Why Choose Renewables for Commercial (Renewable Heat Incentive - RHI)?
On 10 March 2011, the Government announced the details of the Renewable Heat Incentive policy to revolutionise the way heat is generated and used in buildings and homes. This is the first financial support scheme for renewable heat of its kind in the world.
RHI Scheme details
The scheme will be introduced in two phases.
In the first phase, long-term tariff support will be 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 will also be support of around £15 million for households through the Renewable Heat Premium Payment.
The second phase of the RHI scheme will see households moved to the same form of long-term tariff support offered to the non-domestic sector in the first phase. This transition will be timed to align with the Green Deal which is intended to be introduced in October 2012.
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, 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 in the first year of the scheme until the Green Deal is introduced in October when households will become eligible for RHI tariffs.
The RHI will be 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 into the grid.
- 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.
Eligible non-domestic installations completed after 15 July 2009, but before the start of the RHI, will be eligible for support as if they had been installed on the date of its introduction.
The Gas and Electricity Market Authority (Ofgem) will administer the RHI including: dealing with applications; accrediting installations; making incentive payments to recipients; and monitoring compliance with the rules and conditions of the scheme.
Key principles of this policy/scheme:
The RHI provides a continuous income stream over twenty years to any organisation that installs an eligible renewable heating system, ensuring that it becomes more commercially attractive than fossil fuel alternatives. The RHI is important because it will help increase significantly the level of renewable heat in the UK, which is key to the UK meeting its renewable energy targets, reducing carbon emissions, ensuring energy security and helping to build a low carbon economy. The Renewable Heat Incentive (RHI) will help accelerate deployment by providing a financial incentive to install renewable heating in place of fossil fuels.
So, what is renewable heat?
Renewable heat is a term used to mean any heat that is generated using a renewable technology or source. For example, equipment that uses the sun, ground, or water as a means to generate heat. Also included are ‘renewable’ fuels such as sustainably-harvested wood and other plants, biogas and the biomass content of eligible waste streams.
For the RHI, support will only be given to heat from renewable sources which is defined as renewable in the Renewable Energy Directive (RED).
What is it trying to do?
The key objective of the scheme is to increase significantly the level of heat generated from renewable energy sources in Great Britain and thereby enable the UK to meet its binding targets to generate 15% of our energy from renewable sources by 2020.
The Government is committed to the ambition that by 2020, 12 per cent of heating can come from renewable sources.
We estimate that the RHI could save up to 44 million tonnes of carbon (MtCO2) by 2020 (36 MtCO2 outside the EU(ETS) and 8 MtCO2 inside the EU(ETS). This works out as a saving of one million tonnes of carbon in the first carbon budget period (2008-2012), 15 million tonnes in the second carbon budget period (2013-2017) and 52 million tonnes in the third budget period (2018-2022).
How is the RHI being funded?
£860million has been made available from central Government funding to support the RHI over the period 2011-2014. The Government has decided not to take forward previous administration’s proposals for an RHI levy.
What do you expect the benefits of the RHI to be on non-domestic installations?
By 2020, we estimate the RHI support levels are expected to bring forwards around:
- 13,000 installations in industry; and
- 110,000 installations in the commercial and public sector.
These installations are expected to generate around 57TWh of renewable heat.
Further information can be found at: www.decc.gov.uk
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