Renewable Heat Incentive (RHI)
The Government is proposing introduction of a Renewable Heat Incentive, an initiative which will provide the necessary financial support to increase significantly the level of renewable heat generation. The RHI is due to commence in April 2011. It is currently at consultation stage but some of the key points of the Incentive's proposals are:
- Makes payments for every kilowatt-hour of renewable heat you produce, in other words a "clean energy cash back".
- Available for individuals, community groups and businesses in England, Scotland and Wales.
- Supports range of technologies, including air, water and ground-source heat pumps, solar thermal, biomass boilers, and renewable combined heat and power.
- RHI payments to be claimed by, and paid to, the owner of the equipment.
- Both installers and equipment to be certified under the Microgeneration Certification Scheme (MCS) or equivalent standard.
- Payments paid over a number of years; annually for installations below 45kW and quarterly for those above this level, and always subject to conditions such as continuing to operate and maintain the equipment.
- Tariff levels have been calculated to bridge the gap between the cost of conventional and renewable heat systems at all scales, with additional compensation for certain technologies for an element of the non-financial cost (eg the inconvenience of digging up a garden to install a ground-source heat pump).
- Tariff levels are proposed to provide a rate of return of 12% on the additional capital cost of renewable, with a lower rate of return of 6% given to solar thermal.
- Payments to be calculated on the annual amount of heat output, expressed in kWh.
- Eligible installations completed after 15 July 2009 but before the start of the RHI will be allowed to benefit from the scheme.
- At domestic level, Government grants received before the start of the RHI will not be required to be paid back to receive RHI support. At larger project level central Government grants may require to be paid back in order for the project to be eligible.
As an example, a property with a net energy demand of 30,000kWh/year (of which 5,000kWh is hot water) has a ground source heat pump delivering energy of 29,700kWh would receive RHI calculated as:
29,700 kWh x 7p = about £2079.00 per year for 23 years
Say the property was to have 60% hot water supplied by solar thermal panels (3,000kWh) and the remainder provided by the heat pump the calculation would be as follows:
3,000 kWh x 18p = around £540 per year for 20 years
26,700 kWh x 7p = around £1869 per year for 23 years
Then the RHI would be paid as £2409 per year for 20 years and a further 3 years payments of £1869.
The RHI is under consultation and these figures are subject to change prior to the scheme starting in April 2011.
Renewable Heat Incentives - Eligible Technologies & Proposed Tariff Levels
|
Energy Source
|
Scale
|
Tariffs (pence/kWh)
|
Duration (years)
|
|
Small installations
|
|
Solid Biomass
|
Up to 45kW
|
9
|
15
|
|
Biodiesel
|
Up to 45kW
|
6.5
|
15
|
|
Biogas on-site combustion
|
Up to 45kW
|
5.5
|
10
|
|
Ground source heat pumps
|
Up to 45kW
|
7
|
23
|
|
Air source heat pumps
|
Up to 45kW
|
7.5
|
18
|
|
Solar thermal
|
Up to 45kW
|
18
|
20
|
|
Medium installations
|
|
Solid Biomass
|
45kW-500kW
|
6.5
|
15
|
|
Biogas on-site combustion
|
45kW-200kW
|
5.5
|
10
|
|
Ground source heat pumps
|
45kW-350kW
|
5.5
|
20
|
|
Air source heat pumps
|
45kW-350kW
|
2
|
20
|
|
Solar thermal
|
20kW-100kW
|
17
|
20
|
|
Large installations
|
|
Solid Biomass
|
500kW and above
|
1.6-2.5
|
15
|
|
Ground source heat pumps
|
350kW and above
|
1.5
|
20
|
|
Biomethane injection
|
All scales
|
4
|
15
|
