Mixed feelings as government releases Renewable Heat Incentive update

The Department of Energy and Climate Change (DECC) announced that it is extending the Renewable Heat Incentive Premium (RHPP), which was due to run out at the end of the month.

Homeowners planning to install systems that generate heat from renewable sources will be able to apply for a capital grant to help pay for the cost of qualifying installations (see table below). However, DECC also said that the Renewable Heat Incentive (RHI), which pays people for every unit of heat generated by renewable sources, is not likely to be made available to domestic properties until summer 2013. Commercial installations already qualify for the RHI and it was hoped that homeowners would be able to join the scheme sometime this year.

David Parry-Jones of Knight Frank’s building consultancy team said: “Although extending the RHI Premium will be helpful for anybody looking to install a system, we would have preferred to see the RHI payment itself coming into place rather than being delayed again.”

DECC has also announced it will be consulting on measures to help control the cost of the RHI. It said these could include lowering tariffs as the scheme grows and allowing the scheme to be suspended for new entrants if 80 per cent of the available budget is expected to be spent.

Benjamin Davies of Knight Frank’s renewable energy team said: “Clearly costs have to be kept under control, but DECC needs to clarify the situation quickly so we avoid the uncertainty that badly affected confidence in the Feed-In Tariff scheme for renewable electricity.”

Renewable Heat Incentive Premium payments

Renewable heat technologyPremium payment
Ground source heat pump£1,250
Biomass boiler*£950
Air source heat pump*£850
Solar thermal hot water panels£300

* For homes without mains gas heating