Great News for businesses and Non profits – the Renewable Energy Incentive Starts

From Monday 28th November 2011 Schools, hospitals, businesses and communities in the United Kingdom have been able to get financial incentives from the Renewable Heat Incentive for installing renewable heat. The Department of Energy and Climate Change have announced the opening in full of this phase of the RHI, and I expect that the thermal solar (or solar water heating) part of the incentive will be particularly attractive and that my company Genersys will be particularly busy with it. Solar thermal is the cleanest form of renewable heat.

A business installing 200Kwh of solar thermal panels will be able to claim 8.5p per kWh for the renewable heat generated. For businesses in particular there are three financial benefits, and for non profits there are just the first two:-

  1. The 8.5p per kWh is more than most businesses are paying for heat if they use gas, and less than they are paying if they use oil or electricity. The incentive provides an income stream which is produced from the capital cost of the investment over the next 20 years. The 8.5p is linked to inflation so the return is real and predictable in real terms. Coincidentally Genersys solar panels are unconditionally guaranteed for 20 years provided they are properly installed using approved components.
  2. In addition to the incentive there is of course the fuel savings on the fuel that will no longer be used. This adds another financial incentive.
  3. If the business installs solar thermal using Genersys panels, it will be able to claim accelerated capital allowances, writing the investment off against profits in the first year, instead of over a number of years. In real terms, if you do the maths, the real rate of return becomes higher because you can moderate the capital expenditure against corporation tax.

The incentive is very good and should make installation of solar water heating for all businesses and non profit organisations virtually a no brainer.