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New incentive scheme for renewable heating

A long-awaited package of measures aimed at stimulating the installation of renewable heating systems has been announced by the government. Following its launch in March, the Renewable Heat Incentive (RHI) was described by Energy Minister Chris Huhne as "the first of its kind in the world. It'll help the UK shift away from fossil fuel, reducing carbon emissions and encouraging innovation, jobs and growth in new advanced technologies. "

solar collectorImage courtesy of greenspec (

The £860m scheme, funded by central government, is intended to boost take-up of technologies such as biomass combustion, ground-sourced heat pumps and solar thermal collectors, all of which essentially heat water for use in space heating or hot-water supply. Currently over 95% of heat in the UK is produced by burning fossil fuels, responsible for about half of the nation's carbon emissions. The RHI is intended to reduce our dependency on fossil fuels and cut carbon emissions, especially as North Sea gas supplies decline and we rely increasingly on imported gas and oil.

Phased introduction

Introduction of the RHI will be in two phases, with the first phase scheduled to start in July 2011. This will focus mainly on the industrial, commercial and public sector, and see eligible producers receiving a tariff payment for their renewable heat. However, most domestic households will have to wait for phase 2, at least until October 2012, before they can receive RHI tariffs. This is intended to coincide with the start of the Green Deal.

'RHI premium' from 2011

There is though some money for the domestic sector from July 2011. About £15m of the first year's budget has been earmarked for so-called 'RHI premium payments' to around 25,000 households that install renewable heat technologies. These are one-off incentive payments to help cover the cost of installation. To qualify, households will have to meet certain criteria, such as a high level of insulation, and agree to be monitored so the performance of the system can be assessed. The aim is to use this information in designing the more comprehensive domestic RHI tariffs before their roll-out next year.