Renewable Heat Incentive
The Renewable Heat Incentive (RHI) is a UK Government scheme set up to encourage uptake of renewable heat technologies among householders, communities and businesses through the provision of financial incentives. The UK Government expects the RHI to make a significant contribution towards their 2020 ambition of having 12 per cent of heating coming from renewable sources. The Renewable Heat Incentive is the first of its kind in the world.
There are two phases to the introduction of the RHI:
Phase 1: The introduction of the RHI for non-domestic installations in the industrial, business and public sectors.
Phase 2: The domestic element of the RHI, is expected to be introduced in spring 2014 following the consultation published in September 2012 and more recently the UK Government Heat Strategy.
What is the Renewable Heat Incentive (RHI)?
The Renewable Heat Incentive (RHI) is the world’s first long-term financial support programme for renewable heat. The RHI was launched in November 2011 with a scheme for the non-domestic sector that provides payments to industry, businesses and public sector organisations.
It will be expanding the existing scheme to cover additional technologies and will also offer a domestic scheme for individual households. We intend to announce the final details in summer 2013 and open the schemes for payment from spring 2014. Domestic customers should read our guide on the Renewable Heat Premium Payment scheme for details of the householder voucher scheme that is currently available. The RHPP scheme will be extended for a further year to March 2014 to provide continued support for households. This extension will not affect current application deadlines. Further details about the RHPP extension will be available shortly.
The RHI pays participants of the scheme that generate and use renewable energy to heat their buildings. By increasing the generation of heat from renewable energy sources (instead of fossil fuels), the RHI helps the UK reduce greenhouse gas emissions and meet targets for reducing climate change.
How Much Will The RHI Pay Out?
The Renewable Heat Incentive is a payment for generating heat from renewable sources. It’s been designed by the Government and will be regulated by Ofgem, who will pay the tariffs using money from the Treasury.
For the RHI participants they will not only save money by reducing their increasingly expensive current energy bills, but also receive RHI Payments of up to 8.9p per kWhr for the energy they produce from renewable sources. This figure is dependent on the type of system installed, with the Government setting the following tariffs for biomass:
The tariffs are paid for a guaranteed 20 year period from the registration date and can be adjusted according to index-linked inflation rates. It’s estimated that within 7-9 years the RHI participant will have paid off their installation costs and can then expect income for the remainder of the agreed period. The Government have predicted that most systems should see a return of approximately 12% per annum.
Residential energy users are unable to join the RHI currently. This phase of the scheme is expected to open for applications in October 2012, although this is yet to be confirmed. The RHI payments that domestic users can expect to receive has still not been decided and, as with the non-domestic installation, the level of assistance available will depend on the type of technology used. In the meantime, domestic energy users can apply for the RHI Premium Payment scheme which will provide a one-off grant towards the installation of the technology. For instance, those switching to a biomass boiler will receive £950 to contribute towards the initial outlay.
What Technologies Are Covered?
There are several technologies covered under the Renewable Heat Incentive. These include biomass (such as wood pellets or wood chip), solar panels and ground source heat pumps. Each different RHI technology has its own benefits and will generate the heat needed to keep your harm warm during the colder periods.
The renewable heating methods covered under the RHI are:
Biomass heat generation and Combined Heat and Power (CHP)
Ground source heat pumps
Solar thermal heat and hot water
The Government are keen to ensure that the renewable technology used must be of a suitable quality and energy efficiency. Only equipment that meets these criteria will qualify for the RHI financial support.
Currently, Air Source Heat Pumps aren’t included in the Renewable Heat Incentive for non-domestic users. For domestic users, there is a possibility this type of renewable energy will qualify for the RHI and the premium payments are available to help finance the installation of these systems in domestic properties.
Who Can Apply for RHI?
Wondering who can apply for the Renewable Heat Incentive? It depends on which category you fall into, non-domestic or domestic.
The Renewable Heat Incentive (RHI) helps businesses, the public sector and non-profit organisations meet the cost of installing renewable heat technologies.
The types of heating covered by the scheme are:
Heat pumps - ground source, water source
Solar thermal collectors
Biomethane and biogas
The details of the domestic Renewable Heat Incentive (RHI) were announced by the UK Government on 12 July 2013. The Government has released a document setting out the final policy for the domestic RHI, subject to state aid and parliamentary approval.
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 met 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. This is to help manage the potentially large volume of applications submitted when the scheme opens and to avoid a backlog. 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 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, including limits on harmful emissions for biomass systems
Legacy biomass installations, installed between 15th July 2009 and the launch of the scheme in Spring 2014, will not need to meet the emissions limits requirement.
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 will change annually in line with the Retail Price Index (RPI)
DECC intend to introduce a system of degression to control the costs of the scheme. This is where tariffs are reduced over time for new applications to the scheme.Those who have already secured their tariff will not have their tariff reduced due to cost control. DECC will announce further details on the cost control policy in Autumn 2013.
What's The Catch With The RHI?
When hearing that energy users can receive payments for the energy produced, many people often think there is a catch. Put simply, there isn’t. The UK Government are so keen to reduce the CO2 generated in this country that they are dedicating £860m worth of funding towards the installation and ongoing use of renewable heat sources, such as wood pellet boilers.
So, not only do wood pellet users get money for the heat they produce, they can also feel satisfied in the knowledge that they are contributing towards the reduction of harmful carbon emissions. There are three simple steps to the RHI:
You install the renewable heat system in your building, for instance a biomass boiler.
You measure how much heat your renewable energy system creates.
You receive a fixed, regular payment based on the energy created, the type of technology used and the size of the system.
The Renewable Heat Incentive is as simple as that. It is paid for by the Government and not by energy users, and provides regular payments for the heat produced. Currently it is only open for non-domestic and commercial users and domestic users are expected to be able to begin applying from October 2012 (although this is yet to be confirmed).