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UK launches renewable heat incentive

The UK Government has launched a £860 million renewable heat incentive (RHI) making payments to household available from October 2012.

By Renewable Energy Focus staff

The Department of Energy and Climate Change (DECC) says the scheme is expected to increase green capital investment by £4.5 billion up to 2020 and increase the number of industrial, commercial and public sector renewable heat installations sevenfold to 2020.

Currently, over 95% of heat in the UK is generated from fossil fuel sources.

The renewable heat incentive aims to encourage the installation of equipment such as renewable heat pumps, biomass boilers and solar thermal panels.

Individual buildings and community projects will be eligible for the renewable heat incentives, and tariffs will be paid for 20 years to eligible technologies installed since 15 July 2009.

As with feed-in tariffs, the level of support available to new entrants to the scheme is expected to decrease over time.

Energy Secretary Chris Huhne, says: “This incentive is the first of its kind in the world. It’ll help the UK shift away from fossil fuel, reducing carbon emissions and encouraging innovation, jobs and growth in new advanced technologies.”

The renewable heat industry by 2020 will include:

  • 13,000 installations in industry;
  • 110,000 renewable heat installations in the commercial and public sector, supplying 25% of the heat demand in these sectors; and
  • Reach seven times the number of anticipated installations in 2014.

Initial focus on households

The payments will start for homes alongside the Green Deal from 2012. In the meantime, up to 25,000 renewable heat installations from July will be supported by a RHI Premium Payment worth around £15m.

Those taking up the Premium will be eligible for a renewable heat incentive tariff from October 2012 when the Green Deal begins, as will those who have had eligible equipment installed from July 2009.

For new-builds, a RHI tariff will be considered for the 2012 phase, DECC says.

The eligibility criteria for the Premium include:

  • A well insulated home based on energy performance certificates; and
  • Agreeing to give feedback on how the equipment performs.

Further details on the Premium are expected in May this year.

Table of renewable heat tariffs:

Levels of support
Tariff nameEligible technologyEligible sizesTariff rate (pence/kWh)Tariff duration (years)Support calculation
Small biomassSolid biomass: Municipal solid waste (incl. CHP)Less than 200 kWthTier 1: 7.620Metering. Tier 1 applies annually up to the Tier Break. Tier 2 above the Tier Break. The Tier Break is: installed capacity x 1314 peak load hours, i.e.: kWth x 1314
Tier 2: 1.9
Medium biomass200 kWth and above; less than 1000 kWthTier 1: 4.7
Tier 2: 1.9
Large biomass1000 kWth and above2.6Metering
Small ground sourceGround-source heat pumps; Water-source heat pumps; Deep geothermalLess than 100 kWth4.320Metering
Large ground source100 kWth and above3
Solar thermalSolar thermalLess than 200 kWth8.520Metering
BiomethaneBiomethane injection and biogas combustion, except from landfill gasBiomethane all scales, biogas combustion less than 200 kWth6.520Metering

Likely RHI Premium Payments support levels:

Solar thermal£300/unit
Air source heat pumps£850/unit
Biomass biolers£950/unit
Ground source heat pumps£1250/unit

Micropower Council welcome

The UK’s Micropower Council’s CEO, Dave Sowden, welcomes the renewable heat incentive: “We are delighted that the Government has largely shielded the residential sector’s early months of the scheme from the budget cuts brought about in the Comprehensive Spending Review, with a quarter of the first year’s funding being reserved exclusively for the household sector.

“This should provide confidence that this is a serious policy aimed at encouraging citizens to switch over to more sustainable home heating systems in their tens and hundreds of thousands in the early years, and subsequently, we hope, in their millions.”

CHPA: Important step

Graham Meeks, Director of renewable and low-carbon energy trade body the Combined Heat and Power Association (CHPA), adds: “This is an important step forward in opening up the opportunity to develop new renewable CHP plant, at a range of scales and in many new applications. With several major projects and a host of smaller plant in the pipeline, CHP has a major contribution to make towards national efforts to meet our renewables targets.”

He continues: “The key to progress across the market lies in the value of the incentive. We welcome the Government’s commitment to CHP and the undertaking to look carefully at how the RHI and Renewables Obligation work together to mobilise renewable CHP across the market.

“This development also underlines the value of heat networks, delivering economies of scale for many renewable heating technologies and providing a route-to-market for the heat they produce. It is now vital that the Government places renewed focus on accelerating the development of this low-carbon infrastructure.”

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Energy efficiency  •  Energy infrastructure  •  Green building  •  Policy, investment and markets  •  Solar heating and cooling