Renewable Heat Incentive finally revealed – March 2011
The Government has set aside £860 million for the scheme, which is expected to increase green capital investment by £4.5 billion by 2020. This investment will go towards increasing the number of industrial, commercial and public sector installations by 2020, with the full system of Renewable Heat Incentive payments for residential installations available from October 2012. More than a quarter of the first year’s budget will be set aside for a guaranteed 25,000 household installations through what’s been named the ‘Renewable Heat Incentive Premium Payment’. Additionally, 150,000 existing manufacturing, supply chain and installer jobs will be supported.
Energy Secretary Chris Huhne has revealed the Renewable Heat Incentive, claiming that it will support emerging technologies and businesses in the UK, strengthening security of supply by reducing dependence on fossil fuel heating and emissions - which currently stand at around 50%. The Renewable Heat Incentive is expected to reduce these emissions by 44 million tonnes by 2020, equivalent to the annual carbon emitted by 20 typical new gas power stations.
The new policy is aimed at encouraging the installation of equipment such as renewable heat pumps, biomass boilers and solar thermal panels, in order to reduce emissions and support the existing 150,000 jobs in the heating industry. This will in turn reduce the country’s current dependence on fossil fuel heat, which is currently more than 95%.
The Renewable Heat Incentive, which will now need to go through Parliamentary approval, will stand alongside the current feed-in tariff (FiT) and Renewables Obligation (RO). The DECC hopes that the latest renewables incentive will generate 13,000 new installations in industry and 110,000 in the commercial and public sector by 2020. This, the Department claims, is seven times the number expected by 2014.
All industry, commercial and public sectors will be eligible for the incentive, including public houses, schools and power plants. Technologies that will be supported include biomass boilers, heat pumps and solar thermal. Community projects will also be eligible, provided a single installation is providing heat to more than one house. The tariffs (outlined below) will be paid for 20 years to eligible technologies that have installed since 15th July 2009 with payments being made for each kilowatt hour (kWh) of renewable heat produced.
Once a system is receiving payments from the scheme, the level of support an installation will receive is fixed and adjusted annually with inflation. However, as we have already learned with feed in tariffs, the levels of support available for new entrants to the Renewable Heat Incentive scheme will decrease over time as the costs of the equipment and installation reduce through economies of scale – or if a review is implemented.
For households, the Renewable Heat Incentive payments will begin alongside the Green Deal in 2012. However, up to 25,000 installations from July will be supported by a “Renewable Heat Incentive Premium Payment” to help people cover the purchase price of green heating systems. Those taking up the Premium will then be eligible for a Renewable Heat Incentive tariff from October 2012 when the Green Deal begins, as will anyone else who has had eligible equipment installed from July 2009.
The “Renewable Heat Incentive Premium Payment” will be worth approximately £15 million and will ensure there is a fair spread of technologies across all regions of the UK. 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.
As with anything, 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.
