GCP Infrastructure has announced that it is committing up to £25m to loan notes with about a ten year life that will be issued by GCP RHI Boiler 1 Limited. The loan will be secured against a portfolio of domestic biomass boilers. £4m will be drawn down at the start of the arrangement and the rest over the next few months. All payments of both principal and interest in relation to the Loan Note are expected to be serviced from income arising from the use of the boilers in the form of payments under the Renewable Heat Incentive (“RHI”). Payments under the RHI are made by Ofgem.
The RHI is the Government’s principal mechanism for driving forward the transition to the deployment of renewable and low carbon heat over the coming decades. Following the launch of the Commercial RHI scheme in 2011, DECC introduced the Domestic RHI in 2014. Domestic RHI provides a continuous income stream for seven years rising at RPI in respect of eligible renewable heating system, ensuring that renewable heat is commercially attractive when compared to fossil fuel alternatives.
Domestic RHI payments accrue from the accreditation date of an installation and are paid quarterly by Ofgem for a period of seven years. Domestic RHI payments are based on the deemed heat requirement of the property in which the boiler is installed as determined by the property’s EPC certificate, and (subject to certain criteria which are all required to be met for the installation at the property) are not metered or dependent on use of the system as long as the property a) has no other heat source and b) is occupied for at least 183 days a year.
The Secretary of State for Energy and Climate Change is using enabling powers contained in the Energy Act 2008 as amended to introduce and where necessary amend from time to time the RHI in Great Britain.
Under the RHI, the government is committed to ensuring that by 2020, 12% of UK heating is generated from renewable sources. The RHI is seen as key to the UK achieving renewable energy targets and reducing carbon emissions.
The table below shows the subsidies that are payable for domestic use.
| Air-source heat pumps | 7.3p/kWh |
| Ground and water-source heat pumps | 18.8p/kWh |
| Biomass-only boilers and biomass pellet stoves with integrated boilers | 12.2p/kWh |
| Solar thermal panels (flat plate and evacuated tube for hot water only) | 19.2 p/kWh |
The tariffs have been set at a level that reflects the expected cost of renewable heat generation over 20 years. Payments will be made on a quarterly basis.
GCP invests in domestic biomass boilers