Renewable Heat Incentive (RHI) Scheme

Update: 26 March 2012

Today Greg Barker announced further plans for the delivery of the Renewable Heat Incentive (RHI) including a time table setting out what we intend to do and when for both the domestic and non-domestic sectors.

Government remains committed to the deployment of renewable heat and we committed to clarify timing on support for the domestic sector in November 2011. We will consult on how we can support renewable heating for households in the longer term in September 2012 and we will set out a firmer timetable for delivering this support at that point and anticipate that this will be from Summer 2013.

The Renewable Heat Premium Payment (RHPP) has provided support to the domestic sector since August 2011 due to the later than anticipated household scheme under RHI. A second phase of this scheme, worth £25m (£10m more than the first phase), to provide support for the installation of renewable heat technologies in the household sector was also announced. The support will consist of a new voucher scheme for domestic households and a new social landlords’ competition building on the experiences of Phase 1 of the RHPP. Some small but important changes to the voucher scheme to ensure that we learn as much as we can from the installations it supports are also being made. The second phase also includes a new £8m Communities Competition which will help to bring renewable heat to a wider pool of householders. Potential applicants for the voucher scheme will be able to pre-register with the Energy Saving Trust from Monday 2 April. Further details on eligibility criteria and the competitions will be announced in due course.

To ensure the success of the non-domestic scheme (that launched in November 2011), we will prioritise the delivery of a cost control regime that incorporates lessons from other schemes and meets previous commitments. To do this, we are developing a package of policy options that include modified pre-accreditation, degression and reviews. We will consult on proposals in July 2012, with a view to laying Regulations in November and for the policy to be implemented by the end of the current financial year. This consultation will also include amendments to the existing scheme covering air quality and biomass sustainability issues as outlined in the original RHI Policy document. Cost control measures can only apply going forward, i.e. to new entrants, so installations already receiving the RHI will continue to receive their current tariff (adjusted for RPI) for the full 20 year duration.

In the meantime, we are consulting on arrangements for interim measures to be in place to keep us within the budgetary limits set by the Comprehensive Spending Review (CSR) and we intend for this to be in place by the summer subject to Parliamentary approval. The consultation closes on 23 April 2012. Full details are available on the The Renewable Heat Incentive: consultation on interim cost control web page.

We will also consider extending support to new technologies and we will consult on proposals to do this in September 2012, with a view to ensuring new support will be available from Summer 2013.


Summary of RHI milestones

Milestone Timing
Publication of Interim Cost Control Consultation Document 26 March 2012
Deadline for responses to Interim Cost Control Consultation Document 23 April 2012
Interim Cost Control Regulations in place July 2012
Consultation on longer term Cost Control Regime, air quality and biomass sustainability proposals July 2012
Consultation to consider extending support to new technologies in the non-domestic sector September 2012
Consultation on proposals for the deployment of renewable heat in households September 2012
Longer term Cost Control Regime Regulations, air quality and biomass sustainability proposals laid in Parliament November 2012
Parliamentary debates of longer term Cost Control, air quality and biomass sustainability Subject to Parliamentary time
Air quality and biomass sustainability standards in place Following Parliamentary debates
Longer term Cost Control Regime policy to be implemented By the end of the current financial year (2012/13)
Implementation of biomass sustainability standards Mid March 2013
Likely date for new support available for the non-domestic scheme available Summer 2013
Likely date for implementation of longer term support for the domestic sector Summer 2013

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


RENEWABLE HEAT INCENTIVE – tariff adjustment for the year from 1 April 2012

Tariff name Eligible technology Eligible sizes Tier Previous tariff (pence / kwth) up to 31 March 2012 New rounded tariff (pence / kwth) from 1 April 2012
Small commercial biomass
 
 Solid biomass including solid biomass contained in municipal solid waste (incl. CHP) Less than 200 kWth
 
Tier 1 7.9 8.3
Tier 2 2 2.1
Medium commercial biomass
 
200 kWth and above; less than 1,000 kWth
 
Tier 1 4.9 5.1
Tier 2 2 2.1
Large commercial biomass 1,000 kWth and above N/A 1 1
Small commercial heat pumps Ground-source heat pumps; water source heat pumps; deep geothermal Less than 100 kWth N/A 4.5 4.7
Large commercial heat pumps 100 kWth and above N/A 3.2 3.4
All solar collectors Solar collectors Less than 200 kWth N/A 8.5 8.9
Biomethane and biogas combustion Biomethane injection and biogas combustion, except from landfill gas Biomethane all scales, biogas combustion, except from landfill gas N/A 6.8 7.1

 

The tariffs set out in the table above have been increased by 4.8%, which was the increase in the retail price index in 2011. As set out in the RHI Regulations, tariffs are rounded to the nearest 10th of a penny. Therefore, the large biomass tariff has remained unchanged at 1p/kWh.  

What is the Renewable Heat Incentive?

On 10 March 2011, the Government announced the details of the Renewable Heat Incentive policy to revolutionise the way heat is generated and used. This is the first financial support scheme for renewable heat of its kind in the world.

