Help the environment with the Renewable Heat Incentive

Some of the changes expected to the government’s Renewable Heat Incentive (RHI), which pays property owners to install renewable heating in homes and commercial buildings, are expected to be implemented soon.

Plans have already been announced for increased funding and, while many are optimistic about this news, most property owners are keen to learn more about the ideas to reform the scheme and what it will actually mean.

The changes are expected to come into effect this Spring and are intended to provide the level of certainty needed for consumers and industry to invest in renewable heating.

The RHI provides a continuous income stream for 20 years to any organisation that installs an eligible renewable heating system, ensuring that renewable heat is commercially attractive when compared to fossil fuel alternatives. The scheme is important because it helps significantly increase the level of renewable heat produced in the UK – key to the UK meeting its renewable energy targets, reducing carbon emissions, ensuring energy security and helping to build a low carbon economy.

By 2020, it is estimated that RHI support levels are expected to bring forward around:

  • 14,000 installations in industry
  • 112,000 installations in the commercial and public sector

These installations are expected to generate 57TWh of renewable heat.

Renewable heat is crucial to the UK’s long-term decarbonisation efforts and the government believes the technology is almost ready to stand on its own two feet without subsidy.

About the Renewable Heat Incentive (RHI) scheme

Under the UK government’s domestic Renewable Heat Incentive (RHI) scheme, you could receive quarterly cash payments over seven years if you install or have already installed an eligible renewable heating technology.

It was set up to encourage uptake of renewable heat technologies among householders, communities and businesses through financial incentives. It is the first of its kind in the world and the government expects the RHI to contribute towards the 2020 ambition of 12 per cent of heating coming from renewable sources.

The domestic RHI was launched in April 2014 and provides financial support to the owner of the renewable heating system for seven years. The scheme covers England, Wales and Scotland and is targeted at – but not limited to – off-gas households.

The Department for Business, Energy & Industrial Strategy makes key policy decisions and energy regulator Ofgem E-Serve administers the scheme. Last December the government published its response to the RHI consultation which proposed several changes to the existing domestic RHI scheme.

Below is a summary of the government’s final proposals which it intends to implement in Spring 2017 subject to parliamentary approval.

You should keep these proposed changes in mind if you are planning to apply for the domestic RHI scheme or are considering installing an eligible system.

This is not an exhaustive list of changes to the scheme and further information can be found in the full RHI consultation response available on the Department of Business Energy and Industrial Strategy (DBEIS) website.

  • The scheme will continue to support all four technologies currently supported
  • The tariffs for new ASHPs will be increased to 10.18 pence per kilowatt-hour (p/kWh)*
  • The tariffs for new GSHPs will be increased to 19.86p/kWh*
  •  The tariff for new biomass installations will be increased to 6.54p/kWh*

(*These tariffs are based on information taken from regulations laid in parliament and pending parliamentary approval).

The increased tariff for biomass boilers and stoves, ASHPs and GSHPs will be applicable to those participants who apply to the scheme on or after 14 December 2016, the date the consultation response was published, although the increased tariffs will only apply from the date the regulations come into force. Participants will receive the existing tariffs for heat used, on the basis of either deeming or metering, before this point. This approach is intended to encourage consumers to continue to install renewable heating systems between the date of the consultation response and the date the changes come into force, to avoid a hiatus in investment and consequential impacts on the supply chain.

Heat demand limits will be introduced to limit the level of annual heat demand in respect of which any household can receive support. The heat demand limits will be set at 20,000kWh for ASHPs, 25,000kWh for biomass boilers and stoves and 30,000kWh for GSHPs. However, this will not disqualify properties with higher heat demands from applying to the scheme. There will be no heat demand limit for solar thermal.

All new ASHPs and GSHPs applying for support under the scheme will be required to have electricity metering to monitor their heating system. However, payments will continue to be on the basis of the deemed heating requirements of the property, except for second homes and where a renewable heating system is installed alongside another heating system, in which cases payments will continue to be on the basis of heat metering.

GSHPs making use of a shared ground loop will continue to be eligible for the non-domestic scheme and will not be eligible on the domestic.

There will be some changes to the budget management arrangements for the scheme.

What could I earn using RHI?

RHI cash payments are made quarterly over seven years. The amount you receive will depend on a number of factors – including the technology you install, the latest tariffs available for each technology and – in some cases – metering. There are some elements that could affect RHI payment.

What technologies can I claim RHI support for?

  • Biomass (wood fuelled) boilers
  • Biomass pellet stoves with integrated boilers providing space heating
  • Ground to water heat pumps
  • Air to water heat pumps
  • Solar thermal panels (flat plate or evacuated tube only) providing hot water for your home

Air to air heat pumps, all log stoves, pellet stoves without back boilers and hybrid PVT are not supported by RHI.

Water source heat pumps can potentially be eligible for the Domestic RHI – they are included in the definition of a ground source heat pump.

Certain cooker stoves and certain high temperature heat pumps may also be eligible.

All systems must also be listed on the Domestic Renewable Heat Incentive Product Eligibility List.

All biomass fuel used by RHI participants must be sourced from a supplier on the  Domestic Renewable Heat Incentive Product Eligibility List at the time the fuel was purchased. This is a list of suppliers of sustainable biomass fuel and it is advisable to check whether your fuel supplier is registered before entering into any long term supply contract.

Not all fuels from suppliers on the BSL are sustainable as they may supply more than one type of fuel. You should check with your supplier, or prospective supplier, which of their fuels are registered.

Who can apply for RHI?

Owner-occupiers, self-builders, private landlords and registered providers of social housing who have installed an eligible technology can apply for RHI support, provided they meet eligibility criteria.

Single domestic dwellings are covered.

RHI support is not available to new build properties other than self-build projects.

You must apply within one year of the commissioning date of your system.

How do I apply for RHI?

You can apply for RHI via Ofgem’s website. Providing you have all the relevant information to hand and your application does not require a manual review, you should receive an immediate decision.

Tariffs

The table below summarises the latest tariffs available for each technology:

  Air source heat pump Biomass Ground source heat pump Solar thermal
Tariff (p/k Wh renewable heat)

(Applications submitted between 1 Oct. 2016 and 31 Dec. 2016 incl.)*

7.51 4.68 19.33 19.74
Tariff (p/k Wh renewable heat)

(Applications submitted between 1 Jan. 2017 and 31 Mar. 2017 incl.)*

7.51 4.21 19.33 19.74

Applications for heat pumps and biomass systems submitted on or after 14 December 2016 will be subject to the proposed changes to the scheme, which may affect the tariffs above. Eligible applications for solar thermal systems submitted between 1 January 2017 and 31 March 2017 will continue on the 19.74 p/k Wh tariff. *These tariffs will be adjusted in line with the Consumer Prices Index (CPI).