Renewable Heat Incentive Ends

BEIS unveils sweeping plans for heat as RHI closure confirmed

29 Apr / 2020

By Alice Grundy Reporter. Read more from Alice Grundy Here.

Grants of £4,000 are to replace the domestic Renewable Heat Incentive (RHI), the government has announced as part of several heat proposals.

The Department for Business, Energy and Industrial Strategy (BEIS) has launched the ‘Future support for low carbon heat’ consultation, detailing its proposals for support mechanisms following the closure of both the domestic and non-domestic RHI.

The domestic RHI will close to new applicants on 31 March 2022, with its replacement – the Clean Heat Grant – taking effect in April 2022.

Support through the Clean Heat Grant is to be targeted at households and small non-domestic buildings to enable the installation of heat pumps and, BEIS said, biomass in limited circumstances. It is proposing that systems with a capacity of up to 45kW be eligible for the scheme. Hybrids, however, including hybrid heat pumps, will not be supported.

The Clean Heat Grant replaces the RHI’s tariff-based support in favour of a £4,000 grant, set at a flat rate over scaling with system size or changing across technology types.

This will “put the onus on the market” to find which technology is the most cost-effective for each property, BEIS said, adding that it expects that for the majority of applicants this will be air-source heat pumps.

The aim of the scheme is to help grow confidence in the technologies and supply chains and help address the barrier of upfront costs.

However, BEIS outlined that it has the right to review the grant levels in response to unforeseen market changes or “if uptake falls substantially outside the expected range”.

A capping system is also to be introduced as part of the scheme, with BEIS proposing quarterly grant windows that each have a budget cap to mitigate the risk of the budget being depleted more quickly than expected, the department said.

BEIS is suggesting a voucher system for the delivery of the grant, which will be issued on a first come, first served basis.

Funding for the Clean Heat Grant has been committed for two years to March 2024, after which the scheme will close to new applications.

This mirrors the small-scale feed-in tariff for solar, which in 2018 had its tariff rate cut by 87% following huge uptake of the scheme and a capping system introduction. You can review the story below.

Solar Grant Cut by 87%