What is the Renewable Heat Incentive?

The domestic Renewable Heat Incentive (RHI) is a government scheme which makes the installation of renewables more attractive to homeowners. Under the scheme, those with renewable heating technologies are paid back for the heat they generate.

The incentive is appealing because it helps those installing renewables recoup what they spent on buying and installing the technologies in the first place. The payback tariff varies by technology, so it is best to assess your energy usage and the capital cost to work out which will give you the best payback. The Renewable Heat Incentive calculator can help you work this out.

How Does the Renewable Heat Incentive Work?

Homeowners install eligible renewable technology (see more on which renewables are covered below), and are paid back for the heat generated, less any energy input to produce that heat. For example, heat pumps are eligible, but use electricity so this will be deducted (in kWh) from the heat output.

RHI returns are dictated by a tariff which varies by technology type. The tariff rates also vary according to when you install your renewable technology (the rates are updated quarterly).

You will be paid back on a quarterly basis for seven years.

Which Types of Renewable Technology are Covered by RHI?

Four types of renewable technology are covered by the scheme:

Whichever renewable technology you use, it must be certified by the Microgeneration Certification Scheme (MCS) and meet the right European standards. If you use an accredited supplier/installer, this should be a given, but ensure they provide you with an MCS certificate on installation.

Heat Use Restrictions

Unfortunately, you can’t necessarily seek RHI returns for all the heat generated by your renewables — there are restrictions over what the heat can be used for.

  • Biomass and heat pumps must be used for space heating or space and domestic water heating.
  • Solar thermal can only be used for domestic hot water.
  • Domestic hot water uses include water used for washing and heating, but not for heating swimming pools.
  • Biomass boilers can be used for space and water heating, but unlike biomass pellet stoves, cannot be used to generate heat to cook food.

What is the Tariff for Each Renewable Option?

Application submitted Biomass (p/kWh) Air source heat pump (p/kWh) Ground source heat pump (p/kWh) Solar thermal (p/kWh)
01/04/17 – 30/06/17 4.28p 7.63p 19.64p 20.06p
01/07/17 – 30/09/17 3.85p 7.63p 19.64p 20.06p
01/10/17 – 31/12/17
  • Any new tariff changes will be announced in September 2017

To find the historical tariff (for RHI applications made before 1 April 2017) visit Ofgem.

How to Choose the Right Renewable Technology

Your Energy Performance Certificate (the certificate produced when a home is constructed, let or sold) will advise on the best choice of renewable for your home. You should also research your options as factors specific to your site could affect you choice (such as orientation to the sun and available space for installation).

Solar Thermal

Solar water systems use solar collectors to heat up water by running water through glass tubes, before pumping it through a coil to your cylinder. They are commonly installed on a south-facing pitched roof.

Solar thermal panels can produce up to 60% of a home’s annual hot water requirements. In practice this means 70-90% from April to September, and 25-50% or so during other months, so you would need another system to bridge the gap and provide space heating.

Installation cost: A typical 4kW, 4m² installation including a new cylinder would cost around £4,000-£5,000.

Read more on solar thermal here


Ground Source Heat Pumps

A ground source heat pump circulates a mixture of water and anti-freeze around a loop of pipe buried in your garden. Heat from the ground (at 2m deep, the earth stays at a relatively stable 8-12°C) is absorbed into the fluid and then passes through a heat exchanger into the heat pump, which feeds the system through a buffer tank.

Heat pumps are powered by electricity. As such, the amount used to generate the heat will be deducted from your overall heat output.

The Coefficient of Performance (CoP) is the ratio of heat output over the electrical input. The Seasonal Performance Factor (SPF) is the measure of a heat pump’s performance and is the average CoP of a heat pump over the heating season. The higher the SPF, the more energy efficient the heat pump is. A SPF of 2.5 is required for your heat pump to qualify for RHI payments.

Installation cost: Expect to pay around £12,000 for a typical system.

Read more on heat pumps here


Biomass

Biomass boilers use a fuel source such as wood pellets or logs to generate heat. They tend to be larger than regular boilers and may require a significant amount of space for fuel storage too, so tend to be installed in homes where a plant room can be set up.

The running costs and efficacy of the system depends on the fuel you put in, and how you buy it. For instance, it’s cheaper to buy in bulk and get fuel delivered loose. The fuel you use has to meet the government’s low carbon and environmental targets for this heat source to be eligible for RHI. If you buy fuel from a trader registered on the Biomass Suppliers List, this shouldn’t be an issue. If you create fuel from your own land you can register as a self-supplier.

Installation cost: Biomass boiler costs vary massively. Expect to pay £5,000-£10,000 for a 12kW boiler; £15,000-£20,000 for a fully automated larger system.

Read more on biomass boilers


Air Source Heat Pumps

Heat from the air gets absorbed into a fluid, which is then compressed, raising its temperature. The higher temperature is then transferred into the heating system. The external condenser unit sits in a box on the outside wall so you need space around the unit to allow for good air supply.

They rely on electricity to power the pump, and the amount of heat energy output per kW of electricity put in is measured by as a CoP. They’re generally cheaper to install than ground source heat pumps but slightly less efficient.

Correct sizing is critical to overall success and again, electricity usage will be deducted from your heat output for RHI.

Installation cost: A typical 9-12kW air source heat pump system would cost around £7,000.

Read more on heat pumps here

How to Apply for the Domestic Renewable Heat Incentive

Before applying, you need to ensure you have a valid Energy Performance Certificate (EPC) created within the last 24 months. If you don’t, you can find a local energy assessor to produce one. This looks at the energy efficiency of your home and recommends any changes you need to make with regards to heating and insulating the property. If you EPC recommends adding insulating the cavity walls or loft of your property, you must do this and have the home re-assessed before applying for RHI.

On installation of your chosen renewable, the installer will provide you with an MSC certificate which will also be needed for your application. Note that only those who have paid in part or full for their renewables will be eligible. Renewables installed with full funding from a grant are not covered by RHI.

You can then apply online through Ofgem.

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