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Renewable Heat Premium Payment rates confirmed - but are they enough to kickstart renewable heat?

Posted by Cathy Debenham on 21 July 2011 at 11:22 am

Capital grants to help with the cost of installing renewable heat technologies will be available from 1 August.

Any householder in England, Scotland or Wales can apply for the £300 renewable heat premium payment for solar thermal panels.

However, payments for biomass boilers (£950), air source heat pumps (£850) and ground source heat pumps (£1,250) will only be available to households not heated by gas from the grid.

There are conditions attached to receiving the renewable heat premium payments. You must have basic energy efficiency measures in place and the product and installer must both be MCS certified.

In addition, the government is using the premium payments scheme to improve its knowledge of how renewable heat works in practice, in real homes. So once the equipment is installed, you will be asked to fill in two customer surveys, and may be chosen at random to have extra meters attached (free of charge) so performance can be measured.

There is £15m of support available for up to 25,000 renewable heat installations, and the scheme will be reviewed once £10m has been reached. It's available on a first come, first served basis between 1 August 2011 and 31 March 2012 (unless the money runs out before then). The Energy Saving Trust is handling applications.

It's great news to hear that there's going to be research and monitoring into how people use renewable heat, and how well it works in practice. I thoroughly applaud that aspect of the scheme.

However, the government still hasn't announced what rates will be available for the domestic renewable heat incentive, and what the eligibility criteria are. Without this information, investment in renewable heat is still prohibitively expensive for most people.

In my conversations with installers about the subject, most have dismissed the renewable heat payments as too small to make any difference. A change in the price of oil is much more likely to get their phones ringing.

I realise that this is a difficult chicken and egg situation. Without the findings of their research, the eventual Renewable Heat Incentive probably won't be as effective in incentivising uptake of solar thermal, biomass boilers and heat pumps. But unless people know the long term financial implications of investment, will these relatively small grants be enough to persuade them to take an expensive gamble?

Photo by JMacPherson


If you have a question about anything in the above blog, please ask it in the comments section below.

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13 comments - read them below or add one

Cathy Debenham

Cathy DebenhamComment left on: 19 August 2011 at 8:12 am

Hi Nick

I'd be very wary of any installer that was quoting you an annual amount for RHI payments. Under Labour's plans for the RHI, it intended to offer a 12% return on investment. However, the buzz I'm hearing about it, is that it's not expected to be so generous under the current government; that they are concerned about the deeming element of it (as it's not economic to meter domestic installations). So my advice would be that if you would go ahead anyway, then do. But if installation is conditional on getting a certain level of payback, then it's safer to wait until the consultation is announced - which should be sometime this autumn - or even until the government responds to the consultation next year.

And I'd definitely want to question how an installer has come up with any figure that they are giving you.

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Nick Hanna

Nick HannaComment left on: 18 August 2011 at 6:49 pm

HI there, I guess my question is similar to Martin' solar thermal array (Navitron SFB30-47 with 30 tubes) is expected to generate c.1142 kwH of heat per annum - how much will I get from the RHI do you think? My installer thinks about £90 but I can't believe that's right! thanks for your help.

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Cathy Debenham

Cathy DebenhamComment left on: 8 August 2011 at 8:03 am

Hi Martin

The RHPP are only a precursor to the RHI proper, which won't be launched until October 2012. So I'm afraid you're going to have to wait a bit longer. As to the detail of how it's going to be paid, and what amount you'll get, these also haven't been decided. But keep an eye on the blog (or sign up to the newsletter) and we'll keep you updated as we learn more.

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Martin Williams

Martin WilliamsComment left on: 7 August 2011 at 9:08 pm

Cathy - thanks for the clarification.  Do you know how I claim the RHI payment and is it an annual payment?  We had our solar thermal fitted in Feb 2011.

many thanks for your useful blog!         ......Martin

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Cathy Debenham

Cathy DebenhamComment left on: 25 July 2011 at 8:09 am

Good point John. This strikes me as a really difficult one. It makes sense to do proper research and monitoring and get a much better understanding of how these technologies work in situ, and how people interact with them. On the other, we've been waiting for the RHI since 2009, and it's non appearance is skewing the market. Glad I'm not responsible for making these decisions!

