Renewable Heat Incentives

The Energy Performance Centre in conjuction with HM Government have identified the importance of Increasing renewable heat as key to the UK meeting its renewable energy targets. Thereby reducing carbon emissions, ensuring energy security and helping to build a low carbon economy. The Renewable Heat Incentive (RHI) will help accelerate deployment by providing a financial incentive to install renewable heating in place of fossil fuels.

The Government will take a phased approach to implementing the RHI. Initially, in the first phase, long-term tariff support will be targeted at the big emitters in the non-domestic sector.

This sector, which covers everything from large-scale industrial heating to small business and community heating projects, will provide the vast majority of the renewable heat needed to meet our targets and represents the most cost-effective way of increasing the level of renewable heat.

The Government therefore wants to provide support now in order to kick-start take-up in this sector.

As part of the first phase, the Government will also introduce Renewable Heat Premium Payments for the domestic sector. We have ring-fenced funding of around £15 million, which we will use to make premium payments to households who install renewable heating. These direct payments will subsidise the cost of installing qualifying renewable heating systems. In return for the payments, participants will be asked to provide some feedback on how the equipment works in practice and suppliers will be asked to provide a follow up service on any issues that are raised. This will boost confidence in the technology and the information we receive will help enable Government, manufacturers, installers and consumers to better understand how to maximise performance of the various technologies.

The Renewable Heat Premium Payments will support a spread of technologies across all regions of Great Britain and will cover households using gas and other fossil fuels. We may consider focusing support for primary heating systems, such as heat pumps and biomass boilers, on households off the gas grid, where fossil fuels like heating oil are both more expensive and have a higher carbon content.

HM Government launched the Renewable Heat Premium Payments in July 2011 and will announce further details in May 2012.

A second phase of RHI support including long-term tariff support for the domestic sector will then be introduced in 2012 to coincide with the introduction of the Green Deal for Homes. People in receipt of the Renewable Heat Premium Payments will be able to receive long term RHI tariff support once these tariffs are introduced as will anybody who has installed an eligible Renewable Heat Incentive installation since 15th July 2009.

In the second phase, we will also consider introducing support for a number of other technologies and fuels which are not supported from the outset.

Given the current economic climate it is more important than ever that the RHI delivers value for money and ensures there is a fair spread of technologies across a range of properties types.

The Renewable Heat Premium Payments will help ensure that, before we commit to long term payments in a sector where it is difficult to predict levels of take-up and levels of performance of the different heat technologies, we manage their roll-out and learn more about them, as well as controlling budgets and ensuring the money goes where it is intended to.