UK government launches Renewable Heat Incentive

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The UK government today launched the Renewable Heat Incentive (RHI), a scheme designed to stimulate a new market in renewable heat by providing subsidies.

The new financial incentive is expected to encourage the widespread installation of equipment such as renewable heat pumps, biomass boilers and solar thermal panels in domestic and commercial premises.

According to the Department of Energy and Climate Change (DECC), around half of the UK’s carbon emissions come from the energy used to produce heat. The RHI will reduce emissions by 44 million tonnes of carbon to 2020, equivalent to the annual carbon emitted by 20 typical new gas power stations.

‘Renewable heat is a largely untapped resource and an important new green industry of the future,’ said energy and climate change secretary Chris Huhne. ‘This incentive is the first of its kind in the world. It’ll help the UK shift away from fossil fuel, reducing carbon emissions and encouraging innovation, jobs and growth in new advanced technologies.’

The RHI tariff scheme will stand alongside the Renewables Obligation and Feed-In Tariff scheme.

For industry, commercial and public-sector installations the tariffs will be paid for 20 years to eligible technologies that have been installed since 15 July 2009, with payments being made for each kWh of renewable heat that is produced.

Once in the scheme the level of support an installation will receive is fixed and adjusted annually with inflation. The levels of support available for new entrants to the RHI scheme will likely decrease over time as the costs of the equipment and installation reduce through economies of scale.

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 interim, up to 25,000 installations from July will be supported by an RHI Premium Payment to help people cover the purchase price of green heating systems. Those taking up the premium will then be eligible for an RHI tariff from October next year when the Green Deal begins, as will those who have had eligible equipment installed from July 2009.

‘By placing an explicit value on renewable heat supplies, we hope to see an end to the wasteful practices that see much of our precious bioenergy resources dumped into the atmosphere through cooling towers,’ said Graham Meeks, director of the Combined Heat and Power Association.

‘We’ve already installed more than 2,000 heat pumps across the country, as well as offering solar heating and hot water systems,’ said Graham Bartlett, managing director of Energy Solutions at E.ON. ’Today’s announcement is an important step in developing the market for these new technologies just as the Feed-in Tariff has done for renewable electricity.’

A table of tariffs can be found here.