FAQs
What rate of return were the tariffs calculated to deliver?
About 12% (except for solar heating, which is lower). This is therefore higher than the 5-8% used for the Feed-In Tariffs for electricity.
Chapter 6 of the government's RHI announcement says
Rate of return
Tariffs have been calculated on the basis of a required return on additional capital invested of 12 per cent for technologies and fuels except solar thermal.
This reflects the fact that renewable heat is still relatively unknown in the UK and that from this low starting position, the renewable heat market needs a kick-start in order to encourage high growth quickly. The Government believes a 12 per cent rate of return represents the likely level of compensation that professional and commercial market participants will look for with this type of investment.
