RHI takes the heat off investing in renewables

18Mar2011

The launch of the Renewable Heat Incentive on 10th March was welcome news to many farmers and rural businesses. Farmers can now invest in renewable heat technologies, reduce their costs and carbon footprints.

The £860 million government scheme is the first of its kind in the world, providing long term support for renewable heat technologies. Subsidies will be paid to those who install the technology which includes biomass boilers, energy from waste combustion, ground source heat pumps, deep geothermal and the injection of biomethane into the grid.

The RHI will provide the opportunity for rural businesses to harness the benefits of renewable heat on sound economic basis. For example, a biomass boiler providing heat to a large farm and outbuildings at an installed cost of £125,000 would receive a subsidy payment in the region of £15,000 per annum. Not bad!

Until now it has been difficult for many in the rural community to justify the expenditure for these technologies. Long payback periods were not practical, especially in an industry where cash flow and careful investment are paramount.

Some technologies such as heat pumps and deep geothermal require little or no input at all, and many farmers could grow their own fuel for biomass boilers providing a huge opportunity. The government’s announcement will secure this as a progressive form of energy production for the  rural community.

The RHI will be introduced in two phases with the first phase starting in 2011. This will target industry, commerce, the public sector, not-for-profit organisations and communities. The second phase of the scheme will start in 2012 and will include the delivery of long term support for the domestic sector.

The tariffs have been set for the majority of technologies however “tiered” tariffs have been introduced for small and medium-scale biomass. Biomass installations will receive a higher tier 1 tariff for the initial proportion of generation, reducing to a lower tier 2 tariff when generation exceeds the “Tier Break”.

Payments will be made to eligible technologies for a period of 20 years. Once in the scheme, the level of support will be guaranteed, providing certainty to those investing in renewable heat installations.

So, good news all round!

For further information on renewable heat technologies and the Renewable Heat Incentive (RHI) Scheme, contact Rebecca Seaman on 01858 410200 email rebecca.seaman@fishergerman.co.uk.

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