Oral statement - Closure of the Non-Domestic Renewable Heat Incentive (RHI) Scheme - 22 September 2025

Opening remarks

Background

Ceann Comhairle I would like to update the Assembly on the closure of the Non-Domestic Renewable Heat Incentive — or RHI — scheme.

Members will recall that New Decade New Approach, which formed the basis for restoring the Executive in 2020, included a commitment to close RHI and replace it with more effective decarbonisation support.

However, closure was not progressed in that mandate.

In the absence of closure, over £100m of funding for renewable heat has gone unutilised since 2020.

This issue has assumed even greater urgency as Ofgem will stop administering the scheme from April 2026.

In July last year, the Executive affirmed its commitment to closure.

Subsequently, my Department has been developing a Business Case, which contains significant technical and legal detail.

We have also been engaging constructively with stakeholders, including scheme participants and I want to thank all involved for that.

I can now confirm that the Department of Finance has approved the Business Case, and the Executive has agreed on a way forward.

Next Steps

My Department will now move to publish a public consultation on the closure arrangements. This will run for 8 weeks.

At the earliest opportunity my Department will introduce to the Assembly a Bill which clarifies the Department’s powers to close the scheme.

It would be my intention to then bring a paper to the Executive in  December 2025 to confirm the closure regulations.

Subject to passage through the Assembly it is my intention that the new regulations take effect by April 2026.

Closure Payment

In securing closure, we must ensure that participants who have acted in good faith receive the payment that they are legally entitled to receive, while also protecting the taxpayer.

The closure payment aims to strike this balance.

The tariff rate used to calculate closure payments has been independently verified by Professor David Rooney and approved by the Department of Finance.

With closure, and with OFGEM no longer administering the scheme, meters will no longer be monitored for usage.

Payments will therefore be based on usage between 2017 to 2019, the period which best reflects the actual heat demand for which installations were designed.

Instead of receiving a single one-off payment, compensation to participants will be staggered over a period of 10 years for the typical participant.

This approach frees up my Department to engage with Treasury on a scheme which could utilise approximately £10m per annum of AME funding for alternative use.  After the scheme is closed, I will update the Assembly on the progress of engagement with Treasury.

It also means that payments can be stopped if an installation is no longer in use.

There are of course pros and cons associated with all closure options, but the approach proposed, I believe, is the most reasonable in the circumstances.

As we work towards closure, the Executive has also agreed to apply the tariff rate, which will be used to calculate closure payments, ahead of the coming winter period. If the Assembly agrees, this will come into effect in November 2025.

Closure

Ceann Comhairle it is long past time that the RHI scheme is closed, and that the funding available to it is put to better use.

With OFGEM stepping away from the administration of the scheme by April next year, time is running out.

The launch of the consultation will represent a significant step forward.

Closure of the RHI scheme will allow my Department to focus efforts on developing alternative support measures.

We now have a clear path to fulfilling the NDNA commitment and delivering a solution that is fair to participants and taxpayers alike.

I commend this statement to the Assembly.

Addendum

• Non-Domestic Renewable Heat Incentive consultation Tariff Rates