Following the Government’s spending review announced in October 2010, the final details of the Renewable Heat Incentive (RHI) have been announced today (Thursday 10 March) by Greg Barker, the Minister of State, Department of Energy and Climate Change.

Andrew Watkin, head of the energy and marine team at Carter Jonas, commented: “We now have the long awaited Renewable Heat Incentive, which the Government suggest will commence in July 2011. The RHI should theoretically assist in accelerating deployment by providing a financial incentive to install renewable heating in place of fossil fuels. However, all involved in the energy sector must sincerely hope that once the RHI commences we don’t end up with a premature review like the Feed-in Tariff which was only launched in April 2010, such a move by the Government simply dents investor confidence and affects development timescales.

“The Government have suggested that the RHI will have scheduled four yearly reviews starting in 2014 and which will be implemented in 2015.

“Furthermore, it is of some concern that the Government wants to take a phased approach in implementing the RHI.

“Phase 1 will target the large emitters in the non domestic sector which will include the industrial and commercial sectors, not for profit organisations and communities.

“The Government suggest this sector “will provide the vast majority of the renewable heat to meet targets and represents the most cost effective way of increasing the level of renewable heat”. Technologies covered in the non domestic sector will include solid and liquid biomass, solar thermal, ground and water source heat-pumps, on site biogas, deep geothermal, energy from waste and injection of biomethane into the grid and payments will be made quarterly over a 20 year period.

“As part of the first phase the Government will also introduce the Renewable Heat Premium Payments (RHPP) in July 2011 for the domestic sector, having ring fenced £15m which they will use to make premium payments to households who install renewable heating.

“We at Carter Jonas see this form of subsidy as effectively a pilot scheme, as household’s have to provide feedback on installations and their use. It is worrying that the Government don’t appear to have undertaken any significant amount of due diligence in the sector.

“Phase 2 of the RHI will include long-term support for the domestic sector which will be introduced in 2012. This will according to Government, coincide with the introduction of the Green Deal for Homes and people in receipt of RHPP will be able to receive long term RHI tariff once these tariffs are introduced, as will anybody who has installed an eligible installation since 15th July 2009.

“So, at least the RHI is arriving, albeit in phases and we sincerely hope that the Government learn from the Feed-in-Tariff and don’t start making premature alterations to the scheme. The net affect would be to prejudice progress in this part of the energy sector.”