses in the UK, strengthening security of supply by reducing dependence on fossil fuel heating and emissions". It will be a tariff-based scheme working alongside the Renewables Obligation and the Feed-In Tariff schemes, and the Green Deal for households due to be introduced in 2012. There will be a RHI for industry, commercial and public sector, and another for households.
Industry, commercial and public sector
The RHI tariff scheme for industry, commercial and public sectors will allow a wide range of property uses and organisation types to install technologies such as biomass boilers, heat pumps and solar thermal, and to obtain tariff payments for heat generated by those installations. Community projects will be eligible too, provided that more than one house is benefiting from the heat produced by a single installation.
The tariffs will be available to eligible technologies installed after 15 July 2009, and will be payable for 20 years. The tariff is payable per kilowatt hour of heat produced. The tariff levels will range from 1.9 pence per kilowatt hour for biomass to 8.5 pence per kilowatt hour for solar thermal.
It is anticipated that the tariff levels will decrease over time as the cost of currently emergent technologies reduces, but once an installation has joined the scheme, the level of support it receives will be fixed, subject to annual adjustment to account for inflation.
Households with eligible equipment will be entitled to a RHI "Premium Payment" which will help cover purchase costs. Whether or not they take up the Premium, from October 2012 any household with eligible equipment installed since July 2009 will be eligible for a RHI tariff from October 2012. The tariff levels will be the same as noted above.
The scheme will be introduced in two phases.
The first phase will concentrate on the long-term incentives to the industrial, business and public sector and on the RHI Premium Payment. The second phase will introduce long-term tariff support for households, timed to coincide with the Green Deal which is intended to be introduced in October 2012.
A lot more information on the RHI is available by clicking here.