The Domestic Renewable Heat Incentive (RHI) is the UK Governments flagship incentive scheme to support a move away from traditional fossil fuels and encourage the adoption of renewable heating systems. By paying a regular cash incentive it is hoped that the scheme will develop the renewable market by making renewable technologies an affordable option that makes economic as well as environmental sense.

Households eligible for the Domestic RHI:

  • People on and off the gas grid
  • Owner-Occupiers
  • Private Landlords
  • Registered Providers of Social Housing
  • Self-Builders
  • Any Renewable Heating (for a qualifying technology) system installed post July-2009

RHI will be paid for each Kilowatt hour of renewable heat generated by an eligible installation either new or dating back from 15th July 2009. Payments will be made on a quarterly basis for seven years. The amount of money received depends on the type of renewable technology installed.

Qualifying Technologies:

  • Air Source Heat Pumps (air to water only);
  • Biomass-only Boilers and Biomass pellet stoves with back-boilers;
  • Ground and water source heat pumps;
  • Flat plate and evacuated tube solar thermal panel

Air Source Heat Pumps, Ground Source Heat Pumps and Biomass systems MUST be for Central Heating.

Air Source Heat Pumps and Ground Source Heat Pumps MUST have an SPF of at least 2.5 (and be designed at a minimum SPF of 2.5).

Solar Thermal systems used for heating swimming pools DO NOT qualify. They do qualify for any proportion that is used for domestic hot water though.

Individual products MUST be on the MCS eligibility list and installed by an MCS qualified installer. Products must also be listed on the OFGEM maintained domestic RHI Eligibility Database.

Tariff Rates:

p/kWh

Air Source Heat Pumps

7.3

Ground Source Heat Pumps

18.8

Biomass Systems

10.98

Solar Thermal Systems

19.2

 

  • The amount of energy generated will be “Deemed”. The Deemed amount will be taken from the EPC which is generated alongside the Green Deal report (for Self Builders this will be part of the SAP calculations).
  • Where a Heat Meter is fitted the actual reading will be used to calculate payments rather than Deeming, although payments will be capped at the estimated renewable heat generation from deeming.
  • You can only apply for ONE technology per house except where Solar Thermal is installed. Thus you can have Solar Thermal + Biomass but you CANNOT have Biomass + Air Source Heat Pump.
  • Tariff fixed at the date of installation and index linked to the RPI to maintain its real world value. It will be adjusted in line with the RPI each April.
  • The tariff will be paid quarterly over 7 years.
  • Applicants will be required to prove that their system is being maintained regularly. For legacy installations they must have a “health check” from a qualified installer before applying for the scheme.
  • Additional Payments of £200 per year for accurate heat output meters or “monitoring service packages” will also be available
  • If a household has Solar thermal panels installed in addition to other space heating technology it will qualify for two RHI payments
  • Before installation can also receive premium payment to help with upfront installation costs which is then and be deducted from RHI in equal payments over the schemes lifetime

Pre-qualification requirements:

  • The installation must be MCS Certified.
  • A Green Deal survey must have been completed on the property
  • Loft insulation to 250mm and cavity wall insulation must have been installed if recommended by the Green Deal Advice Report
  • An updated EPC must be provided
  • Self-Builders will be exempt from the Green Deal requirements

Certain installations (at the discretion of DECC) will be required to have a DECC heating meter fitted to monitor energy performance and generation. These properties will be selected at random by DECC. As a result of this, all installations in the future will be required to be “meter-ready” as part of the MCS installation standards. This will NOT apply to legacy installations between July 2009 and the start of the scheme in 2014.
Properties that have a renewable heating system installed alongside a fossil fuel system will be required to have a heat meter installed on the renewable system. This is also the case for those applying for the RHI for second homes.

RHI Payments:

  • The payments are made quarterly and last for 7 years.
  • The Tariff is adjusted by the level of the RPI each April during the scheme
  • Once you have joined the scheme the tariffs cannot be reduced retrospectively.

As an example:

A property has an EPC showing that the Estimated Annual Heat Demand for the property is 31,031kWh:

epc

The heat demand is satisfied by a Biomass Boiler which has a tariff rate of 12.2p/kWh. Therefore the annual payment will be:

Annual RHI Payment = 31,031 x 12.2p = £3,785.78

This annual payment will be made quarterly for 7 years. The amount paid each quarter will be:

Quarterly RHI Payment = £3,785.78 / 4 = £946.45

The payment for Air Source Heat Pumps is slightly different to take into account the cost of running the system (i.e. the cost of the electricity to run the heat pump). If the above property with a heat demand of 31,031kWh was using an Air Source Heat Pump then the payments would be based on the following Annual Heat Load:

SPF from heat emitter guide = 2.7

Annual Heat Load (for RHI Calculations) = 31,031 x (1 – 1/2.7) = 19,538kWh

Annual RHI Payment = 19538 * 7.3p = £1,426.77

RHI and the RHIPP:

If you have applied and received the RHIPP you must pay this amount back from your RHI payments. These will be deducted in equal amounts from the quarterly payments made over the 7 years. Therefore, if you received the £2,000 RHIPP for a Biomass system you will be deducted £285.71 each year or £71.43 each quarter.

RHI and Metering:

You do NOT have to have a Heat Meter unless:

  • You have back up heating
  • Your system does not provide 100% of the annual heat load
  • Your property is occupied for less than half the year

If you are required to have a heat meter then the actual heat meter readings will be used to calculate your payments.

Optional Monitoring:

There is an optional Metering and Monitoring Service Package (MMSP) under the RHI and is available to those with Biomass-only boilers or Air Source Heat Pumps. You can apply for this even if you are not required to have a Heat Meter.

The package is an extra payment for those that (a) install a heat meter and (b) sign up to an annual service contract with a qualified installer. The payments for those with Air Source Heat Pumps are £230 per annum and for Biomass £200 per annum, with payments made for the 7 year scheme.

From the MMSP you will be able to log onto a website (via PC or Tablet) and view your systems performance and meter readings, with historical readings available. The scheme is optional and can be supplied by any MCS accredited installer.

Audits:

DECC will conduct audits of systems randomly throughout the life of the scheme and these will require you to provide evidence of:

  • MCS Certificates
  • EPC Certificates
  • Green Deal report
  • Utility and Council Tax Bills
  • Proof of Ownership receipts
  • Fuel receipts for Biomass Pellets

There will also be occasional random site audits by DECC.

RHI and Budget Management:

The RHI Tariffs will be managed by a scheme known as Degression.

This will see the tariffs lowered for NEW ENTRANTS only if the uptake in any particular technology has reached a certain level.

DECC will review the number of installed systems on a monthly basis and report how close any particular technology is to a “trigger” point. Once a trigger point is reached the tariff will be reduced by 10%. If a “Super Trigger” point is reached the tariff for that technology will be reduced by 20%. If neither trigger has been reached then the tariff will remain the same. The tariffs will be reviewed on a QUARTERLY basis.

Scheme management and registration:

The scheme is managed by OFGEM and more details can be found here.

Further reading:

Biomass: a real world example

Air Source Heat Pump: a real world example

Ground Source Heat Pump: a real world example

Solar Thermal: a real world example