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Renewable Heat Incentive – The Devil is in the Detail
2011-07-14

On 24 June 2011 Ofgem published detailed guidance on accreditation and eligibility for the Renewable Heat Incentive (RHI) scheme.

Woodchip

Woodchip

The RHI is a new government scheme designed to encourage the uptake of renewable heat. The scheme is the first of its kind in the world and will provide £860 million of subsidy between 2011 and 2015, more than double the amount of funding allocated to the Feed in Tariff Scheme.

Tariffs will be paid on the basis of the metered heat produced by eligible installations. The tariffs have been calculated to provide a return on the additional capital invested of 12 per cent. Tariff rates will be adjusted every year in accordance with the UK Retail Price Index and will continue for up to 20 years from the date of accreditation. The RHI will be introduced in two phases. It is expected that support will be available to non-domestic sectors with eligible installations from the 30 September 2011 and to the domestic sector from 2012.

Rebecca Seaman of Fisher German comments “The RHI provides a fantastic economic opportunity for rural businesses looking to invest in renewable heating technologies. For example a biomass boiler providing heat to a farmhouse and several cottages at an installed cost of £155,000 would receive a subsidy payment in the region of £18,000 per annum. For certain installations that can sell heat to a third party, the returns can be as much as 22%.”

In order to gain accreditation and receive support under the RHI an applicant will have to demonstrate that the installation meets the RHI eligibility criteria which include:

· the renewable heat technology type and size is eligible;
· the installation was completed and first commissioned on or after 15 July 2009; and
· the heat is for eligible purposes

Rebecca Seaman of Fisher German advises “A renewable heat installation must satisfy the detailed eligibility criteria to ensure that it benefits the RHI. For example the installation must provide useful heat which is measured by an approved heat meter.”

If you are interested in generating heat from renewable heat sources and would like to benefit from the Renewable Heat Incentive, it is important to consider the physical and economic viability of the technologies available and the eligibility criteria of the RHI scheme.

For further information on renewable heat technologies and the Renewable Heat Incentive (RHI) Scheme, contact Rebecca Seaman on 01858 410200.

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