At a time when we can see many problems with relying on a rapidly changing world and continuous reliance on oil and gas, we are proposing to put in place a key foundation stone of our energy future where both carbon reduction and energy security are assured.

The Renewable Heat Incentive(RHI) policy document, sets out the detailed arrangements for this scheme, which will provide long-term financial support to renewable heat installations to encourage the uptake of renewable heat.

Read the DECC press notice (including tariffs) and Chris Huhne's Written Ministerial Statement.


Scheme details

The scheme is being introduced in two phases.

In the first phase, long-term tariff support is targeted in the non-domestic sectors, at the big heat users – the industrial, business and public sector – which contribute 38% of the UK’s carbon emissions. Under this phase there is also support of around £15 million for households through the Renewable Heat Premium Payment scheme.

The second phase of the RHI scheme will see it expanded to include more technologies as well as support for households. In light of the later than expected launch of Phase 1, as a result of changes required by the European Commission, we are reviewing the timetable for introducing Phase 2. We will be able to confirm the exact timing early in the New Year.

The RHI is being administered by Ofgem E-Serve. More information on the administration of the RHI can be found on the Ofgem E-Serve: Renewable Heat Incentive web pages. The Ofgem E-Serve Renewable Heat Incentive (RHI) accreditation enquiries line is also open to deal with questions on applications and eligibility. The team can be contacted on 0845 200 2122 between 8:30am until 5pm Monday to Thursday, and 8:30am until 4:30pm on Fridays. Alternatively, you can send an email to RHI.Enquiry@Ofgem.gov.uk. Complicated enquiries are best handled in writing via email.

 

Further information on the Renewable Heat Incentive Scheme can be found in the FAQs:

Latest News

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Call for evidence on renewable Combined Heat and Power (CHP): 28 November 2011

DECC is asking for data on the costs of renewable CHP to be provided by 5 January 2012. This will be used to inform further analysis for the Renewables Obligation (RO) Banding Review and the next phase of the RHI. Responses can be provided using Questionnaire B on the RO Banding Review consultation page.


Supporting analysis

This report examines potential biomass supply in the UK between 2010 and 2030, given current constraints and the potential to address some of these constraints. It examines the supply side issues only and does not provide projections of deployment or demand. It includes analysis of the resources that could potentially be imported to the UK, as well as of possible prices for traded feedstocks.

Detail on methodology and each of the feedstocks

Analysis for DECC by SKM Enviros on the costs and potential of biogas combustion and biomethane injection.

This report outlines the results of the review undertaken by AEA on behalf of DECC of the technical cost evidence on renewable heat technologies during the period February 2010 to November 2010.

This annex presents the key assumptions used in the analysis presented in the Renewable Heat Incentive Impact Assessment. The assumptions are key drivers to various analytical outputs such as resource and subsidy costs, cost-effectiveness assessment, counterfactual costs, technology costs, and the value of CO2 displaced.

This document provides recommendations to Government including metering of individual RHI technologies, how heat meters could be chosen and maintained, how the data gathered could be reported and the cost of metering . Please note that this document is not a guide to RHI eligibility requirements or a statement of government policy.

Historical analysis on the RHI can be found on the National Archives version of the Renewable Heat Incentive (RHI) proposals and NERA/AEA study on the UK Supply Curve for Renewable Heat (2009): Invitation for feedback web pages from a snapshot of the DECC website as at 23 January 2011.

Details of the consultation that ran from February to April 2010 are available on the National Archives version of the Consultation on the Renewable Heat Incentive (RHI) web page.

Key aspects of the RHI from 2011

  • support for a range of technologies and fuel uses including solid and gaseous biomass, solar thermal, ground and water source heat-pumps, on-site biogas, deep geothermal, renewable CHP, energy from waste and injection of biomethane into the grid
  • support for industrial and the commercial sector, the public sector, not-for-profit organisations and communities in England, Scotland and Wales, through the RHI tariffs
  • support for households through the Renewable Heat Premium Payment scheme.

The RHI is being funded from general government spending, not through the previously proposed RHI levy. 

Key aspects of the non-domestic sector

  • RHI payments to be claimed by, and paid to, the owner of the heat installation or producers of biomethane for injection
  • payments will be made quarterly over a 20-year period
  • for small and medium-sized installations (up to and including 45kWth), both installers and equipment to be certified under the Microgeneration Certification Scheme (MCS) or equivalent standard, helping to ensure quality assurance and consumer protection
  • tariff levels have been calculated to bridge the financial gap between the cost of conventional and renewable heat systems, with additional compensation for certain technologies for an element of the non-financial cost
  • heat output to be metered and the support calculated from the amount of heat used for eligible purposes, multiplied by the tariff level
  • biomass installations of 1 MWth capacity and above are required to report quarterly on the sustainability of their biomass feedstock for combustion and where they are used to produce biogas
  • eligible non-domestic installations completed after 15 July 2009, but before the start of the RHI, can apply for support as if they had been installed on the date of its introduction
  • the Gas and Electricity Market Authority (Ofgem) is administering the RHI including: dealing with applications; accrediting installations; making incentive payments to recipients; and monitoring compliance with the rules and conditions of the scheme
     

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