Renewable Heat Incentive Announcement

Posted by Roderick Ellison - MSc BSc (Hons) AIEMA on 18/03/2011

As expected, there are some major changes in this new release, in comparison to previous government Renewable Heat Incentive proposals.

It has been confirmed that different approaches are being taken for the domestic and non-domestic sectors, with the RHI being introduced in two phases. Phase 1 will commence post-July 2011, when RHI tariffs will be available for the non-domestic sector.

As announced during the Comprehensive Spending Review in October, the government has confirmed that £860 million from the budget will be funded to the RHI between 2011 - 2014. This is in contrast to plans by the previous government to levy on heating bills. Following are further key points from the recent government announcement;


  • Payments will be guaranteed for 20 years following entry to the scheme
  • The RHI will run until at least 2020.
  • Rates will be adjusted with inflation on a yearly basis
  • The government proposes to introduce digression in 2012
  • Payments to be made quarterly
  • Payments can only be made to the owner of the equipment
  • Ofgen to grant preliminary accreditation for plans submitted for installations

Formal reviews of the RHI are expected to be undertaken every 4 years, with the first review scheduled for January 2014, and resulting changes to legislation by April 2015 - though it has been said that the government will hold the right to perform earlier reviews, if necessary, and based on a number of criteria still to be published.

An MCS certification (Microgeneration Certification Scheme) or equivalent (such as Solar Keymark for solar thermal panels) will be required for installers and equipment on installations below 45kWth.

Details of the eligible technologies, tariff rates and tariff lifetimes for the non-domestic sector have now been published, the details are provided below;



Tariff rate (p/kWh)

Tariff lifetime (years)

Solid biomass  & municipal solid waste


7.6 (Tier 1)

1.9 (Tier 2)



4.7 (Tier 1)

1000kWth & above


Ground source & water source heat pumps & deep geothermal




100kWth & above


Solar thermal




Biomethane injection & biogas combustion, except from landfill gas

Biomethane - all scales

Biogas <200kWth



Note: biomass installation payments (up to 1000kWth) are split into two tiers. Higher rates are paid for the initial 1,300kWh of heat generated each year on Tier 1, with Tier 2 covering the rates for heat generated after that.

What will be the impact of the scheme?

It is the governments’ aim to obtain 12% of the UK's heat demand from renewable sources by 2020. Clearly, this is a large increase from the current percentage of 1.5%, and will help to achieve the UK’s legally binding 15% renewable energy target.

The government has estimated that 11% of the target will be comprised of renewable energy source usage in the non-domestic sector. They also project that £4.5 billion capital investment will be made in the non-domestic sector by 2020 following the RHI - with 13,000 industrial installations and 110,000 installations in the public and commercial sectors.