Renewable Heat Incentive

The Renewable Heat Incentive (the RHI) is a payment system in England, Scotland and Wales, for the generation of heat from renewable energy sources. Introduced on 28 November 2011, the RHI replaces the Low Carbon Building Programme, which closed in 2010.

The RHI operates in a similar manner to the Feed-in Tariff system, and was introduced through the same legislation - the Energy Act 2008. In the first phase of the RHI cash payments are paid to owners who install renewable heat generation equipment in non-domestic buildings: Commercial RHI.

The RHI went live on 28 November 2011 for non domestic buildings. The Coalition Government confirmed its support for the RHI in the October 2010 Spending Review and published details on 10 March 2011. The RHI was extended to domestic buildings on 9 April 2014 after a further series of delays. Three consultations were launched which included proposed domestic tariffs and a long discussion on eligible technologies along with changes to the Non-domestic RHI which included proposals to triple the tariffs for ground source heat pumps and the proposed addition of a tariff for Air to Water Heat Pumps.

Through the Non-domestic RHI, generators of renewable heat for non-domestic buildings can be paid up to 10.44p/kWhr for hot water and up to 9.09p/kWhr for heat which they generate and use themselves. The RHI tariff depends on which renewable heat systems are used and the scale of generation. The annual subsidy lasts for 20 years for non-domestic buildings, and seven years for domestic buildings. As such, users may earn enough money from the tariffs to pay off their installation costs in five to eight years. According to the Government, which has set the tariff levels, users will earn a return of 12% per annum. This is tax free income for individuals. The equivalent for Feed-In Tariffs is 5%-8%.

The RHI provides support for community and district heating schemes where a single renewable heat system provides heat or hot water to more than one property.

The renewable heat technologies which are eligible under the Non-domestic RHI are solar thermal (hot water) panels, ground source heat pumps, water-source heat pumps, biomass boilers, and biomethane. The list was extended in April 2014 to include air to water heat pumps and deep geothermal. See table of tariffs for the Non-domestic RHI.

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