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Renewable Heat Incentive

Volume 571: debated on Wednesday 4 December 2013

I am pleased to announce today the publication of DECC’s Government response document “Non-Domestic Renewable Heat Incentive: Improving Support, Increasing Uptake”, which sets out a range of improvements and increased support under the non-domestic renewable heat incentive (RHI).

This responds to the consultations “Expanding the non-domestic scheme”, “Air to Water Heat Pumps and Energy from Waste” and “Non-Domestic Scheme Early Tariff Review” as well as addressing the outcome of four calls for evidence related to bio-propane; large biomass, ground-source heat pumps and landfill gas.

The non-domestic RHI scheme has been open to commercial, industrial, public sector, not-for-profit and community generators of renewable heat since November 2011. The scheme is designed to bridge the gap between the cost of fossil fuel heat sources and renewable heat alternatives through financial support for owners of participating installations.

Given low levels of uptake for some technologies in the scheme and additional evidence from stakeholders, we decided to re-examine the evidence on the assumptions and cost data used to set the level of tariffs when this world-first scheme for renewable heat was launched. It is vital that we get the level of support right so that the market can invest with confidence, cost reductions can be achieved and the market can grow sustainably.

We gathered new data on the assumptions used to set tariffs and used this in conjunction with evidence from the industry to calibrate new tariff levels. Subject to state aid approval, we intend to increase the support available for renewable combined heat and power (CHP) plants, large biomass boilers (over 1MW), deep geothermal, ground-source heat pumps, solar thermal and biogas combustion up to 200kWth. We are also introducing new support for air-water heat pumps and commercial and industrial energy from waste, along with improvements to our budget management policy and further policy development on providing increased tariff certainty for large-scale schemes.

Also published today are further details of the domestic RHI, related to budget management policy, phasing of legacy applications and treatment of some types of subsidy, as well as confirming the tariff for solar thermal at 19.2p/kWh, as per our commitment when publishing the domestic RHI policy in July 2013.

The changes set out in the publications I am announcing today are summarised on and are subject to parliamentary and state aid approvals. They are designed to stimulate considerable growth in the deployment of renewable heating technologies in the coming years and we expect that these tariffs will drive significant deployment so that the industry can grow and invest with confidence.