Renewable Heat Incentive (RHI): What It Was, Why It Closed and Lessons for Biogas CHP

The Renewable Heat Incentive (RHI) was a UK government support scheme designed to encourage the production and use of renewable heat.

For the anaerobic digestion and biogas sector, it became particularly important because it could support the use of biogas for heat and, under qualifying arrangements, the useful heat recovered from combined heat and power (CHP) systems.

The Great Britain Non-Domestic RHI opened in 2011 and closed to new applicants on 31 March 2021. Existing accredited installations could continue to receive payments under the terms of the scheme.

The RHI is now historically important for another reason.

It demonstrated why renewable-energy support should reward genuinely useful heat rather than simply paying for heat because it has been produced.

The most notorious example occurred under the separate Northern Ireland RHI scheme, where flaws in the tariff structure created a financial incentive to generate excessive heat. That episode became widely known as the “Cash for Ash” scandal.

This article explains what the Renewable Heat Incentive was, how it affected anaerobic digestion and CHP, what went wrong, why useful heat became such an important concept, and what succeeded the scheme for new biomethane projects in Great Britain.

Key Takeaways

• The Renewable Heat Incentive was designed to encourage renewable heat. It supported qualifying technologies including biomass, heat pumps, biogas and biomethane.
• The Great Britain Non-Domestic RHI closed to new applicants on 31 March 2021. Existing accredited installations could continue receiving payments under their scheme rules.
• Biogas and anaerobic digestion were important RHI technologies. Support could apply to qualifying renewable heat and biomethane production.
• Useful heat became a critical issue. Subsidising heat merely because it was generated created a risk of rewarding unnecessary energy consumption.
• The Northern Ireland RHI exposed this problem dramatically. Its original tariff structure could pay some participants more in subsidy than the fuel cost, creating a perverse incentive to produce excessive heat.
• The problem was not confined conceptually to Northern Ireland. Evidence relating to the Great Britain RHI also identified examples of unnecessary heat production, including heating empty buildings.
• Modern CHP assessment places much greater emphasis on proving useful heat. Current CHPQA guidance requires useful thermal outputs to be quantified and justified.
• For new AD projects, policy emphasis has shifted toward biomethane. The Green Gas Support Scheme supports eligible biomethane injected into the gas grid.

What Was the Renewable Heat Incentive?

The Renewable Heat Incentive was a government programme designed to increase the use of renewable heating technologies.

The underlying policy problem was straightforward.

Renewable electricity technologies had received substantial policy support, but decarbonising heat was also essential because heating homes, businesses and industrial processes accounted for a large proportion of UK energy use.

The RHI therefore offered financial payments to qualifying renewable-heat installations.

In Great Britain there were separate domestic and non-domestic schemes.

The Non-Domestic Renewable Heat Incentive applied principally to commercial, public-sector, industrial and other eligible installations.

Technologies supported at different stages of the scheme included:

• biomass boilers;
• heat pumps;
• solar thermal systems;
• deep geothermal;
• biogas combustion;
• biomethane production; and
• certain qualifying CHP applications.

Payments were generally linked to eligible renewable heat production or, for biomethane, eligible gas production.

When Did the Non-Domestic RHI Close?

The Great Britain Non-Domestic RHI closed to most new applications at the end of 31 March 2021.

This is an important correction to older versions of this article, which described the scheme as closing in 2022.

There were limited transitional provisions for some projects, but the main scheme ceased accepting new applications in March 2021.

Existing accredited projects were not simply cancelled.

Participants continued under the payment arrangements applicable to their accredited installations, subject to continuing compliance with scheme rules.

Why Was the RHI Important to Anaerobic Digestion?

Anaerobic digestion produces biogas containing methane.

That gas can be used in several ways, including:

• direct combustion for heat;
• combined heat and power;
• upgrading to biomethane for gas-grid injection; and
• other suitable fuel applications.

The RHI helped improve the financial case for some of these uses.

For AD developers, this affected decisions about whether to:

• install CHP;
• make greater use of recovered CHP heat;
• upgrade biogas to biomethane; or
• develop other renewable-heat applications.

The scheme therefore influenced not only plant economics but also the way biogas-utilisation systems were designed.

