Renewable Heat Incentive

The scheme was first announced by Government on 10 March 2011. It is the first financial support scheme for renewable heat of its kind in the world. It is being introduced in two phases.

First phase: non-domestic installations

The first phase, introduced on 28 November 2011, provides long-term tariff support targeted in the non-domestic sectors, at the big heat users – the industrial, business and public sector – which contribute 38% of the UK’s carbon emissions. It is being administered by Ofgem E-Serve and detailed guidance on the criteria and application process can be found on theirwebsite.

What help is available to housing associations?

This first phase also applies to residential communal heating schemes, such as those developed by housing associations.

There is also support for households through the Renewable Heat Premium Payment (RHPP) to encourage the uptake of domestic renewable heat technology in off-gas grid areas before the introduction of the second phase (domestic installations) for individual homes. On 26 March 2012 the Government extended the RHPP scheme and increased the funding to £25 million. The scheme will run until 31 March 2013, subject to funding, and is administered by the Energy Saving Trust (EST).

DECC has reopened the second competition - RHPP3 (PDF opens in new window) - for registered providers to bid for funds to install renewable heating technologies in their housing stock. Funding has been increased from the previous £3 million to £10 million for this competition. EST are managing the competition, which closes on 9 October 2012. Further improvements have been made to the competition to provide more time to apply and only requiring energy bills at the project delivery stage. Successful applicants will be approached by EST to see if they want to bid for additional funding but more applications are encouraged from social landlords.

There is also a Communities Scheme for installations in private households, in which social landlords can be involved as long as they are working in partnership with the community. For example, a social landlord may have already installed renewable heating in their own housing stock and they could then work with an unconstituted local transition group to offer a bulk deal on renewable heating systems through its preferred contractor, using its charitable status to meet the scheme eligibility enquiry. Where social landlords are the lead organisation for bids they will need to make a strong case that they are working in partnership with the local community on their project.

Full details of Renewable Heat Premium Payment and Communities Scheme are available on the EST website.

Second phase: domestic installations

The second phase will see the RHI scheme expanded to include more technologies as well as support for households. The Government plans to consult on proposals for supporting renewable heating for households in September 2012 and will then set out a firmer timetable. We expect this phase to operate from summer 2013.

Will the Government reduce RHI?

The Government will not necessarily reduce RHI but the scheme has to keep within the budgetary limits set by the Comprehensive Spending Review. As an initial precaution, following consultation, it has published the arrangements for interim cost-control measures, if required, to keep within the budgetary limits.

• Read our response on the interim cost-control measures

The Government is consulting on longer-term plans to manage the non-domestic budget, details can be found at RHI budget consultation (PDF - opens new window)

Further information

Full details of RHI can be found on DECC’s website.