The Renewable Heat Incentive provides a financial incentive to promote the use of renewable heating technologies in England, Scotland and Wales. As part of the scheme commercial and public sector users will be paid a certain amount of money depending on how much heat they produce. This will then be paid on a quarterly basis for a set period of 20 years.
The Government decided on a tariff to ensure an adequate rate of return for each technology and size. The aim was to provide an estimated 12% annual rate of return for most types of system.
The following tariffs have been set for wood pellets (as of 1st April 2012):
Once signed up to the RHI your tariff rate is secured. The payments are made for a guaranteed 20 year period and are index linked. This means that each year the level of tariffs will be adjusted in line with the retail price index.
For people that haven’t already signed up to the RHI, the tariff levels will be reviewed in 2014 or earlier under an approach called degression. This means that support levels will be reviewed if uptake is greater than anticipated.