New government scheme offers incentives for updating to renewable heating

Biomass boilers, which burn wood pellets, would be one of the heating systems supported by the RHI scheme

Biomass boilers, which burn wood pellets, would be one of the heating systems supported by the RHI scheme

Today the UK government announced a new programme of financial incentives that will reward businesses and individuals for upgrading their heating systems to use renewable resources.

The £860 million Renewable Heat Incentive (RHI) scheme will support emerging heating technologies like biomass boilers (which burn wood pellets), solar thermal, ground and water source heat-pumps, on-site biogas, deep geothermal, energy from waste and injection of biomethane into the grid.  

The scheme, which has been spearheaded by UK Energy Secretary Chris Huhne, aims to strengthen the security of supply by reducing the country’s dependence on fossil fuel heating and emissions. It is the first renewable heat financial support scheme of its kind in the world.

Around half of the UK’s carbon emissions come from the energy used to produce heat – more than from generating electricity. Huhne says that the RHI will reduce carbon emissions by 44 million tonnes of carbon by 2020. The scheme is also expected to increase green capital investment by £4.5 billion up to 2020, stimulating a new market in renewable heat.

Right now, over 95% of heat in the UK is produced by burning fossil fuels.  North Sea fuel supplies are declining, which has led to an increase in the UK’s fuel imports. Low carbon alternatives are needed, says Huhne.

The scheme will be introduced in two phases.  In the first phase, long-term tariff support will be targeted at the biggest heat users – the industrial, business and public sectors – which contribute 38% of the UK’s carbon emissions. Under this phase there will also be tariff support of around £15 million for households through the Renewable Heat Premium Payment. RHI payments will be claimed by, and paid to, the owner of the heat installation or producers of biomethane for injection.

The second phase of the RHI scheme, slated to begin in October 2012, will give households the same form of long-term tariff support offered to the industrial, business and public sectors.

This transition has been timed to come into effect at the same time as the UK government’s Green Deal scheme. The Green Deal will offer consumers energy efficiency improvements to their homes, community spaces and businesses at no upfront cost. The programme plans to recoup payments through instalment charges on the energy bills of the scheme’s participants.

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