Renewable Heat Incentive – the background

Phase 1 of the RHI has been in operation since November 2011 having replaced the Low Carbon Building Programme (LCBP).

This first wave covers non-domestic buildings only but does include the Renewable Heat Premium Payment scheme (RHPP) consisting of up-front payments to domestic households installing renewable heat technologies.

Administered by Energy Saving Trust, RHPP payments are currently only available to households installing heat pumps or biomass without access to mains gas or to any household installing solar thermal.

Typical one-off payments include £850 for an air source heat pump, £1,250 for ground source heat pumps and £300 for solar thermal.

Uptake of RHPP has been modest with nearly 7,000 cash vouchers issued and over £5m paid out to date.

The non-domestic RHI is administered by Ofgem which receives an average of 20 applications per week. So far only 11 have been granted whilst 300 are in the application stage.

Phase 1 extended

The latest government announcement on renewable heat means that Phase 1 will now continue beyond its original expiry date of March 31 2012 whilst ministers have also boosted the original £15m budget to £25m. Community groups and social housing will also be free to apply for the first time.

These current arrangements could be subject to change as a consultation is being launched to consider plans on controlling overall spending on Phase 1 including handing DECC the power to suspend the scheme to new entrants at one month’s notice in the event that 80 per cent of the budget is exceeded. Although current uptake is no where near levels which would trigger this suspension, a strict limit of £864m has been made available by the government to fund RHI until 2014/15.

This consultation closes to public comment on April 23 with full details of the proposals and how to leave feedback available by clicking here.

Phase 2

Phase 2, of course, is RHI for domestic properties. Originally planned for introduction alongside Green Deal in October, climate change minister Greg Barker has now  announced that its implementation will be delayed until 2013 due to a lengthy consultation process which will now start in September.

Detailed proposals for the domestic RHI are currently unknown but DECC has indicated a tariff which will reduce in line with uptake much like the proposed changes to the Feed-in Tariff (FiT). Cost control is also expected to be tightened following the recent well-publicised and fast-tracked changes to FiT. DECC has categorically stated that projected tariffs set out by the previous government in 2010 should no longer be used as a basis for predicting future financial support given by the government.

Concrete details will only emerge once the consultation process is completed although they will definitely become public knowledge by the end of the next financial year.

Summary of RHI milestones



Publication of Interim Cost Control Consultation Document26 March 2012
Deadline for responses to Interim Cost Control Consultation Document23 April 2012
Interim Cost Control Regulations in placeJuly 2012
Consultation on longer term Cost Control Regime, air quality and biomass sustainability proposalsJuly 2012
Consultation to consider extending support to new technologies in the non-domestic sectorSeptember 2012
Consultation on proposals for the deployment of renewable heat in householdsSeptember 2012
Longer term Cost Control Regime Regulations, air quality and biomass sustainability proposals laid in ParliamentNovember 2012
Parliamentary debates of longer term Cost Control, air quality and biomass sustainabilitySubject to Parliamentary time
Air quality and biomass sustainability standards in placeFollowing Parliamentary debates
Longer term Cost Control Regime policy to be implementedBy the end of the current financial year (2012/13)
Implementation of biomass sustainability standardsMid March 2013
Likely date for new support available for the non-domestic scheme availableSummer 2013
Likely date for implementation of longer term support for the domestic sectorSummer 2013

Source: Department of Energy and Climate Change.

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