Why the Renewable Heat Incentive is an opportunity too good to miss
Posted by Mark Henderson on 22 June 2012 at 9:47 am
Despite attractive and near-certain returns on investment, take-up of the renewable heat incentive (RHI) far has been very low so far. If the opportunity is too good to miss, what is holding it back?
The world’s first renewable heat incentive (RHI) scheme has been open to applicants since 28th November 2011, providing payments for heat generated from renewable technologies including biomass boilers, solar thermal equipment and heat pumps. The scheme is retrospective, meaning that installations made since 15th July 2009 are eligible. Yet only 76 installations have been accredited to date (18 June 2012).
With an initial budget of £860m for the period 2011-2015, the RHI provides financial support to commercial, industrial, public and not-for-profit and community generators of renewable heat. RHI payments continue for a 20-year period.
The Department for Energy and Climate Change (DECC) predicts 14,000 industrial installations and 112,000 installations in the commercial and public sector by 2020. The domestic sector will be included in the scheme next year.
In their analysis of the RHI scheme to date, the Carbon Trust predicts that biomass will be the most popular technology to be adopted, with the initial budget capable of supporting up to 6,000 new installations.
Can the Government be trusted?
With the furore surrounding the Government’s earlier than expected review of electricity feed-in-tariffs (FiTs) still rumbling on, prospective customers can be forgiven for harbouring sceptical attitudes towards any reassurances over the RHI. A lack of trust in Government initiatives is likely to be an important factor for organisations considering large investments.
However, a closer analysis of the impact of the FiT review shows that the Government did not renege on promises made to existing customers. Bringing forward the deadline for installations to qualify for higher payments meant that some projects ended up on the wrong side of the revised deadline and missed out. This demonstrates the importance of taking advantage of similar schemes as soon as possible.
£860million has been committed to the RHI scheme, so it is vital that investors act quickly to guarantee their share before the fund is exhausted, especially as the RHI represents such an excellent return on investment, far better than many other alternatives.
Complex application process
Even if they are aware of the scheme, most people still need help with applying for funding. Responsibility for the application lies with you, the customer, not the supplier. So make sure you choose an installer that has the experience and expertise to guide you through the bureaucratic process, help with the application and ensure that the you receive all the benefits you are entitled to.
Credibility of payback estimatesIf you are borrowing money to fund renewable energy equipment, you need to be sure that the investment will cover the repayments. The lender also needs to have confidence in the figures to ensure that the loan will be repaid. Again, it is important to deal with reputable suppliers, like those accredited as recognised suppliers for the Energy Efficiency Financing Scheme or installers you find on YouGen.
Look out for my next blog on finance for renewable heat installations. Ecoliving is a EEF approved installer.
About the author: Mark Henderson is founder and franchise director of Ecoliving.
If you have a question about anything in the above blog, please ask it in the comments section below.
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