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John Connett

John ConnettComment left on: 24 July 2011 at 9:51 am

The timing of RHPP means that after the prerequisites have been met most installations will have to be made during the heating season which may act as a discouragement! Most would plan to replace heating systems during the summer.

The research and monitoring may be of questionable value, especially for primary heating systems, to feed into the design of RHI planned to start in October 2012. Installations completed towards the end of RHPP in March 2012 are unlikely to provide much data from their use for space heating.

The continuing uncertainty over the final eligibility criteria and tariffs for domestic RHI compared with solar PV FIT makes it impossible to make an informed decision between renewable technologies. This may push many towards installing solar PV where the criteria and tariffs are clear.

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Martin Williams

Martin WilliamsComment left on: 22 July 2011 at 12:39 pm

Am I being dumb or is that the job of our wonderful Government?  Isn't gas a fossil fuel, causing climate change along with oil and coal?  So why can't we give incentives to all those who take a lead and install solar thermal units to heat their water?  Why restrict it to "off-gas" properties?  So there is a 'limit' on how much we can spend as a country on renewable fuel - why?  Have they not read the climate change reports or are their heads stuck firmly in the sand . .. or elsewhere?  Enraged of Exmouth.


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Harriet Martin

Harriet MartinComment left on: 22 July 2011 at 11:55 am

My understanding was the the Renewable Heat Incentive would be paid annually to people who had installed the technologies using an accredited installer.  The first sentence of this article, "Capital grants to help with the cost of installing renewable heat technologies will be available from 1 August" implies strongly that these grants are a one-off payment to encourage installation.  Please, what is the RHI, a one off capital grant or a year-on-year incentive payment?

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Cathy Debenham

Cathy DebenhamComment left on: 22 July 2011 at 11:43 am


Yes, gas is a fossil fuel, but one that is both cheaper and cleaner than oil and coal. So I guess this limited pot of money is going where it's needed most.

However, grants for solar thermal are available to anyone - it's just the biomass and heat pumps that are restricted to off-gas households.

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Cathy Debenham

Cathy DebenhamComment left on: 22 July 2011 at 11:39 am


You're right that the renewable heat incentive is expected to be an annual payment. However, for domestic properties it is not going to start until October 2012.

These Renewable Heat Premium Payments are an interim measure, to try and stop the market stalling completely, and to enable some research and monitoring that will feed into the design of the RHI proper. They are one-off capital grants, and people who get them will still be eligible for the RHI, as long as their system meets the final criteria (which haven't yet been decided).

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pigasusComment left on: 21 July 2011 at 12:05 pm

We're planning a new build sometime next year and are hoping to install a wood pellet boiler.  I am concerned that when the RHI is finalised, the same restrictions as to eligibilty will be applied - ie, it won't be offered where gas is available.  I guess I'll need to find a plot with no gas in this case.

Sally Schreiber

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Bob Irving

Bob IrvingComment left on: 21 July 2011 at 11:47 am

25,000 installations are about 0.6% of the of-gas-grid dwellings in the UK. Just how much difference is that going to make? The levels of grant are the same (I think) as the LCBP which resulted in ~800 ASHPs, ~600 GSHPs,  ~8000 solar thermal systems and 600 wood fuelled boilers being installed over a much longer period.

The promise of RHI payments in 2012 might help but there is an impression that these are dependent on what comes out of the RHPP systems research.

Seems like another of those schemes blighted by the Treasury... 

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Cathy Debenham

Cathy DebenhamComment left on: 21 July 2011 at 11:26 am

I hope you're wrong Sally. My feeling is that this restriction on the premium payments is about trying to reach those in greatest need first, given the limited budget. But there's always going to be financial pressure, especially as the RHI is being paid out of taxes, so I guess we have to wait and see.

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