The Renewable Heat Incentive (the RHI)
The Renewable Heat Incentive (the RHI) is a payment system for the generation of heat from renewable energy sources introduced in the United Kingdom on 28 November 2011. The RHI replaces the Low Carbon Building Programme, which closed in 2010.
The RHI operates in a similar manner to the Feed-in Tariff system, and was introduced through the same legislation - the Energy Act 2008. In the first phase of the RHI cash payments are paid to owners who install renewable heat generation equipment in non-domestic buildings: Commercial RHI.
Through the Domestic RHI, generators of renewable heat for single domestic buildings can be paid up to 19.51p/kWhr for solar thermal hot water. The tariffs are larger than for the Non-domestic RHI, but are paid over seven years, rather than for 20 years for non-domestic buildings. Through the Non-domestic RHI, generators of renewable heat for non-domestic buildings can be paid up to 10p/kWhr for hot water. The RHI tariff depends on which renewable heat systems are used and the scale of generation. The annual subsidy lasts for 20 years for non-domestic buildings, and seven years for domestic buildings. As such, users may earn enough money from the tariffs to pay off their installation costs in five to eight years. According to the Government, which has set the tariff levels, users will earn a return of 12% per annum. This will be tax free for individuals. The equivalent for Feed-In Tariffs is 5%-8%.