The non-domestic Renewable Heat Incentive (RHI) closed to new applicants on 31 March 2021. The domestic RHI closed to new applicants on 31 March 2022.

The information in this resource is intended for reference only.

As mentioned, to ensure that the RHI remains financially sustainable and provides value for money to the taxpayer, DECC introduced a degression mechanism to regulate the level of RHI payments. Under this mechanism, the tariffs paid to new RHI recipients will reduce if uptake of the RHI is higher than DECC forecasts. Conversely, if uptake is less than DECC forecasts, tariffs will increase.

Note that degression only applies to new entrants to the RHI, once an installation is accredited the tariff levels are fixed (subject to inflation indexes), this enables any new project to plan financially for the lifetime of the project. Since the start of the non-domestic RHI tariff levels have reduced for biomass and increased for ground source heat pumps. The forecasts used are of the level of renewable heat needed to achieve the heat proportion of the UK’s 2020 renewable energy targets.

The degression mechanism is complex, with reviews undertaken every three months based on uptake of the RHI. If deployment is higher than specified trigger levels, then the RHI for new schemes can be reduced by 5% or more. DECC have announced that as of 1 April 2015, there will be a 15% reduction to the small commercial biomass tariff.

Information required for funding applications

It is important to ensure that you keep a record of the information you have gathered in anticipation of an RHI application, as RHI income will be important to lenders when they are deciding on whether to fund a project. It is not possible to be accepted on to the RHI scheme until after your system is commissioned. Therefore, it is important to be able to show progress in your accreditation process during the early stages of engaging with a lender.