Renewable Heat Incentive ( RHI ) Scheme

Under the Government spending review, the RHI scheme due to come into force in April 2011 has been saved.

The details of the scheme are not clear at this time but it is assumed that it will operate in a similar way to the Feed in tariff system for photovoltaic installation where customers who use the technology not only benefit from the savings of microgeneration but are paid for each unit of energy consumed.

This might seem crazy at first sight but there is logic to the payments. Firstly, the government have agreed to meet carbon reduction targets which means increasing the level f green energy produced or less palatable building more nuclear power stations. Also, the cost of any new power station is colossal in comparison to grants and payments made to private individuals.

Bear in mind that there is not a lot of cash about at the moment and that the government are now suffering the massive losses brought about by Private Finance Initiative (PFI) in hospital and other public sector building programmes. A mistake which it would be unwise for them to make again.

It is likley that there will be a levy on everybody’s energy bills, a green tax if you like and this money will be used to fund the RHI h. It therefore becomes self financing and the people who use the most energy pay the largest amount to the green forum whilst the people who invest in microgeneration (Solar pv, solar thermal and heat pump technology) should recover their investment in a few years and benefit from lower energy costs too.

Intelligent decision making is vital however. Gas is still cheap and plentiful in most areas. This is liklely to continue for the next 5 years or so and so a decision to invest in renewable technology at a cost of £10 – £15 thousand as against a cheap and cheerful combi boiler system for generally less than £2 thousand might still be a viable option for a large number of people on mains gas, and will probably cost less to run.

The RHI scheme will  require equipment to be registered under MCS and installers also registered in order to qualify for the incentive.