Introduction
The Department for Business, Energy and Industrial Strategy (the Department) launched the Non-domestic and Domestic Renewable Heat Incentive (RHI) schemes in Great Britain in 2011 and 2014 respectively. Their objectives are to increase the production of renewable heat and reduce carbon emissions in Great Britain, and to develop domestic supply-chains of renewable and low-carbon heat. These objectives are designed to help the UK meet its ambitious targets for producing renewable energy (sourcing 15% of energy demand from renewables by 2020) and reducing carbon emissions (reduce greenhouse gas emissions by at least 80% by 2050 compared to levels in 1990). The independent Committee on Climate Change advise that meeting long-term carbon targets may be impossible without a near complete elimination of carbon emissions produced by heating homes and businesses, the vast majority of which currently use fossil fuels.
The Renewable Heat Incentive is designed to encourage households and businesses to switch from fossil fuel heating systems to renewable and low-carbon alternatives. It provides funding to participants to invest in a range of technologies including biomass boilers, heat pumps and anaerobic digestion plants, which produce biomethane injected into the natural gas grid. The costs of the RHI are met by the UK taxpayer from general taxation, unlike most other schemes to support low carbon sources of energy which are funded through people’s energy bills.
The RHI is a demand-led scheme which, although it can be accessed by anyone, is targeted at those households and businesses which are not connected to the gas grid. Of the 26 million homes and 5.6 million businesses in Great Britain, the vast majority are on the gas grid. Around 1.1 million homes and 62,000 business premises are off the gas grid and use oil and liquefied petroleum gas for heating. The RHI is open to new applications until March 2021. Final payments to participants in the current scheme will run to at least 2040–41, by which time the scheme is expected to have cost the taxpayer £23 billion.
Published: 16 May 2018