Renewable Heat Incentive
Friday 09 May 2008
Heat accounts for 49% of the nation's final energy demand - and 47% of its emissions - but has been something of a "sleeping giant" in climate change circles, since most legislation so far in the UK has focused on moving electricity generation towards lower carbon options.
Powers for the government to introduce a Renewable Heat Incentive were included within the 2008 Energy Act, passed by Parliament in November 2008.
The Renewable Heat Incentive will provide for subsidies for any supplier of renewable heat or renewable fuel to be used for heating purposes.
It is likely to include anything from biomass, biofuel and biogas powered heating systems through to heat pumps, air-source pumps, fuel cells and solar thermal systems.
It will be available for any project from a household or community scale to large industrial plants using renewable fuels, including in combined heat and power systems. Unlike the feed-in tariffs being brought in for renewable electricity, there will be no cap to limit the size of projects taking part.
Feed-in tariff
The Renewable Heat Incentive is expected to take the form of a feed-in tariff like system, offering long-term set rates for each unit of renewable heating fuels or renewable heat.
It will most likely be paid for by fossil fuel suppliers, but could take the form of a levy administrated by energy regulator Ofgem.
The structure of the scheme is still yet to be decided, with a consultation expected soon within the government's developing Heat and Energy Efficiency Strategy, which is expected to be published in the Spring or Summer 2009 alongside the new Renewable Energy Strategy.
The details of the Renewable Heat Incentive will be drawn up within secondary legislation, but is unlikely to come into force before April 2010, and could take longer than that to finalise.
There has been some argument from industry that CHP plants should be exempt from paying an RHI levy, but ministers have not been persuaded of the need for such an exemption so far, pointing out that the Incentive would be paid out based on the amount of fossil fuels being used, not how those fossil fuels are used.