The Link Between the RHI and Biogas CHP

In a biogas CHP system, a gas engine burns biogas to generate electricity.

Heat is recovered from the engine cooling system and exhaust gases.

At an anaerobic digestion plant, that heat may be used for:

• maintaining digester temperature;
• feedstock heating;
• pasteurisation;
• digestate drying;
• industrial processes;
• buildings; or
• a nearby heat customer.

Where qualifying renewable heat met the scheme requirements, RHI support could improve the value of that thermal output.

This gave operators a direct financial reason to identify uses for heat that might otherwise have been rejected.

In principle, that was sensible.

Using heat that would otherwise be wasted can significantly improve the overall efficiency of CHP.

The difficulty comes when the financial reward for consuming heat becomes greater than the value of the energy service the heat actually provides.

Why “Useful Heat” Became So Important

There is a fundamental distinction between:

heat that is produced or recoverable

and

heat that performs a genuinely useful function.

For example, heat used to maintain an anaerobic digester at its required operating temperature clearly has a practical purpose.

Heat replacing natural gas in a food factory boiler also has a demonstrable value.

But deliberately creating an unnecessary thermal load simply to qualify for subsidy does not represent improved energy efficiency.

This sounds obvious, but the history of renewable-heat incentives shows why the distinction needs to be formally defined and verified.

The Northern Ireland RHI and the “Cash for Ash” Scandal

The best-known RHI controversy occurred in Northern Ireland.

Northern Ireland operated a separate Non-Domestic Renewable Heat Incentive scheme.

The Northern Ireland Audit Office later concluded that the original design contained critical flaws.

In particular, some medium-sized biomass-boiler users could receive financial support greater than the cost of the fuel they burned.

This created what the Audit Office described as a perverse incentive to generate excessive heat in order to increase subsidy payments.

In simple terms, under the flawed tariff structure, burning more fuel could make the participant more money even when the additional heat was unnecessary.

The controversy became popularly known as “Cash for Ash”.

A major public and political scandal followed, and an Independent Public Inquiry was established in January 2017.

The Inquiry published its report in March 2020, and its recommendations were subsequently accepted by the Northern Ireland Executive.

Were People Really Heating Empty Buildings?

Reports during the RHI controversy included allegations of buildings being heated despite having little or no genuine requirement for heat.

The underlying economic incentive made such behaviour plausible because the subsidy could increase with heat production.

However, it would be unfair to treat this as evidence of some uniquely Northern Irish problem.

Evidence submitted to the UK Parliament concerning the Great Britain Renewable Heat Incentive also referred to known examples of unnecessary heat production, including heating empty buildings and leaving doors and windows open.

The wider lesson is therefore about scheme design, not geography.

Whenever a subsidy rewards energy consumption, policymakers need safeguards to ensure that the energy is serving a legitimate need rather than being consumed purely to maximise payments.

Why This Matters to CHP Operators

The lesson from the RHI extends beyond the subsidy itself.

It goes to the heart of how CHP performance should be assessed.

A CHP manufacturer may state that an engine can recover a particular quantity of heat.

That describes the technical capability of the equipment.

It does not prove that the heat contributes useful energy to the project.

A serious CHP assessment should establish:

• who uses the heat;
• what process requires it;
• at what temperature it is needed;
• when it is required;
• how much is actually consumed;
• what heat source it replaces; and
• whether the demand would exist without the CHP installation or subsidy.

This distinction is discussed further in our guide to the advantages and disadvantages of combined heat and power.

CHPQA and the Modern Definition of Useful Heat

The UK Combined Heat and Power Quality Assurance (CHPQA) programme provides a formal methodology for assessing CHP quality.

Current guidance places explicit emphasis on identifying, quantifying and justifying useful heat outputs.

This matters because CHP efficiency should not simply be calculated by adding all theoretically recoverable heat to electricity generation.

The heat must qualify as a genuine useful output.

Current CHPQA guidance requires calculations to be supported by reliable and traceable data.

This is a much stronger basis for judging a CHP project than simply quoting the engine manufacturer's maximum thermal recovery figure.

Official guidance is available from the UK Government CHPQA guidance collection.

