Renewable Heat Incentive (RHI)

On 1st February the Department of Energy and Climate Change (DECC) announced a 12 week Consultation phase on the proposed RHI due to be launched in April 2011. The proposals look very encouraging and are aimed at generating a 12 fold increase in Renewable Heating Installations by 2020. In addition to being a laudable aim this is required under European Union legislation. Details are available at The Department of Energy and Climate Change.

For those considering an investment in a Renewable Heating system at present it should be noted that all installations from 15th July 2009 should qualify and the various grant schemes that the industry has benefited from are still in place but will be phased out to coincide with the introduction of the new RHI. Put simply there will probably never be such a good time to invest in a renewable heating system as 2010/ early 2011.

DECC intend to provide long term payment plans to coincide with the lifetime of the project. Payments should more than offset running costs and also provide a return on investment of the original purchase. The intended rates and time frames are set out below. We understand these will be index linked.

If you have a view please make it known to DECC. We'll certainly be lobbying on behalf of pre 15th July 2009 customers for their inclusion with a backdated time frame. This appears to have happened with Renewable Electricity Generators who have migrated from the "Renewable Obligation" to the new and more generous "Feed in Tariff" structure.

Possible Returns

Payments will be based on a deemed reasonable usage rate rather than metered quantities for obvious reasons. The relevant quantities haven't yet been announced but should be based on industry standard heat loss methodology where all legal and practical insulation measures have been taken.

Payments could, therefore, be reasonably expected as such:

Scheme Financing

Prima facie this scheme shouldn't require any taxpayer funding. Rather a levy will be raised on fossil fuel heating system users.

Further information can be found in Renewable Heat Incentive, consulation on the proposed RHI financial support scheme.