RENEWABLE HEAT INCENTIVE (RHI) SCHEME

Scheduled by the UK Coalition Government to commence in June 2011, the Renewable Heat Incentive (RHI) scheme will provide incentives for energy consumers to generate water and space heating from approved renewable sources such as solar thermal, air and ground source heat pumps and biofuels. It may also be possible to sell surplus heat from buildings that are connected to a suitable ‘heat network’. An approved source will be one that is certified by the Microgeneration Certification Scheme (MCS) and that has been fitted by an MCS-accredited installer.

Incentives are likely to take the form of index-linked, tax exempt subsidies that will be paid directly by the Treasury for every kilowatt hour (kWh) of heat energy generated from an approved renewable source and used locally. Tariffs will depend upon the mechanism of heat generation used, the appropriate scale of the installation, the ‘deemed heat’ output and perhaps some other metrics (still to be defined). Current indications are that the subsidies will be designed to provide a ‘reasonable’ rate of return on investments made in heat generation technology, taking into account equipment, installation costs and inconvenience etc.. The UK is one of 27 European member states that have signed up to the legally-binding ‘Renewable Energy Directive (2009/28/EC) and consequently the UK Government has some fairly ambition targets to meet regarding renewable energy. Without powerful incentives it is unlikely that these targets will be realised and so the RHI scheme and its sister scheme FIT need to be sufficiently attractive to encourage people to migrate away from more traditional fossil fuels.

At the time of writing, the results of a consultation are awaited and so the finer details of RHI have not yet been announced. Full details of the scheme are expected early in 2011 so watch this space...