The Renewable Heat Incentive Scheme was a proposal first mooted in the final days of the Labour government in March 2010.

 

Despite some initial fears over the scheme’s continue existence under the Coalition government, further details were released in March 2011 clarifying details, and the long-term existence, of the renewable heat incentive.

Under the scheme, homes and businesses in England, Scotland and Wales will be paid a tariff for every kilowatt hour (kWh) of renewable heat they generate. The theory behind the renewable heat incentive scheme is similar to that of feed-in tariffs, where generators are paid for each kWh of renewable electricity they generate. However, there are some fundamental differences in the way the scheme will be administered.

Unlike feed-in tariffs, the renewable heat incentive scheme will not be linked to electricity suppliers. Instead, those customers eligible for renewable heat incentive tariffs will receive their payments direct from government funds. This differs from feed-in tariffs, where microgenerators nominate a feed-in tariff licensee (electricity suppliers), who in turn contribute to a large pot from which payments are made, known as the ‘levelisation fund’.

 

The renewable heat incentive is the first such scheme anywhere in the world.
 

Generating heat for Britain’s homes and businesses is responsible for more than half of our nation’s carbon emissions, which is more than the emissions produced by the electricity supply sector.
 

The renewable heat incentive is predicted to save around 44 million tonnes of carbon by 2020. Department of Energy and Climate Change (DECC) equates this to the annual output of 20 gas-fired power stations.

Alongside environmental and climate change considerations, the renewable heat incentive also tackles an important energy security question. Currently, 95% of the UK’s heating needs are met by the burning of fossil fuels. Historically, this has been met by North Sea gas imports. With these gas deposits dwindling, the UK has been relying increasingly on imports from further afield, such as gas from Russia. This leaves consumers and, arguably, the economy at the mercy of price shocks.

Finally, the renewable heat incentive is expected to act as a ‘green-collar’ stimulus package for jobs and services in the renewable heat sector.

As of March 2011, the renewable heat incentive was yet to go before parliament for approval.

DECC’s timeframes indicate that a ring-fenced £15 million fund for the renewable heat incentive premium payments will be available from July 2011 until October 2012.
 

The renewable heat incentive proper is expected to launch in October 2012.

More information is expected from DECC in May 2011.

The renewable heat incentive payments will cover the next 20 years.

Four technologies have already received confirmed tariff rates and lifespans:

 

DECC has indicated that it will support air-source heat pumps, although more exact details have not yet been released.

Only systems accredited under the Microgeneration Certification Scheme (MCS) and commissioned before 15th July 2009 will be covered.

The renewable heat incentive premium payments will cover the first phase of the scheme before the full launch in October 2012. This has been designed to encourage technology take up as soon as possible.

 

£15 million has been set aside as a grant towards the price of an eligible piece of technology:
 

 

As the table shows, biomass will operate on a 'tiered' system, depending on how much heat is produced. 

 

Tier 1 will apply until the tier break, thereafter tier 2 will apply.

 

The tier break can be calculated by taking the installed capacity and multiplying it by the peak load (i.e. 1,314 peak load hours).

 

 It almost goes without saying that the reduction to your carbon footprint brought by renewable heat is vast. On top of this, Renewable Heat Incentive payments should provide a very tidy cost saving, with the average home expected to make a net profit of around £600 a year.

 

 

 The Coalition government only announced their support for the Renewable Heat Incentive scheme in the October 2010 Spending Review. We are still waiting for the details to be finalised but current indications are that there will not be a Levelisation Fund, unlike the Feed-in Tariff scheme, which electricity suppliers pay into.