The Renewable Heat Incentive is a government funded scheme providing ongoing financial support to owners of sustainable energy generators to help towards the high costs of equipment purchase, installation and maintenance. At present, the scheme targets commercial properties, charities and public organisations only.

Original tariffs have increased since the launch of the scheme in 2011 and are expected to rise each year in line with inflation. All tariffs are fixed and are determined by company size, type of alternative fuel source and energy expenditure.

Biomass Tariffs 2012

For commercial use biomass boilers using at least 90% pure biofuel, tariffs differ between small biomass generators (less than 200 kWth), medium generators (200 kWth to 1000 kWth) and large biomass generators (above 1000 kWth). Energy expenditure is metered and the tariff is tiered for small and medium systems.

Tier one tariffs, i.e. for fuel expenditure that comes under the installed capacity multiplied by the 1,314 peak load hours, are set at 7.6 pence per kWth for small boilers, 4.7 pence for medium, and 2.6 pence for large. Tier two tariffs for 2012 are 1.9 pence per kWth for small biomass systems, and 1.9 pence for medium systems.

Upon approval to the scheme, these payments are guaranteed for 20 years. For a medium sized biomass boiler system providing power for a commercial business, Renewable Heat Incentive payments could be as much as £15,000 per annum, or £300,000 over the course of the scheme. With the average 200 kWth biomass boiler costing in the region of £60,000, this would give companies a 25% annual return, or over a 400% total return.

Heat Pump Tariffs 2012

Ground and water source heat pumps are eligible for the Renewable Heat Incentive, and the tariffs for these systems are split into small generators (below 100 kWth) and large generators (over 100 kWth). The 2012 tariffs are set at 4.3 pence per kWth for small heat pumps and 3 pence for large pumps.

Expenditure is determined through metering and these payments are guaranteed for 20 years upon approval to the scheme. For a small 100 kWth ground source pump, Renewable Heat Incentive payments could total over £17,000 each year. Ground source heat pumps generally cost around £800 per installed kWth, so a company paying out £80,000 for a generator can expect a repayment period of roughly 4 to 5 years with help from the scheme.

Solar Tariffs 2012

All commercial thermal collectors under 200 kWth are eligible for Renewable Heat Incentive payments and the 2012 tariff is fixed at a rate of 8.5 pence per kWth. Usage is metered and payments are guaranteed for 20 years for those approved for the scheme.

This high tariff means that owners of solar thermal collecting panels could receive up to £34,000 per year from the Renewable Heat Incentive, totalling almost £700,000 over the course of the scheme. The annual return on a £110,000 system averages 31%, or 528% in total.

Biomethane Tariffs 2012

Biomethane is somewhat different to the methods above, as the Renewable Heat Incentive is provided for those injecting bio gasses into the gas grid from sources other than landfill. This is a particularly good incentive for farmers or other animal workers. 'Savings' don't really come into this area, as payments are not made for use of the gas once it is in the gas grid. As of 2012, tariffs for utilising biogasses are set at 6.5 pence per kWth. As with all other eligible alternative fuels, this will be metered and payments are guaranteed for 20 years following approval.