Good practice:

Renewable Heat Incentive

Investment in renewable heat technologies wasn’t growing as the payback period was long and the technology unfamiliar to the market. Capital grants had been in place in a limited fashion but this wasn’t stimulating the growth levels required. The Renewable Heat Incentive was designed as being able to provide the financial stimulus required but phased over a number of years with payment related to heat output. Set up in 2011, contributes to the UK’s target of meeting 15% of energy demands with renewable sources by 2020. The scheme is open to domestic and non-domestic customers and the following technologies: - Heat pumps, biomass, solar thermal, energy from waste, biogas (CHP, gas grid). By the end of March 2019 there were 20,160 participants on the Non-Domestic RHI scheme and in total 4.5GW of heat capacity has been installed.
Heat generated by eligible schemes is either deemed or metered and then quarterly payments made to the owner over 7 years for domestic and 20 years for non-domestic. As take-up increases the tariffs decrease but once an installer is registered the tariff is set for the period of the RHI. The RHI is paid for by the public through charges on their energy

Between Nov 2011 and Aug 2017, total payments under the RHI amounted to £1.4 billion. The scheme currently has a budget for new applicants until Mar 2021. Final payments to these applicants will run to at least 2040-41, by which time these payments are expected to have cost £23 billion.

Delivered a 44% carbon saving through the RHI scheme by 2020. Estimated 4.5 million tonnes CO2e saved in 2017-18, c. 1% of UK carbon emissions. Delivered 78,048 installations by December 2017.

Although a range of technologies are eligible the vast majority of supported installations were for biomass. There are concerns that as payments were related to the amount of heat generated, installations were incentivised to generate as much heat as possible and so not sized properly.

The scheme was the very first to offer payments for renewable energy generated and for renewable heat specifically. The scheme did deliver carbon savings and increase renewable heat production in the UK as well as increasing the profile for renewable heat technologies in general
The NAO concluded that the UK government needed to increase rates of renewable and low-carbon heating in order to meet the UK’s legal obligations. The RHI is a novel approach to making progress against these obligations and identifying longer-term options for eliminating carbon emissions from heat production. Measures it introduced to control the scheme’s costs have enabled it to avoid the budget control problems that occurred on a similar scheme in Northern Ireland.