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Renewable Heat Incentive News!

RENEWABLE HEAT INCENTIVE (RHI)                               
10th March 2011

Chris Huhne, Secretary of State for Energy & Climate Change today announced the long-awaited details of the Renewable Heat Incentive (RHI), an initiative which will provide the necessary financial support to significantly increase the level of renewable heat generation in the UK. The target the government is aiming for is 12% of total heat consumption by 2020.  The RHI will start on 29th July this year, later than the expected June start date. 

£860 million has been allocated to the RHI for the current spending review period to 2014/15. In the first year from July 2011, £60 million is available rising to around £420 million by 2014/15. However because the RHI payments are over 20 years the actual spending commitment is far greater than the initial £860 million over the next 4 years.

Similar to the Feed-in Tariff introduced in April 2010 the RHI is a "clean energy cash back" and makes quarterly payments to property owners for the renewable heat they produce.

The Government has taken the view that it wants to target the biggest users of heating first i.e. the commercial, industrial and public sector and this is where 75% of the Renewable Heating Incentive will go in the first year.

The residential sector or householders will be treated differently until October 2012 when the Green Deal will also have a role to play in supporting the uptake of renewable heat. In the meantime, householders fitting a renewable heating system into an existing property will be eligible for a Renewable Heat Incentive Premium from 29th July 2011, an up-front one-off payment designed to encourage early uptake. They will then be eligible for the RHI payments when they start for the household sector in October 2012.

Looking at this in more detail then.

As of 29th July 2011:
 
Commercial and Industrial Sector The commercial and industrial sector (includes the public sector, not-for-profit organisations and communities) in England, Scotland and Wales will benefit from RHI tariffs on eligible renewable heat technology. Applications and payments will be managed by Ofgem with tariff levels fixed and adjusted annually with inflation. The tariff level for new entrants will reduce over time. The level of payments will be calculated on a metered basis. Eligible installations completed after 15th July 2009 will receive support as if they had been installed on the date of the RHI introduction.
 
Commercial scale air-source heat pumps will not be eligible for support from the outset. The reason given is that "more work is needed to better understand the costs associated with the technology and, for air to air heat pumps, work is ongoing to develop a robust methodology for measuring heat delivered in the form of hot air. Subject to successful conclusion of this work and other factors (such as the role of cooling as opposed to heating in such systems) we intend to extend eligibility to this technology from 2012."

Residential Sector

Residential is defined as 'installations where a renewable heating installation serves a single private residential dwelling only'.

The RHI will be rolled to the residential sector in 2 phases.

Householders fitting a renewable heating system into an existing property will be eligible for a Renewable Heat Incentive Premium from 29th July 2011, an up-front one-off payment designed to encourage early uptake. The eligibility criteria for the Incentive Premium will be announced in May this year. It is anticipated that householders will be required to achieve minimum energy efficiency levels in their home and agree to system performance monitoring and reporting. The payment levels for the Renewable Heat Incentive Premium are as follows:

 

Technology

RHIP*

Air Source Heat Pump

£850

Ground Source Heat Pump

£1,250

Biomass

£950

Solar Heating

£300

*Renewable Heat Incentive Premium

Phase 2 - From October 2012

Eligible residential renewable heating systems will receive an ongoing RHI payment for a number of years. It is anticipated that the number of years will reflect the lifetime of the technology or be harmonised to 20 years as for the commercial sector. Again full details will be announced in May this year. All eligible systems installed since 15th July 2009 will qualify for RHI payments from October 2012 including those in receipt of the Renewable Heat Incentive Premium in Phase 1 (from 29th July 2011). MCS product and installer accreditation is expected to be a key requirement.

Only retro-fit installations will be eligible for the Renewable Heat Incentive Premium in Phase 1 and RHI tariffs in Phase 2. For new-build homes, an RHI tariff is being considered for Phase 2 starting in October 2012.

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