Design of the Renewable Heat Incentive

Mon Feb 01 15:24:38 EST 2010
By Daniel Radov et al.

The UK Department of Energy & Climate Change (DECC) commissioned a NERA team led by Associate Director Daniel Radov to assist with the design of the UK's Renewable Heat Incentive (RHI). The RHI is an innovative new policy designed to stimulate a massive increase in the use of renewable energy for heating across all sectors of the UK economy, to help meet the UK's challenging 2020 renewable energy targets. The RHI is projected to result in 12 percent of the UK's heat in 2020 coming from renewable sources, up from only one percent today -- at a projected subsidy cost totalling more than £30 billion.

The new research builds on previous work for DECC by NERA to investigate the supply curve for renewable heat. NERA's report provides three main outputs: an updated supply curve for renewable heat; proposed RHI subsidy levels for technologies to be covered by the RHI; and modeling of the deployment of renewable heat, along with calculations of the associated subsidies, costs, and emissions benefits.