What is the renewable heat incentive?

The Renewable Heat Incentive (RHI) is designed to provide financial support that encourages individuals, communities and businesses to switch from using fossil fuel for heating, to renewables such as wood fuel. The Government is currently consulting on the design of the incentive which they are proposing to introduce in April 2011.

Consultation on the proposed RHI financial support scheme

This annex provides illustrative estimates of useful energy for space heating in the domestic sector. Although the exact deeming methodology will be determined post consultation, Table 1 can give an indication of the approximate deemed heat demand for a number of characteristic dwellings.

1. The useful energy requirement for hot water is assumed constant across all property types and sizes at 3,742 kWh/year.

2. The figures presented in this table assume filled cavity walls and adequate (150mm) loft insulation where appropriate.

3. Figures in bold are for base case dwellings. Figures in ordinary type have been extrapolated from the base case dwelling numbers using a scaling factor.

The Government is currently in the final consultation period for the Renewable Heat Incentive (or RHI), due to be launched in April 2011. This is part of the UK Governments commitment to reducing CO2 emissions by increasing the use of renewable technologies whilst also reducing the UK's dependence on imported fuel and thereby increasing the security of supply for the country.

The RHI will apply to houses and buildings that change from using fossil fuel for heating, such as gas or oil, to a qualifying renewable technology, such as Air Source Heat Pump. All sectors will be covered including private housing, social housing, and commercial buildings.

The RHI will apply to all qualifying installations after July 15th 2009, provided the building meets minimum requirements to prevent heat being wasted - such as loft and cavity wall insulation. The RHI will provide the system owner with payments designed to cover the capital cost of the installation, plus a return on their investment.

For domestic customers the payments will be based on the type and size of property, for which an amount will be paid, based on the 'standard' annual heat requirement in kWh. This is to prevent abuse of the system, by installing systems that are too large or wasteful for example. This also will make the tariff easy to calculate and apply as no complicated metering would be required. A standard energy requirement for hot water supply is also factored in.

The proposed tariff for an Air Source Heat Pump system is 7.5p/kWh over 18 years. For a typical flat this could amount to £614 per annum and for a 4 bed detached house £1551 per annum. It is proposed that the system would be administered by Ofgem and payments would be made as annual lump sums and would be linked to inflation.

The RHI would be funded by a new levy on fossil fuels - which in itself will provide an incentive to move away from conventional heating to a renewable form.

At Aspen we see that the Renewable Heat Incentive shows, at last, that the Government is serious about promoting renewable technology and we believe this initiative will provide the kick-start needed to bring our heating and hot water systems into the 21st century.