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Details of solar PV FIT changes announced

The Department of Energy and Climate Change (DECC) has announced that the domestic Renewable Heat Incentive (RHI), due to commence in October 2012, will be delayed. It has launched a consultation on interim cost control measures for RHI and launched a second tranche of the Renewable Heat Premium Payment (RHPP).

The RHI scheme involves the provision of long term financial support for eligible equipment installed since 15 July 2009 and is being introduced in two phases. It is currently in its first phase for non-domestic renewable heat systems. The second phase, for domestic renewable heat systems, was originally intended to commence in October 2012 but it now appears that it will be delayed, probably until summer 2013. DECC has indicated that it will consult on final proposals for domestic RHI in September 2012, following which it will announce the exact launch date.

The level of support payable under the RHI scheme depends on the type and size of the eligible technology. Payments are made quarterly over a period of 20 years irrespective of the type of installation. Some technologies have tiered tariffs to discourage production of excess heat. After a delayed start, RHI opened for applications in relation to non-domestic properties on 28 November 2011. The Government's intention behind launching the RHI in two phases was to maximise the effectiveness of the scheme, prioritising the non-domestic sector as the biggest emitters.

In announcing the delay of domestic RHI, DECC also announced the availability, from 2 April 2012, of a second tranche of RHPP. RHPP is an interim measure for domestic properties, pending the start of domestic RHI. Rather than the provision of long term financial support for eligible equipment, the RHPP scheme involves the provision of a single direct payment to subsidise the installation of renewable heating systems in domestic properties. The payment is towards the equipment and installation costs of renewable technologies like biomass boilers, air and ground source heat pumps and solar thermal panels. The first phase of the scheme commenced on 1 August 2011 and ended on 31 March 2012. The budget for the first tranche of RHPP was £15m and the budget for the second tranche has been increased to £25m, with pots set aside for community schemes and social housing.

The Government hopes that RHPP will provide it with valuable insights into how RHI will work in the domestic sector, and assist in appropriately scoping which renewable heat technologies should be prioritised. To this end, recipients of RHPP are required to provide feedback on how their installation works in practice. It is intended that those persons who have received or are receiving RHPP will also be able to apply for tariff support when the second phase of the RHI is implemented. RHPP is administered by, and will continue to be administered by, TLT's longstanding client, the Energy Saving Trust.

The RHI interim cost control consultation seeks views on DECC's plans to manage the budget for the non-domestic RHI. Stating that it will be taking on board lessons learned from the Feed-in -tariff scheme, the consultation includes a proposal that RHI would be suspended to new entrants, until the next financial year, on one month's notice if 80% of the available budget is expected to be spent. The consultation closes on 23 April 2012.

This publication is intended for general guidance and represents our understanding of the relevant law and practice as at May 2012. Specific advice should be sought for specific cases; we cannot be held responsible for any action (or decision not to take action) made in reliance upon the content of this publication.

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