The Department of Energy & Climate Change (DECC) has today (12 July) announced the rates householders can receive for generating renewable energy.

The Renewable Heat Incentive (RHI) has been designed by DECC as a financial incentive to promote the domestic uptake of renewable energy, in a bid to decrease the UK’s reliance on traditional fossil fuels and ‘cut carbon, help meet renewables targets and save money on bills’.

Energy and Climate Change Minister Greg Barker said that under the scheme, householders could get paid ‘hundreds of pounds a year’ for heat generated by solar thermal panels, biomass boilers and heat pumps.

Tariff details

DECC has said that householders wishing to install renewable energy under the RHI scheme ‘may be able to get help with the upfront costs of the renewable heating kit under the Green Deal’ (which, according to latest figures, has only been adopted by four people nationwide).

Applicants wishing to claim RHI rates will need to complete a Green Deal Assessment and ensure they have met minimum loft (250mm) and cavity wall insulation requirements, where appropriate.

Anyone who has installed a renewable heat technology since 15 July 2009 and meets the scheme eligibility criteria will also be able to join the scheme.

The RHI tariff levels are as follows:

• 7.3 pence for kilowatt hour (p/kWh) for air-to-water heat pumps;
• 12.2p/kWh for biomass-only boilers and biomass pellet stoves with back boilers;
• 18.8p/kWh for ground and water heat pumps; and
• ‘at least’ 19.2 p/kWh for flat-plate and evacuated-tube solar thermal panels.

Government has said that the rates ‘reflect the expected cost of renewable heat generation over 20 years’, and will make payments on a quarterly basis for seven years to relevant homeowners, private and social landlords, third party owners of heating systems and people who build their own homes.

In most cases, payments will be made based on estimated heat demand of the property. DECC will offer an extra set payment of £230 per year where consumers take out metering and monitoring support packages for heat pumps and £200 for biomass boilers.

Domestic RHI is a ‘world first’

The scheme has been up and running for the non-domestic sector since November 2011 and is now being extended to householders, in what government is saying is a ‘world first’. Originally, the government intended to launch the domestic scheme in autumn of 2012, but the start date has twice been delayed.

Speaking of the tariffs, Barker said: “Investing for the long term in new renewable heat technologies will mean cleaner energy and cheaper bills. So this package of measures is a big step forward in our drive to get innovative renewable heating kit in our homes.

“Householders can now invest in a range of exciting heating technologies knowing how much the tariff will be for different renewable heat technologies and benefit from the clean green heat produced. We are also sending a clear signal to industry that the Coalition is 110 percent committed to boosting and sustaining growth in this sector.”

DECC has said that it is ‘currently finalising the details of the expansion of the non-domestic RHI scheme’ and will confirm the way forward ‘in the autumn’ alongside the outcome of the tariff review.

Industry reaction

Industry reaction to the RHI tariffs has been mixed, with commentators welcoming some aspects of the announcement.

Tim Minett, Chief Executive of UK biomass supplier CPL Industries, said: “We have been waiting a long time for these figures which bring much-needed clarity and should provide real impetus to the scheme.

“The domestic RHI should be hugely popular as a fifth of the UK’s housing stock is not connected to the gas grid and most of those rely on expensive oil for their heating. Every single one of these homeowners would benefit as RHI payments will allow them to cut their fuel bills by thousands of pounds a year, while making a positive step in cutting carbon emissions.”

Minett went on to say he was “surprised” the rates for biomass were lower than other technologies (except air-to-water), but “still expected biomass systems to be the most popular by far” as they are easy to retrofit to properties and work in all weather conditions.

He added that “the chief stumbling block” is a lack of awareness among the public, and the government “desperately” needs to “step up and promote the scheme vigorously”.

The Renewable Energy Association (REA) has also welcomed the announcement, but voiced dismay at the fact that the domestic RHI will only support retrofit installations and will not support integration of renewable heat systems into new-build developments.

REA’s Head of On-site Renewables Mike Landy, said: “After several delays and stagnation in the market, today’s announcement will give a huge boost to the domestic renewable heat industry. Companies will now be able to tell homeowners exactly how much financial support they can earn through the use of renewable heating systems.”

Concerns over the non-domestic RHI

However, the REA added that many project developers had been working on the assumption that non-domestic tariffs would be known ‘this summer’, not ‘this autumn’, and as such ‘a number of the most cost-effective renewable energy projects currently in development will have to be scrapped as investment decisions cannot be made on schedule’.

REA Chief Executive Gaynor Hartnell added that whilst the tariff level decision is still on track to be ‘spring next year’, DECC has still not confirmed which technologies will be supported under the non-domestic RHI, which “does not instill confidence and delays business planning”.

Read more about the Renewable Heat Incentive scheme.