The government has announced details of the renewable heat incentive which will reward companies and private individuals for installing technologies including biomass boilers, heat pumps and thermal solar panels.

Owners of eligible installations will receive a cash payment for each kilowatt hour of heat generated. This works in a similar way to the feed in tariff for renewable electricity generation and is payable for 20 years with adjustments for inflation. The rate payable for installations in future years will reduce as capital costs come down.

The government said £860m was being made available which it expected to stimulate £4.5bn of green capital investment.

The scheme will be introduced in two phases with the first phase targeted at non-domestic, big heat users. This is expected to take effect from the middle of 2012. As part of this first phase householders will be eligible for £15m worth of grants to offset capital costs of renewable heat technologies.

The government said grants are likely to be £300 for a solar thermal installation, £950 for a biomass boiler and £1,250 for ground source heat pumps.

The grants will support 25,000 installations and will be targeted on those with well insulated homes who are dependent fossil fuels with a high carbon content such as heating oil.

The second phase of the scheme will take effect from October 2012 to coincide with the introduction of the Green Deal. Recipients of grants will be entitled to renewable heat incentive payments. Payments will also apply to any installation made after July 2009.

The payments will be calculated using heat meters. Owners of large installations will also be expected to meter the amount of heat used to prevent deliberate over generation. Payments will be paid on a two tier basis with the first tier payable at a higher rate. For example the owner of a domestic biomass boiler will receive 7.6p per kWhr for the first tier then 1.9p kWhr once a certain output level has been reached.

Owners of large biomass installations will also be expected to report regularly on the sustainability of their fuel sources.

Further detail of the scheme will be announced in May next year. For full details of the scheme go to the DECC website

Table of Tariffs (RHI for industry, business and large organisations)

Tariffs

 

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