Heat in buildings strategy - achieving net zero emissions: consultation

Annex D Summary of GB Wide Funding for Heat and Energy Efficiency

Domestic Renewable Heat Incentive (RHI)

The GB wide Domestic Renewable Heat Incentive (Domestic RHI) is a UK Government financial incentive to promote the use of renewable heat.

Successful applicants to the scheme receive quarterly payments for seven years for the amount of clean, green renewable heat their system is estimated to produce.

The scheme opened in April 2014, and will run until 31 March 2022, having recently been extended by a year with only minor changes to the scheme. These include allowing those who commissioned their plant on or after 1 March 2019 to apply for accreditation up until the closure of the scheme, rather than within 12 months of the commissioning date.

Currently 19% of installations accredited under the Domestic RHI are located in Scotland.

Non-Domestic Renewable Heat Incentive (NDRHI)

The GB wide Non-Domestic Renewable Heat Incentive (RHI) is a UK government environmental programme that provides financial incentives to increase the uptake of renewable heat by businesses, the public sector and non-profit organisations.

Eligible installations receive quarterly payments over 20 years based on the amount of heat generated. The scheme is scheduled to close on 31 March 2021.

While some changes have been made with regards to tariff guarantees and some commissioning deadlines extended beyond the closure of the scheme, no payments will be made beyond 31 March 2041. Applicants who commission after the closure of the scheme on 31 March 2021 will receive a shorter payment lifetime.

Currently 19% of installations accredited under the Non-Domestic RHI are located in Scotland, more than its pro-rata share.

Clean Heat Grant Scheme (in development)

The UK Government has announced the Clean Heat Grant Scheme, which will begin in April 2022 and run for 2 years until March 2024.

The Scheme is intended to provide a £4,000 flat-rate technology neutral upfront grant to successful applicants. It will fund heat pumps, and biomass where a heat pump is not suitable, up to 45kw in capacity via a voucher mechanism. £100 million funding will support the scheme.

Green Gas Support Scheme (in development)

The UK Government has also announced the Green Gas Support Scheme, which will run for four years from autumn 2021. The scheme will support biomethane injection in to the gas grid and is expected to contribute 21.6MtCO2e of carbon savings over its lifetime. The scheme is to be funded by the Green Gas Levy, and will use a tariff mechanism similar to the Non-Domestic RHI.

Energy Company Obligation (ECO)

The Energy Company Obligation (ECO) is a UK Government programme to deliver energy efficiency measures across Great Britain (GB). The legislation obliges eligible energy providers to deliver energy efficiency improvements to help fuel poor households to reduce the cost of heating their homes (HHCRO or the Help to Heat Cost Reduction Obligation). ECO is funded through a charge on the energy bills of all customers of regulated energy companies with over 250,000 customers.

As of December 2020, BEIS report that 287,996 households in Scotland have received ECO finance (13.4% of GB); or an average of 118 measures per 1000 households (compared to 81 in Wales and 77 in England). The council with the highest reported number of ECO measures per household (number of measures per 1000 households) in GB is the Comhairle nan eilean siar (Western Isles council).

Warm Home Discount (WHD)

Warm Homes Discount is a GB wide scheme that provides an annual one-off discount on electricity bills paid by energy companies between September and March. Currently the Warm Homes Discount is worth £140 and the costs of the discount are applied to all household bills.

In 2017-18 Scottish households represented around 10.9% of WHD recipients compared with 9.2% of all households in Great Britain. Two groups are eligible: a “core” group where the household receives the Guarantee Credit element of Pension Credit (income under £167.25 for a single pensioner or £255.25 for a couple); and a “broader” group on a low income as set by suppliers - some households receiving income related benefits must be included on a `first come, first serve basis’.

9.6% of all rebates were to the overall ‘core’ group in Scotland (117,020 Scottish households) and 12.5% to the ‘broader’ group (121,425 Scottish households).