The Renewable Heat Incentive (RHI) launched back in 2014, and while the government scheme may be coming to an end in 2022, it's still available now for those who are looking to install renewable technology into their homes.
The RHI, while offering a decent level of compensation for those who install renewable heat sources such as heat pumps in their homes, has only been moderately successful over the course of the scheme. While the Department of Business, Enterprise and Industrial Strategy (BEIS) predicted over 500,000 renewable heating systems would have been installed by 2020 under the scheme, reports suggest that this figure dropped to just 22% of the original target in the latter stages of the scheme.
For the right homeowner, however, the Renewable Heat Incentive certainly has something to offer. Discover more about the scheme with our complete guide, including details on when you need to apply by, and the scheme that will succeed the RHI for renewable heating.
What is the Renewable Heat Incentive?
The Renewable Heat Incentive is a government scheme designed to promote the use of renewables. The scheme offers payments for qualifying installations of renewable technology, paid back over a seven year period. This can be used to offset the initial expenditure in buying equipment and paying for installation, which can be one of the largest barriers to adoption of renewable tech.
The RHI payment rates are specifically designed to pay back the capital cost difference between the renewable technology and a conventional heating technology. The payments differ between properties in accordance with the efficiency of the property, but in most cases the RHI does cover a large percentage of the capital costs over seven years.
The Renewable Heat Incentive (RHI) has two schemes, the domestic RHI and the non-domestic RHI. You can only apply for incentive payments from one or the other so it is important to research the rules before applying.
- The Domestic RHI scheme is designed to pay back the difference in capital cost of a renewable heat technology installation (replacing or instead of conventional heating technology) with quarterly payments over a seven year period. The amount of payment is calculated according to the heat requirements of the property and the efficiency of the heating system.
- The Non-Domestic RHI scheme is the same as above but it’s for the public sector and non-profit organisations. You will need to apply online to get accepted.
When Does the Renewable Heat Incentive Close?
Applications for the domestic RHI are still open for applications until 31 March 2022 for all eligible technologies and installations. There is to be no extension to this scheme.
If you make a successful application before this time, you'll still be eligible for payments over the course of the following seven years.
What is Replacing the Renewable Heat Incentive?
The Clean Heat Grant is launching in April 2022, and can be viewed as a successor to the Renewable Heat Incentive. Functioning more like the Green Homes Grant, the Clean Heat Grant offers a fixed sum towards a renewable technology installation. Though it's unconfirmed at present, this sum is thought to be up to £7,000, paid directly to the installer via a voucher system, with the homeowner paying the balance of the installation.
This means, unlike the RHI, the Clean Heat Grant doesn't require the homeowner to have the capital upfront to pay for the full balance of the installation, removing this as a barrier and allowing more households to take advantage of the grant.
The Clean Heat Grant will focus almost exclusively on heat pumps. Biomass boilers will also qualify, but only for properties which are deemed unsuitable for heat pump installation.
(MORE: Heat Pump Grants)
How Do I Apply for the Renewable Heat Incentive?
Remember the domestic RHI payments are not available to all properties. An energy performance certificate needs to be completed and any recommendations, such as additional insulation, installed before payments can be received.
Applications for the domestic RHI are done through the Ofgem website and you will need your Energy Performance Certificate and Microgeneration Certification Scheme (MCS) documentation from the installer. The applications are done by the home owner.
What is a MCS Certification and How do I Get One?
Microgeneration Certification Scheme (MCS) is the certification body for renewables technologies and renewables installers.
To be eligible for RHI payments, all the technologies must be MCS certified and installers must be MCS-approved for the relevant technology. The homeowner does not need MCS certification themselves.
Do I Need a Meter for the Renewable Heat Incentive?
To get domestic Renewable Heat Incentive you do not need to fit a heat meter unless there is an alternative heat source such as a boiler.
There must be an electricity meter installed on all installations but there only needs to be a designated space for a heat meter installation.
If you choose to fit an approved Metering and Monitoring Service Package, which includes approved electric and heat meters, then you will be eligible for additional payments under the RHI scheme.
(MORE: Choosing a new boiler)
What is Eligible for the Renewable Heat Incentive?
The eligible technologies included in the domestic RHI scheme include:
- Air source heat pumps
- Ground source heat pumps
- Biomass boilers (including wood pellets, wood chips and logs)
- Solar thermal panels
All the technologies must also specifically be registered on the MCS to be eligible for payments.
Approved Metering and Monitoring Service Package (MMSP) equipment can also be installed and will receive additional payments.
What are the Current RHI Tariffs?
The RHI provides a great incentive for homeowners to invest in ground source heat pumps and solar thermal renewable heat technologies.
Having said that, there are more technologies available.
The domestic RHI tariffs are currently:
- Biomass - 6.97p/kWh
- Air source heat pump - 10.85p/kWh (capped at 20000kWh per year)
- Ground source heat pump - 21.16p/kWh (capped at 30000kWh per year)
- Heat pump MMSP - £57 per quarter
- Solar thermal - 21.36p/kWh
If you are wondering how long the RHI payments last it's important to know domestic RHI payments are paid quarterly for seven years.
Unmetered payments are fixed for the duration of the term and adjusted according to the Consumer Price Index (CPI).
How are RHI Payments Calculated?
Domestic RHI payments are calculated on the energy performance rating of the property and the efficiency of the appliance.
Heat pumps use electricity so the output energy figure is adjusted to allow for the electricity used.
If there is a second heat source, such as a boiler and a heat pump, then meters will be installed and the payments will be based on meter readings.
How Much Can I Receive From the RHI?
The whole idea of the RHI is to offset the capital cost of the installation of renewable technologies to bring them in line with conventional heating appliances. This is not intended to be an income stream.
Air source heat pumps are capped at 20,000kWh per year. Ground source heat pumps are capped at 30,000kWh per year. Both of these figures are also subject to the efficiency of the system.
So as an example if your ground source heat pump is 400% efficient then it uses one unit of electricity to deliver four units of heat.
Therefore if you generate 30,000kWh of heat then you will only be paid for three quarters or 22,500kWh x 21.16p = £4761 per year
£33,327 over seven years.
How to Get the Most From the Renewable Heat Incentive
RHI payments are based on the efficiency of the heating system and the heat demand of the home.
A well-insulated home will result in a smaller heat load and therefore a smaller plant. To maximise your RHI incentives the heat demand must not exceed any caps and also fit the metering and monitoring service package if available.
The domestic RHI eligible technologies attract different tariffs and heat pump tariffs are also capped. The payback is very similar for the different technologies but as installation costs can vary the payback can vary too.
A large home ground source heat pump installation may cost around £25,000 fully installed and you could expect RHI payment over seven years in excess of £20,000 on that system.
(MORE: Get a quote for your heat pump)
David is an expert in sustainable building and energy efficiency and is also director of Heat and Energy Ltd.
Get the latest news, reviews and product advice straight to your inbox.
Thank you for signing up to Homebuilding. You will receive a verification email shortly.
There was a problem. Please refresh the page and try again.