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Renewable Heat Incentive (RHI) finally announced

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The details of the long-awaited Renewable Heat Incentive (RHI) have finally been announced by Chris Huhne today (10 March) with the £860m scheme expected to increase green capital investment by 4.5 billion up to 2020, giving a definite boost to the renewable heat market.

For homeowners, a full system of RHI payments will be available from October 2012. In the interim period, more than a quarter of the first year’s budget will be guaranteed for up to 25,000 household installations, through ‘RHI Premium Payment’, designed to encourage take-up.

Currently, around half of the UK’s carbon emissions come from the energy used to produce heat – more than from generating electricity. The RHI will reduce emissions by 44 million tonnes of carbon to 2020, equivalent to the annual carbon emitted by 20 typical new gas power stations.

Chris Huhne said: “Renewable heat is a largely untapped resource and an important new green industry of the future. This incentive is the first of its kind in the world. It’ll help the UK shift away from fossil fuel, reducing carbon emissions and encouraging innovation, jobs and growth in new advanced technologies.”

The tariffs offered under the RHI will shortly be approved by Government, so exact figures are not yet available. What we do know is that tariffs will be paid back over 20 years and eligible for technologies installed since 15th July 2009. As with Feed in Tariffs, it is expected that the levels of funding will be higher for early entrants onto the scheme, reflecting the inevitable reduction in the price of equipment and installation over time.

In terms of sector growth, by 2020 estimations suggest that in the commercial and public sectors alone, there will be 110,000 installations, supplying 25% of the heat demand – seven times the anticipated installations for 2014.

The full DECC press release can be found here.

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