RHI consultation on interim cost control

Friday 11th May 2012

On Monday 26th March 2012, the Department of Energy and Climate Change (DECC) launched a consultation that detailed plans to implement a cost control mechanism for the Renewable Heat Incentive (RHI).

The RHI aims to provide long-term financial support, similar to the Solar PV Feed-in Tariff (FIT), by paying for each kW of heat that is generated by Renewable Heat technologies. This will enable a significant shift away from fossil fuels to renewable heating in the UK.

The scheme opened for non-domestic applications in November 2011 and currently supports renewable heat installations in business, industry and the public sector.

The consultation, which closed on Monday 23rd April 2012, set out a proposed interim cost control measure, which would see the RHI suspended until the next financial year should estimated spending reach a level where the budget could be exceeded.

The UK Government has learnt from their experience of the Solar Panel FIT fiasco – in which they tried to rush through unlawful cuts when the budget was threatened – and plans to put precautions in place for the RHI scheme.

The RHI is also funded by the Government, who have to make sure that they maintain value for money for the taxpayer. The Government’s aim is for the scheme to be sustainable, with the ability each year to ensure that spending does not exceed available funding.

Greg Barker, Minister of State for Energy and Climate Change, commented:

"We have to learn lessons from the Feed-in Tariffs and ensure that we maintain budgetary control, whilst providing appropriate certainty to stakeholders about how we will do this."

Barker continued:

"Putting a protective measure in place will preserve sustainability of the scheme and the renewable heat industry. In the longer-term, we propose to introduce a more sophisticated cost control mechanism which would include a flexible digression-based system."

DECC are currently reviewing all of the responses to the RHI interim cost control consultation and will place the summary on their website in due course.

The domestic RHI is scheduled to launch in Summer 2013. A Renewable Heat Premium Payment of £300 is available now, to bridge the gap until the domestic RHI scheme is launched, to all homeowners that wish to install Solar Thermal Panels. Read More about the Renewable Heat Premium Payment.

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