Originally published 11 March 2011

Yesterday DECC announced the detailed policy for the RHI and the proposed draft secondary legislation. The RHI will be the first financial support scheme for renewable heat of its kind in the world. This is an exciting opportunity for those involved in the renewable energy sector and looks to give long-term support for renewable-heat technologies.

1. Summary

The key aspects of the RHI tariffs from 2011 for the non-domestic sectors will be:

  • Support for a range of technologies and fuel uses including solid and gaseous biomass, solar thermal, ground and water source heat-pumps, on-site biogas, deep geothermal, energy from waste and injection of biomethane into the grid
     
  • Support for all non-domestic sectors including: industrial and the commercial sector; the public sector; not-for-profit organisations and communities in England, Scotland and Wales
     
  • RHI payments to be claimed by, and paid to, the owner of the heat installation or the producer of biomethane
     
  • Payments will be made quarterly over a 20 year period
     
  • For small and medium-sized plants (up to and including 45kWth), both installers and equipment to be certified under the Microgeneration Certification Scheme (MCS) or equivalent standard, helping to ensure quality assurance and consumer protection
     
  • Tariff levels have been calculated to bridge the financial gap between the cost of conventional and renewable heat systems, with additional compensation for certain technologies for an element of the non-financial cost
     
  • Heat output to be metered and the support calculated from the amount of eligible heat, multiplied by the tariff level
     
  • Biomass installations of 1 MWth capacity and above will be required to report quarterly on the sustainability of their biomass feedstock for combustion and where they are used to produce biogas
     
  • Eligible non-domestic installations completed on or after 15th July 2009, but before the start of the RHI, will be eligible for support as if they had been installed on the date of its introduction
  • Ofgem will administer the RHI including: dealing with applications; accrediting installations; making incentive payments to recipients; and monitoring compliance with the rules and conditions of the scheme and
     
  • The RHI will be funded from general Government spending, not through the previously proposed RHI levy.

From 2012, the Government plans to introduce a second phase of support, which will include RHI tariffs for domestic installations and a number of additional technologies and fuel uses, where they represent a cost-effective way of increasing renewable heat uptake.

2. Timescales

DECC are aiming for the proposed secondary legislation to be approved by Parliament before the Summer recess and for the legislation to come into effect shortly after such approval.

3. Eligibility:

  • RHI will cover England, Scotland and Wales
     
  • Only non-domestic installations supported from the outset
     
  • Installations completed and first commissioned on or after 15th July 2009 eligible for support providing they meet the eligibility criteria
     
  • Heat must be usable and useful heat used for space, water or process heating to be eligible for support and
     
  • RHI participants will be required to meet a number of ongoing obligations, including maintaining equipment, providing information to Ofgem and allowing installations to be inspected.

4. Eligible Technologies and fuels:

  • Phase One of the RHI, will support a range of technologies and fuels including biomass, solar thermal, heat-pumps, on-site biogas, deep geothermal, energy from waste and injection of biomethane into the gas grid
  • Eligibility of some technologies will be limited to certain capacities
  • Only technologies and fuels classified as renewable under the Renewable Energy Directive will be eligible and
  • Fossil fuel heat recovery and fossil fuel CHP, transpired solar panels and co-firing won't be supported.

5.  Proposed Tariffs

Please click here for the proposed tariff levels.

We will be providing a more detailed analysis of the proposed legislation and how the RHI will interact with the Renewables Obligation and Feed-in Tariff scheme shortly.


For further information or advice, please contact:

Michelle Thomas
Partner, Head of clean energy and sustainability
Tel: 0845 498 7553
michellethomas@eversheds.com

Jean-Pascal Boutin
Senior Associate
Tel: 0845 498 8265
 jeanpascalboutin@eversheds.com

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.