Chris Huhne: encouraging the installation of renewables.

RHI gets the green light

Published:  10 March, 2011

LONDON: Energy Minister Chris Huhne has just unveiled details of the Renewable Heat Incentive (RHI), aimed at boosting the UK's uptake of renewable energy.

The new financial incentive will encourage installation of equipment like renewable heat pumps, biomass boilers and solar thermal panels to reduce emissions and support the existing 150 000 jobs in the heating industry.

"Renewable heat is a largely untapped resource and an important new green industry of the future,” Mr Huhne said. “This incentive is the first of its kind in the world. It will help the UK shift away from fossil fuel, reducing carbon emissions and encouraging innovation, jobs and growth in new advanced technologies."

The proposed tariffs could well attract criticism as the energy produced by solar thermal panels will be less than a quarter of the subsidy for groundsource heat pumps.

The Department of Energy and Climate Change (DECC) said the RHI tariff scheme will stand alongside the Renewables Obligation and Feed-in Tariff scheme. DECC estimates that by 2020, the UK renewable heat sector will have grown to include around 13 000 installations in industry and 110 000 installations in the commercial and public sector, supplying 25% of the heat demand in these sectors.

The £860m government scheme is expected to increase green capital investment by £4.5bn up to 2020, stimulating a new market in renewable heat. 

The incentive will increase number of industrial, commercial and public sector installations by seven times to 2020. A full system of RHI payments will be available to households from October 2012. In the interim, more than a quarter of the first year's budget to be guaranteed for up to 25 000 household installations through a 'RHI Premium Payment' to encourage take-up.

Over 150 000 existing manufacturing, supply chain and installer jobs will be supported. RHI tariff payments  will start for homes alongside the Green Deal from 2012 to allow a more whole-house approach to heat production and energy saving. In the meantime, up to 25 000 installations from July will be supported by a 'RHI Premium Payment' to help people cover the purchase price of green heating systems.

Those taking up the Premium will then be eligible for a RHI tariff from October next year when the Green Deal begins, as will anyone else who has had eligible equipment installed from July 2009.

The 'RHI Premium Payment' will be worth around £15m and will ensure there is a fair spread of technologies across all regions of Great Britain.

The installed technologies will be monitored to enable government, manufacturers, installers and consumers to better understand how to make sure householders get the most out of them.

There will be clear eligibility criteria in order to qualify for a Premium payment, including:

A well insulated home based on its energy performance certificate;

Agreeing to give feedback on how the equipment performs;

A key focus of this initial phase will be on people living off the gas grid, where fossil fuels like heating oil are both more expensive and have a higher carbon content.

DECC is planning to publish details of the 'RHI Premium Payment' and how this will apply in May this year. It will consult on the RHI tariffs that will apply from October 2012 later in the year.

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