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How the non-domestic RHI (renewable heat incentive) works: your questions answered

Posted by Cathy Debenham on 12 December 2011 at 3:58 pm

Can anyone in the UK benefit?

No – just non-domestic installations in England, Scotland and Wales. A domestic version is expected to start in October 2012. Installations completed and commissioned on or after 15 July 2009 can apply as long as they meet the eligibility criteria. Those installed prior to that date will not be eligible (the reason given for this is that the RHI is an incentive, not a reward).

What technologies are included, and what are the commercial rates?

Small biomass (<200kWth)  Tier 1: 7.9p / kWh, Tier 2: 2p /kWh
Medium biomass (200kWth - <1,000kWth)  Tier 1: 4.9p / kWh, Tier 2: 2p / kWh
Large biomass 1MWth+, 1p / kWth
Small heat pumps (GSHP, WSHP & deep geothermal <100kWth) 4.5p / kWh
Large heat pumps (GSHP, WSHP & deep geothermal 100kWth+) 3.2p / kWh
All solar collectors (<200kWth) 8.5p / kWh

I understand the RHI is only available for ‘useful’ heat. What does that mean?

The heat must be supplied to meet an economically justifiable heating requirement – ie one that would be otherwise met by another type of heating, such as a gas boiler. (At risk of stating the obvious) it shouldn’t be a heat load that is created artificially, just to claim the RHI. Acceptable uses are for space, water and process heating where the heat is used in fully enclosed structures. Ofgem is responsible for deciding what is and isn’t eligible according to the RHI regulations.

What about heat used for cooling?

It is eligible as long as it meets all the other eligibility criteria. Cooling through absorption chillers is supported. However, cooling generated by heat pumps is not.

Are there any on-going obligations?

Yes, you will have to agree to a number of obligations to receive the RHI, and you will be asked to re-declare that you are meeting them at regular intervals. These include:
Maintaining your equipment in line with manufacturer instructions to ensure it is working effectively; keeping evidence of maintenance work carried out; and agreeing up-front that you will provide any relevant information requested by Ofgem, and allow inspection of the installation.

How does the metering work?

All payments of the non-domestic RHI will be made on the basis of heat meter readings. You can install any meter that meets the class 2 requirements listed in Annex MI-004 of the EU measuring Instruments Directive 2004. You will need to check whether your installation needs just a generation meter, or also needs to be metered at the point of usage.

I’m replacing an existing renewable heat system. Am I eligible?

Yes (although the government may review this if they see lots of people scrapping fully functioning systems just to get the RHI).

Can I use any installer?

If your system is of 45kWth capacity or less then all installations of biomass, ground and water source heat pumps and solar thermal must be installed by an MCS certified installer, using MCS certified products (or an equivalent EU approved scheme such as Solar Keymark).

I run a business from home. If I install renewable heat does it count as domestic, or non-domestic?

The definition for domestic installations is where a renewable heating installation serves a single private residential dwelling only and is currently classed under the local council tax banding as a “self-contained” unit. However, if a house has been significantly adapted for non-residential use, and if it may be considered non-domestic. An example might be a house converted to a shop or bed and breakfast. If landlords install renewable heat in one or more residential dwellings it counts as domestic.

How will I be paid?

Payments will be made quarterly, over a period of 20 years. You will have to submit a quarterly meter readings to Ofgem. They will be calculated by multiplying the appropriate tariff by the eligible heat use (in kWh).

Can I get a grant as well as the RHI payments?

No. RHI support will only be available if the installation has not received (and will not receive) any other public funding (for those commissioned after the Regulations came into force), or where it has received public funding before the RHI regulations came into force, it has paid that back.

What happens if I sell the system?

The new owner will receive the RHI payments for the remains of the eligibility period, as long as they can prove to Ofgem that the ownership has been transferred validly, and that they are meeting the eligibility criteria. It is illegal for the previous owner to attempt to continue receiving payments.

Can I get an agent or my installer to apply on my behalf?

No, you must do it yourself. The preferred route is to apply online at the Ofgem website.

Why aren’t air source heat pumps included?

The government says more work is needed to better understand the costs associated with air source heat pumps. It hopes to extend eligibility to air to water heat pumps in 2012. Air, ground or water to air heat pumps are not eligible as it is difficult to meter heat through warm/hot air, and there is not enough evidence on the costs of the technologies on which to base tariff. They may also be added to the RHI in 2012.

How have the tariff levels been set?

They are based on the additional costs of each technology over the fossil fuel alternative, plus a 12% return on capital (except for solar thermal which offers a lower rate of return. The aim is to provide sufficient support while avoiding over-subsidising.
   
For specific eligibility for each technology see the relevant information pages

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