Renewable heat incentive for solar thermal systems in the United Kingdom: The next big thing?

This paper focuses on the renewable heat incentive (RHI) scheme in the United Kingdom (UK); and in particular, on its implications in relation to solar thermal systems. First, a short review on the UK's energy demand is provided. Then, a brief explanation of solar thermal systems is presented, followed by a detailed description of the renewable heat incentives. A financial analysis is presented afterwards, analysing the impact of the RHI scheme to the applicants, in terms of payback period and average annual return on investment. This is based on installations of different sizes and at various levels of solar insolation. The analysis also presents the reduction of carbon dioxide emissions that could be achieved by installing a solar thermal system. From the financial analysis it has been found that the RHI scheme could generate moderate average annual returns on investment and ‘acceptable’ payback periods. As a result, it could increase the penetration of solar thermal systems in the UK. Significant reductions of carbon dioxide emission can also be achieved by installing a solar thermal system on a building.