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HM Government announce new incentive for biomass industry – March 2011

The Renewable Heat Incentive, or RHI, is a new UK government scheme designed to encourage the take-up of low-carbon heating systems.

The UK has a number of targets for reducing its contribution to global warming, and burning fossil fuels to provide heat and hot water in buildings accounts for a large slice of current emissions. The RHI is the government's attempt to kick-start a move towards heating systems that use renewable energy sources and produce fewer emissions.

Like many other countries, the UK has a feed-in tariff to provide financial payments to people and organisations for each unit of electricity they produce using small-scale renewable technologies such as solar photovoltaic panels and wind turbines. The RHI provides a similar set of incentives for heating, and is the first policy of its type anywhere in the world.

The first phase of the RHI focuses on large-scale systems suitable for municipal and commercial buildings. It isn't yet clear exactly when the first payments will be made, or how they will be administered, but the government has promised to backdate the benefits to cover all technologies installed since July 2009. So in effect the scheme has already started.

The domestic version of the RHI won't launch in full until October 2012, to coincide with the Green Deal, a government policy supporting energy efficiency in homes. In the meantime, £15 million will be made available in grants – called Renewable Heat Premium Payments – to subsidise the cost of installing a domestic-scale renewable heating system. The government aims to announce details of these grants in May 2011 and make them available from July 2011. "Likely levels of support" are £300 for solar thermal; £850 for air-source heat pumps; £1250 for ground-source heat pumps; and £950 for biomass boilers. Recipients of the grants will be expected to provide feedback on their experience using the technology.

For phase one of the scheme, focusing on large-scale installations, eligible technologies are biomass boilers, ground-source heat pumps, solar thermal collectors, and bio-methane (a renewable gas that can either be burned for heat or injecting it into the gas grid).

Large-scale systems will receive the following tariffs for each kilowatt hour of heat produced:

  • 3–4.3p for ground-source heat pumps, depending on the system size
  • 8.5p for solar thermal
  • 6.5p for biomethane combustion or injection.
  • The tariff for biomass boilers is more complex, to remove the possibility that system owners become incentivised to burn more fuel than they actually need. It works out at 1.9–7.6p per kWh of heat, depending on the size of the system and the amount it's used. The tariffs for the domestic version will be consulted on in October 2011 and announced in due course.

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