What Happened to the Great Britain RHI?

The Non-Domestic RHI was eventually closed to new applicants.

By that stage, government renewable-energy policy had evolved considerably.

For the anaerobic digestion industry, one of the most important changes was an increasing policy focus on upgrading biogas to biomethane rather than necessarily generating electricity and heat through CHP.

The Great Britain Non-Domestic RHI closed to new applicants on 31 March 2021.

The Green Gas Support Scheme subsequently opened on 30 November 2021.

What Replaced the RHI for New Biomethane Projects?

The principal successor relevant to new anaerobic digestion biomethane projects in Great Britain is the Green Gas Support Scheme (GGSS).

The GGSS provides tariff support for eligible biomethane produced by anaerobic digestion and injected into the gas grid.

Rather than primarily incentivising renewable heat at the point of use, the scheme supports production of renewable gas capable of replacing fossil natural gas in the network.

The scheme is funded through the Green Gas Levy applied to licensed fossil-fuel gas suppliers.

Government information on the scheme is available at Green Gas Support Scheme: open to applications.

The Green Gas Support Scheme in 2026

The GGSS remains active.

Official figures published by Ofgem for the year ending March 2026 show that since the scheme began:

• 68 tariff-guarantee applications had been received;
• 23 tariff guarantees had been issued;
• 13 plants had completed registration;
• almost £40 million in support payments had been made; and
• 649 GWh of eligible green gas had been injected into the gas grid.

This illustrates the policy shift from subsidising renewable heat toward supporting renewable methane production and grid injection.

Does the End of the RHI Mean CHP No Longer Makes Sense?

No.

CHP should not be selected or rejected solely because a particular subsidy exists or has ended.

Its fundamental value still depends on the energy balance of the individual site.

CHP can remain attractive where:

• the AD plant has substantial electrical demand;
• electricity imported from the grid is expensive;
• there is a good use for recovered heat;
• the engine can operate for high annual hours;
• biogas quality can be managed economically;
• grid export is practical where required; and
• whole-life costs compare favourably with alternative gas uses.

The economics simply need to stand on their current merits.

For our main guide, see Biogas CHP Systems: Benefits, Efficiency, Costs and Design.

RHI History Also Explains the Move Toward Biomethane

The change from the RHI to the Green Gas Support Scheme reflects a wider change in biogas policy.

Historically, many UK AD plants used biogas in CHP because renewable electricity and renewable heat received strong financial support.

Modern policy increasingly values biomethane as a renewable gas that can be injected into existing gas infrastructure.

This does not make CHP obsolete.

It means developers now need to compare alternative utilisation routes more carefully.

A plant with strong electricity and heat demand may still favour CHP.

A plant with limited heat demand but good access to the gas grid may favour biomethane upgrading.

Our wider guide to biogas utilisation compares these options.

Lessons from the Renewable Heat Incentive

1. Subsidies Can Change Engineering Behaviour

Financial incentives do not simply improve project economics.

They can influence equipment sizing, operating hours and the way energy is consumed.

Scheme designers therefore need to consider how participants may rationally respond to the payment structure.

2. Paying for Output Can Encourage Overproduction

If producing additional heat always produces additional profit, there needs to be a mechanism that ensures the heat serves a genuine purpose.

3. Useful Heat Must Be Demonstrable

A heat meter alone proves that heat passed through a pipe.

It does not necessarily prove that the heat was needed.

The end use matters.

4. Headline Efficiency Can Mislead

CHP may technically recover 80% or more of fuel energy as electricity and heat, but the project only benefits from thermal energy that is genuinely used.

5. Long-Term Projects Should Not Depend Entirely on Subsidies

Anaerobic digestion plants, CHP engines and biomethane installations are long-lived assets.

Government support mechanisms can change during their operating lives.

Project economics should therefore be tested against future changes in tariffs, energy prices and policy.

6. Regulation Needs to Follow Real-World Behaviour

The RHI experience demonstrated the importance of monitoring what happens after a support scheme is launched.

Unexpected participant behaviour should be identified early enough for corrective action.

