Today sees the launch of a Consultation on the Renewable Heat Incentive (RHI) and the publication of the Government's response to the Feed-in Tariff (FIT) section of the summer 2009 consultation on Renewable Electricity Financial Incentives (REFI). Links to these documents are listed below.
The UK Renewable Energy Strategy (RES), published in July 2009, set out a path towards achieving the UK's target of sourcing 15% of overall energy consumption from renewable sources by 2020. The lead scenario set out in the RES suggests that over 30% of our electricity (including 2% from small scale generation) and 12% of heat demand could come from renewable sources.
The RHI scheme will be the first of its kind for renewable heating anywhere in the world and we intend to implement this by April 2011. This consultation sets out our proposals on the design and operation of the scheme, including the proposed tariff levels, and seeks views on different aspects, such as:
- Accessing the RHI;
- Eligibility;
- Tariff setting;
- Reviews; and
- Interaction with other policies.
We consulted on the FITs as part of a wider consultation on the REFI in Summer of 2009 and intend to implement this scheme by April 2010. The Government's Response sets out our final decisions on the FITs scheme design including eligibility, tariff levels, registration and getting paid. The overall structure of the scheme, as set out in the Consultation, remains largely unchanged. Some of the key highlights include:
- FITs will be applicable to installations up to 5MW (2kW for non-renewable CHP );
- Wind, solar PV and hydro projects of 50kW or less, and microCHP projects supported through the pilot will be required to use the Microgeneration Certification Scheme (MCS) eligible products installed by MCS accredited installers to claim FITs support;
- All tariffs will be linked to the Retail Price Index (RPI);
- Electricity supply companies to make FITs payments to eligible generators;
- FITs income for domestic properties will be exempt from income tax;
- Ofgem will act as the FITs scheme administrator;
- A levelisation process, undertaken by Ofgem, to share the cost of the scheme across all licensed suppliers in proportion to their share of the UK electricity supply market; and
- Regular reviews of the scheme, the first one in 2013.
The scheme will be brought into effect through modifications to electricity suppliers licences, which we have also consulted on. The FIT will be subject to Parliamentary clearances as required by the Energy Act 2008.
These measures take forward powers granted in the Energy Act 2008 to establish financial incentives schemes to facilitate and encourage small-scale low-carbon generation of electricity and renewable generation of heat.
We hope that you will take the time to read these documents and reply to the RHI consultation, helping us develop our policies going forward.
- The RHI consultation (which closes on 26 April) can be viewed by clicking here
- The Government Response to the Consultation on Feed-in Tariffs can be viewed by clicking here
Regards,
The Renewables Financial Incentives Team
Department of Energy and Climate Change
