New renewable heat incentives pass parliamentary hurdle

The long awaited reforms of the renewable heat incentive (RHI) known as ‘Package 2’ passed their final parliamentary hurdle on 22 May and will be implemented with immediate effect.

The non-domestic RHI was launched in 2011, with the domestic scheme following in 2014.  The initiative has since been instrumental in kick starting the UK’s push towards a target of 11% of our heat requirement coming from renewable sources by 2020.  The new package of measures introduces a range of regulations affecting both RHI schemes.

Adam Baxendine, Savills renewable heat specialist, said: “The new package is designed to close a number of loopholes but, unusually for government energy policy, it also opens up opportunities in a number of other areas.  Most notably tariff guarantees for certain systems will provide certainty to projects with long lead-in times. They will also increase the viability for anaerobic digestion projects, where tariffs are in fact due to increase.”

A summary of the measures is set out below:

  • Introduction of tariff guarantees
  • Introduction of assignment of rights
  • Uplift to biogas/bio methane tariffs
  • Biogas/biomethane feedstock restrictions
  • Removal of wood fuel drying, waste drying/processing, and domestic swimming pools as eligible uses of heat
  • Removal of digestate drying as an eligible heat use
  • Changes to CHP efficiency thresholds
  • Revision of degression thresholds
  • Introduction of shared ground loop regulations for the Non-domestic RHI
  • Introduction of mandatory electricity metering for heat pumps on the Domestic RHI and domestic properties on shared ground loop systems in the Non-domestic RHI
  • Various operational administrative changes


Nick Green, head of Savills energy said:  “The UK still has a long way to go on decarbonising heat, which presents opportunities and challenges in equal measures for anyone with a high heat demand such as the manufacturing and construction sectors. Businesses should use the introduction of these new measures to review their heat strategies as there are economic advantages, as well as wider environmental benefits.”

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