REA, STA and WHA welcome improvements to Renewable Heat Incentive

Long-awaited improvements to the world's first Renewable Heat Incentive (RHI) come into force today [1]. The non-domestic RHI pays organisations for every unit (kWh) of useful heat produced using eligible renewable technologies. This counts towards the UK's 2020 renewable energy target and helps reduce the UK's dependence on polluting fossil fuels. The REA and affiliated trade bodies the Solar Trade Association and Wood Heat Association welcome these improvements, which are the result of close cooperation between industry and Government.

Key changes to the scheme

Ø Increased support for:

o large biomass heat projects

o deep geothermal heating

o ground source heat pumps

o solar heating

Ø New support for:

o air source heat pumps

o biomass combined heat and power (CHP)

o on-site combustion of biogas from anaerobic digestion at all scales (previously limited to <200kW)

o waste-based heating projects using commercial and industrial waste as well as municipal solid waste

Ø Preliminary registration for biomethane plants to help developers plan their projects

The REA has also been working closely with DECC on changes to the budget management mechanisms, to minimise policy costs to the taxpayer whilst ensuring cost-effective technologies are given room to grow. In particular, wood heat companies were frustrated that small and medium biomass tariffs were degressed last year despite a major underspend on the RHI scheme overall. Today's changes reduce tariff degression triggers for large biomass, biomethane injection and ground source heat pumps whilst significantly increasing triggers for small and medium biomass, giving these sectors more room to grow.

REA Chief Executive Dr Nina Skorupska said:

"The RHI is now a truly world-leading renewable energy policy. Almost all renewable heat applications are now supported under the scheme, offering businesses greater choice than ever before on how to sustainably meet their heating needs. Local authorities and housing associations can also benefit from the expanded support for technologies that can feed district heating schemes, such as biomass, geothermal and energy from waste."

The STA provided evidence to Government in support of increasing the ‘value for money cap' for renewable energy support programmes, which has enabled support for solar water heating to increase to 10p/kWh.

Stuart Elmes, Chair of the STA Solar Thermal Working Group, said:

"The extra support for solar heating means that the economics will now stack up for more projects. More swimming pools, sports centres, food factories and hospitals will now be able to afford year-round heating from the sun. We have also proposed that future improvements should include front-loading RHI payments for solar into the first seven years, as with the domestic scheme, to help businesses get over payback hurdles."

Support for large biomass heat has doubled, but this technology sub-sector still draws the lowest fixed level of subsidy of any low carbon technology. The increased support for CHP and the increased degression triggers for small and medium biomass will also boost the deployment of wood heat.

The newly formed Wood Heat Association announced its affiliation to the REA last week [2]. Julian Morgan-Jones, Interim Chairman of the WHA, said:

"Under the previous cost-control mechanisms, wood heat was being unnecessarily constrained in order to preserve head room in the budget for heat pumps that was clearly not going to be used. The revised cost control mechanisms more closely match real world deployment and will ensure that wood heat can maximise its contribution to cost-effective emissions savings and renewable energy targets."