RHI, CHP and the Difference Between Energy Production and Energy Value

Perhaps the most important technical lesson from the RHI is this:

producing energy is not the same as creating useful energy value.

A CHP engine can produce heat.

A boiler can produce heat.

An AD plant can produce biogas.

But in each case, the crucial question is what useful purpose the energy ultimately serves.

For CHP, this means distinguishing recoverable heat from useful heat.

For biomethane, it means having a viable route to a real gas customer.

For electricity generation, it means having an economic on-site or grid outlet.

This principle now runs through good biogas-utilisation design.

Frequently Asked Questions About the Renewable Heat Incentive

What was the Renewable Heat Incentive?

The Renewable Heat Incentive was a government scheme that paid eligible participants for producing renewable heat or, under relevant provisions, renewable gas such as biomethane.

When did the UK RHI close?

The Great Britain Non-Domestic Renewable Heat Incentive closed to most new applicants on 31 March 2021. Existing accredited participants could continue receiving payments subject to the applicable scheme rules.

Was there one RHI scheme for the whole UK?

No. Great Britain and Northern Ireland had separate arrangements. The Northern Ireland Non-Domestic RHI became the subject of a major public inquiry following serious flaws in its original design.

What was “Cash for Ash”?

“Cash for Ash” was the popular name given to the Northern Ireland RHI controversy. The scheme's original tariff structure allowed some participants to receive support worth more than the fuel they burned, creating an incentive to generate excessive heat.

Were farmers paid to heat empty sheds?

Reports and evidence associated with RHI schemes included examples and allegations of unnecessary heating, including empty buildings. The central policy failure was that poorly structured incentives could make unnecessary heat production financially attractive.

Was this only a Northern Ireland problem?

No. Northern Ireland experienced the most serious and politically prominent RHI failure, but evidence relating to the Great Britain scheme also identified unnecessary heat production. The broader issue was the design of incentives for metered heat.

What does useful heat mean?

Useful heat is thermal energy that performs a genuine function, such as heating a digester, supplying an industrial process or replacing heat that would otherwise have to be generated from another source.

What replaced the Renewable Heat Incentive?

For new biomethane projects in Great Britain, the Green Gas Support Scheme provides tariff support for eligible biomethane produced through anaerobic digestion and injected into the gas grid.

Can existing RHI installations still receive payments?

Yes, qualifying installations accredited before closure can continue receiving payments according to the terms and duration applicable to their accreditation, provided they remain compliant with scheme requirements.

Does CHP still make sense without the RHI?

It can. CHP remains attractive where electricity and useful heat have sufficient value. The correct decision should now be based on site-specific energy economics and comparison with alternatives such as biomethane upgrading.

Conclusion: The RHI's Most Valuable Legacy May Be the Lesson About Useful Heat

The Renewable Heat Incentive played an important role in developing the UK's renewable-heat, biogas and biomethane sectors.

It helped bring renewable heating technologies into commercial use and provided financial support for projects that might otherwise have struggled to compete with fossil energy.

But its history also demonstrated the danger of poorly structured incentives.

The Northern Ireland experience showed dramatically what could happen when subsidy payments made additional fuel consumption financially profitable regardless of whether the resulting heat was genuinely required.

The lesson for modern biogas and CHP projects is broader than the RHI itself.

Energy should be valued according to the useful service it provides, not simply because a meter records that it was produced.

That principle is now reflected in modern CHPQA treatment of useful heat and should also be central to every anaerobic digestion feasibility study.

Further Reading

• Biogas CHP Systems: Benefits, Efficiency, Costs and Design – our main CHP pillar guide.
• Combined Heat and Power Advantages and Disadvantages – including why recoverable and genuinely useful heat are not the same thing.
• Biogas CHP Design: 7 Factors for Selecting and Sizing a CHP System – technical guidance on heat loads, engine sizing, gas production and plant design.
• Biogas Utilisation: CHP, Biomethane, Heat and the Best Uses for Biogas – comparing the principal routes for using AD biogas.

This article is a historical and technical overview. Renewable-energy support schemes, tariff rules and eligibility requirements change over time. Current projects should use the latest Ofgem and UK Government guidance.

[Updated most recently July 2018 and July 2022. Rewritten August 2026.]