Following a long period of uncertainty, the Government has finally launched the Renewable Heat Incentive (RHI) which was opened to non domestic applicants from 28 November 2011. This has followed an ongoing dispute that the original tariff for large biomass was in breach of EU state aid rules. This article summarises the key points.

What is it?

The RHI is similar in many respects to the feed in tariff that provides financial support to small scale electricity production. The key difference is the RHI provides financial support to (initially non-domestic) renewable heat generation. The RHI provides a continuous income stream guaranteed for 20 years for any organisation that installs an eligible renewable heating system. The aim is to accelerate deployment of renewable heat produced in the UK so that the Government can meet its legally binding target to produce 15% of our total energy from renewable sources by 2020.

Technologies

Technologies that are eligible for the scheme are:

• Biomass boilers (including CHP biomass);
• Solar Thermal;
• Ground and Water Source Heat Pumps;
• On-site biogas combustion;
• Deep Geothermal;
• Energy from Municipal waste; and
• Injection of biomethane into the grid

What are the tariffs?

As with the feed in tariff, the RHI applies differing tariffs to each technology type and size to reflect the estimated capital cost of installing the equipment. 

http://www.rhincentive.co.uk/eligible/levels/tiered/

For biomass, tier 1 heat production is limited to 1,314 x installation capacity. For example a 195 kWth installation will receive the 7.9p/kWh tariff under tier 1 up to 256,230 kWh (i.e.1,314 x 195). Any excess heat produced will receive the tier 2 tariff of 2p/kWh.

Other key eligibility criteria

As well as being one of the above technologies, applicants need to ensure:

• Installations must be new equipment and installed after 15th July 2009.
• The installation is within the eligibility sizes for the technology used (e.g. solar thermal are only eligible up to 200kW).
• Each installation is registered with the regulator Ofgem and installations under 45kW must comply with the Microgeneration Certification Scheme.
• The tariff payable is based on the eligible heat output of the system and this heat must be used for an eligible purpose (i.e. water, space or process heating, not electricity generation)
• The equipment needs to be maintained throughout the 20 year period to a given standard.
• Only the owner of the renewable installation is eligible to receive the tariff income.

Further technologies are expected to be included in phase 2 of the RHI along with provisions for domestic installations. Despite these omissions, the scheme is set to be extremely well received in the industry for job creation and unique opportunities for UK businesses.