What is the Commercial/ Non-Domestic Renewable Heat Incentive?
The Commercial or Non-Domestic Renewable Heat Incentive (RHI) is a Government environmental programme that provides financial incentives to increase the uptake of renewable heat. For the non-domestic sector broadly speaking it provides a subsidy, payable for 20 years, to eligible, non-domestic renewable heat generators and producers of biomethane for injection based in Great Britain.
Ofgem is responsible for implementing and administering the scheme on behalf of the Department of Energy and Climate Change.
What is the Purpose of the Scheme?
By providing a long-term financial incentive, the objective of the Non-Domestic RHI is to significantly increase the proportion of heat generated from renewable sources. By driving change in a heat sector currently dominated by fossil fuel technologies, the RHI can help the UK meet EU targets to reduce carbon emissions and improve energy security.
Who is the Scheme for?
The Non-Domestic RHI is open to the non-domestic sector including industrial, commercial, public sector and not-for-profit organisations with eligible installations, and to producers of biomethane. In the context of the scheme, a non-domestic installation is a renewable heat unit that supplies large-scale industrial heating to small community heating projects.
This includes for example small businesses, hospitals and schools as well as district heating schemes such as where one boiler serves multiple homes.
- Annual budgets for the RHI are fixed so Government needs to ensure that the scheme stays within budget and that it is value for money to the taxpayer who funds the scheme.
- At the same time, those who are considering installing renewable heat need to know what support is likely to be available to them.
- The means of controlling the budget for the non-domestic RHI since April 2013 until March 2016 is through degression, which operates by gradually lowering the tariffs which can be paid to new applicants as more renewable heating systems are installed.
- Tariffs are only reduced as estimated spend on the non-domestic scheme reaches certain expenditure thresholds or “triggers”.
- Initial reductions to tariffs are low – at 5%. Strict rules govern future reduction levels meaning that these will not always occur.
- Announcements confirming whether there will be a tariff reduction will take place quarterly, with one month’s notice prior to any reduction taking effect.
- Applicants who are accredited or registered onto the scheme once the notice period ends will receive the new (reduced) tariffs. Those who have already been accredited or registered onto the scheme will continue to receive the previous tariffs.
- Monthly updates of how the scheme is performing, and progress towards the expenditure thresholds will be published on the DECC section of the GOV.UK website.
(D.E.C.C _Department for Energy & Climate Change, May 2014 -Non-Domestic Renewable Heat Incentive scheme Degression mechanism)