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The Renewable Heat Incentive

The Renewable Heat Incentive (RHI) is a UK Government incentive scheme designed to reward those who use renewable energy to heat their buildings and encourage uptake of renewable heat technologies among householders, communities and businesses through the provision of financial incentives Initially only industrial, commercial, public sector and community organisations will be eligible to apply, but a second phase will allow residential homes to benefit too. The RHI will guarantee regular 'tariff' payments for 20 years based on the amount of renewable energy they generate.

The two phases to the introduction of the RHI are as follows:

  • Phase 1: Non-Domestic: the introduction of the RHI for installations in the industrial, business and public sectors.
  • Phase 2: Domestic (UK Home Owners): this element of the RHI, is expected to be introduced in the spring of 2014 following the UK Government consultation published in September 2012.

Phase 1 Non Domestic RHI

This provides financial incentives to eligible, non-domestic renewable heat generators for the life of the installations or up to a maximum of 20 years. So not only are you saving money on your heating bills by using a lower cost fuel, you will be paid for being green as well.

Non-domestic sectors include industrial, commercial, public and non-for-profit sectors. A non-domestic installation might be a large-scale industrial heating systems or a smaller community heating project.

Name Eligible Technology Eligible Sizes Tariff level
Pence/kWh
Small biomass Solid biomass including solid biomass contained in municipal solid waste (incl. CHP) Less than 200 kWh 8.6 (tier 1)
2.2 (tier 2)
Medium biomass 200 kWh and above, less than 1,000 kWh 5.0 (tier 1)
2.1 (tier 2)
Large biomass 1,000 kWh and above 1.0
Small heat pumps Ground source heat pumps; water source heat pumps; deep geothermal 100 kWh and above Less than 100 kWh 4.8
Heat pumps 100kWth and above 3.5
All solar thermal collectors Solar thermal collectors Less than 200 kWh 9.2

RHI rates published by Ofgem for the year from 1 April 2013 – rates will change with inflation each year.

Phase 2 Domestic RHI

On 12 July 2013 DECC set out the policy framework for introducing longer term support for households. The scheme is for householders looking to replace their current heating system with a supported renewable heat technology and householders who have installed a renewable heat technology since 15 July 2009. The domestic RHI will pay owners the following:

Technology ASHP GSHP Biomass Boilers Solar Thermal
Panels
Tariff 7.3p/kWh 18.8p/kWh 12.2p/kWh 19.2p/kWh

The main details of the scheme are listed below:

  • The domestic RHI is a UK Government financial support scheme for renewable heat, targeted at, but not limited to, off gas grid households.
  • The domestic RHI scheme covers England, Wales and Scotland only
  • DECC intend that the scheme will open to applications in Spring 2014 and will be administered by Ofgem
  • Ofgem guidance will be available before the launch of the scheme on how to apply and the information that will need to be provided
  • The scheme will cover single domestic dwellings and will be open to owner-occupiers, private landlords, Registered Providers of Social Housing, third party owners of heating systems and self-builders. It will not be open to new build properties other than self-build
  • it will be open to anyone in these groups who installed an eligible technology since 15th July 2009, provided they meet the scheme criteria
  • for those who have installed a renewable heating system before the launch of the scheme in Spring 2014 and since 15 July 2009 (legacy applications), the date they can submit their application may not be from when the scheme first opens and will be phased over time. Further details on the phasing will be provided by Ofgem prior to launch
  • the financial support will be paid at a set rate per unit of renewable heat produced (kilowatt hour or kWh), for seven years, to the owner of the heating system
  • the scheme will support air source heat pumps (ASHP), biomass systems, ground source heat pumps (GSHP) and solar thermal technologies. The support rates will vary depending on the technology installed
  • for biomass the renewable heat generated will be based on an estimated figure of heat demand from an Energy Performance Certificate (EPC)
  • for heat pumps the renewable heat generated will be based on an estimate of the heat demand from an EPC combined with an estimate of the heat pump's efficiency
  • for solar thermal systems the renewable heat generated will be based on the estimate of system performance completed as part of an Microgeneration Certification Scheme (MCS) installation
  • to help improve performance of renewable heating systems, there will be an extra incentive for applicants who install metering and monitoring service packages, of £230 per year for heat pumps and £200 per year for biomass boilers
  • to be eligible the system must be certified under the Microgeneration Certification Scheme (MCS) scheme and meet relevant standards for each technology
  • all applicants are required to complete a Green Deal Assessment (GDA) before applying and to ensure they meet minimum energy efficiency requirements of loft and cavity insulation where required by the GDA
  • any public grants previously received, including RHPP, will be deducted to avoid a double subsidy
  • tariffs are as below and will change annually in line with the Retail Price Index (RPI)

Domestic installation - Typical examples (Biomass Boilers)

Annual RHI Payments on a 3 Bedroom House - Boiler Size 15 KW - EPC 20000 Kwh
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Total
£2,440.00 £2,488.80 £2,538.58 £2,589.35 £2,641.13 £2,693.96 £2,747.84 £18,139.65
Annual RHI Payments on a 4 Bedroom House - Boiler Size 25 KW - EPC 30000 Kwh
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Total
£3,660.00 £3,733.20 £3,807.86 £3,884.02 £3,961.70 £4,040.94 £4,121.75 £27,209.48
Annual RHI Payments on a 6 Bedroom House - Boiler Size 40 KW - EPC 60000 Kwh
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Total
£7,320.00 £7,466.40 £7,615.73 £7,768.04 £7,923.40 £8,081.87 £8,243.51 £54,418.95

Non Domestic Typical example (Biomass Boiler)

You install a biomass boiler with a capacity of 175kWth. Because of the capacity, it’s on the ‘Small Biomass’ tariff. You use the boiler for 2000 hours in 1 year.

You’ll be paid:

  • 8.6p per kWh (the tier 1 rate) for the first 1,314 hours = 1314 x 175 x £0.086 = £19,775.70
  • 2.2p per kWh (the tier 2 rate) for the other 686 hours = 686 x 175 x £0.022 = £2,641.10

Making a total of £22,416.80 per annum (paid over a 20 year period) = £448,336.00 (plus inflation adjustment).

The tariff table will be reviewed by the Government, who will decide if the tariff levels need to be changed. The first review will take place in 2012.

The tariff level at present is as the below table and is set from the date of registration for the full 20 years.

How to apply for accreditation and support

Accreditation for the RHI can be obtained from Ofgem, who are responsible for administering the scheme. Ofgem started receiving applications on Monday 28th November 2011, for industrial, commercial, public sector, not-for-profit and community installations.

Information on how to apply for support, plus detailed guidance documentation to help you through the process, can be found on the Ofgem website.

Alternatively you can contact their enquiries centre on 0845 200 2122 or by email to rhi.enquiry@ofgem.gov.uk

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Almondsbury Ecoheat Ltd
Sunday's Hill
Almondsbury
Bristol
BS32 4DS