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Renewable Heat Incentive in six questions

What is the Renewable Heat Incentive (RHI)?

It is an amount of money paid to businesses for each unit of heat that they generate from renewable energy sources. You get paid even though you use the heat for heating and/or hot water.

Where does the incentive come from?

The Government started the scheme in November 2011 and it is the world’s first scheme of its kind. The payments come directly from Government rather than through utility companies (as is the case with the Feed in Tariff), and the money is raised through taxes rather than as a levy through energy bills.

How much do you get?

The payments vary depending on the technology that you choose to provide heating. For example for biomass boiler up to 200kW in size, you get paid 8.6p/kWh for the first 1340 peak load hours each year, and then 2.2p/kWh for the remainder.

The RHI runs for 20 years from commissioning of your boiler at a fixed rate, which is inflation linked. In real terms this equates to the following: A 200kW biomass boiler would attract £607K of RHI payments over the 20 year terms. If this boiler was replacing an oil boiler you would see an approximate £885K net benefit from installing the system (including fuel savings).

Which technologies are applicable?

Biomass boilers - burning fuel such as wood pellets, chips and logs
Ground or water source heat pumps
Solar thermal
Why is it relevant for farms?

If you have a heat load on site, and you are meeting this load through oil, electric or LPG heating then you will have high energy bills and a considerable risk to your business due to the volatility of fossil fuel prices.

Biomass boilers are particularly appealing solutions for farms as they are simple and easy to run, can use a fuel source from the farm and provide the heat needed eg for crop drying.

The technology provides a cheaper fuel alternative, a revenue stream that can boost farm income and it is carbon neutral.

Are the rates guaranteed and when will they go down?

When your system is commissioned and you sign up to the RHI your rates are fixed from that point for 20 years. They are index linked so will increase with inflation and they are underwritten by law and so will not change with a change in Government.

There is no current information detailing a decrease in RHI rates, but if the Feed in Tariff model is replicated then the incentive will start to decrease over time meaning that those who get on board now will secure the best rates.

Carl Benfield is Founder and Managing Director of Prescient Power (www.prescientpower.co.uk)

http://www.farmingfutures.org.uk/blog/renewable-heat-incentive-6-questions