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Low carbon Incentives: the renewable Heat Incentive is finally with us

Low carbon Incentives: the renewable Heat Incentive is finally with us

The Renewable Heat Incentive (RHI) finally became available to non-domestic eligible renewable heat installations at the end of November 2011.[1]   It is intended that the RHI will be extended to domestic installations in October 2012.  In the meantime, eligible domestic renewable heat installations will benefit from the Renewable Heat Premium Payment Scheme, which is already up and running.

The RHI is a price support mechanism designed to encouraging investment in heat technologies from renewable sources.   Space and water heating represents approximately 40 per cent. of total UK energy consumption.

The RHI is the sister policy to the electricity feed in tariff (FIT) which has been in place since April 2010.  Both the RHI and the FIT have been introduced under provisions of the Energy Act 2008.

Whilst the UK was slow to introduce a FIT, and since that point, the UK Government has grown notably cold on the policy, the RHI is the first scheme to support renewable heat in the world.  Under the incentive, those who install an eligible renewable heating system or inject biomethane into the gas grid will receive regular cash support payments for a 20 year period.   Originally incentive payments were to be funded by a levy on non-renewable fuel bills.   However, in the 2010 Spending Review the Government decided that the incentive payments would now be paid out of general taxation. Either way, the cost is borne by UK businesses and consumers.

The introduction of the RHI was delayed whilst the Department of Energy and Climate Change navigated through EU State Aid approvals.

Edward Craft


[1] The Renewable Heat Incentive Scheme Regulations 2011 (SI 2011/2860) are available at http://lgl.kn/f33a1.

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