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What the domestic Renewable Heat Incentive means for heat pumps

Posted by Chris Davis on 15 July 2013 at 11:06 am

After nearly 4 years of waiting, the Government has finally confirmed the details of the Renewable Heat Incentive (RHI) for domestic properties.  Cathy has already summarised the key details in her blog.

This is great news for home owners looking to install renewable heating systems, especially those living off the gas grid who want to reduce or remove their dependency on fossil fuels. This is where the savings will be the highest.

For heat pumps there are some details you will need to take into consideration and also make sure your installer is aware of!

The tariff for air source heat pumps is 7.3p/kWh and for ground source heat pumps it is 18.8p/kWh. This is because ground source heat pumps are more expensive to install due to the additional ground collectors, etc.

Higher efficiency = more RHI!

What’s really important to understand though is that these rates are paid per kWh of renewable heat, not for the overall heat provided, which of course includes the electricity to run the heat pump.

It stands to reason then that the more efficient your heat pump system, then the higher the renewable heat content is and therefore the more RHI you will receive.

This is absolutely as it should be – we should be encouraged to invest in higher quality, higher efficiency systems, and by doing so – ie running a system more efficiently with a higher Seasonal Performance Factor (SPF) – not only receive more RHI but also benefit from larger savings in running costs.

Of course to do this, you will need to invest a little more in your system. This means making sure you consider a good quality heat pump from a reputable manufacturer, upgrade your radiators to allow the system to run at lower water temperatures and a reputable installer – not only one that is MCS accredited, but also one recommended by the manufacturer.

How it the RHI for heat pumps works

So how will the RHI be calculated to benefit more efficient systems?  Well the SPF (efficiency) will be based on the Star Rating for your system, using a document called the Heat Emitter Guide (blog to follow on this). Your MCS installer is required to talk you through this. The guide provides an indication of how efficient your system should be dependent on the intended water flow temperature (which we all know is the key factor in determining the efficiency of a heat pump system).

This is how it works for a typical air source system:

  Total kWh/yr Tariff Rate water flow temp. Star rating SPF Renewable kWh/yr RHI income/yr

Approx
fuel* savings/yr

Total Annual benefit
Option 1 23,000 7.3p 50C 3 2.7 14,481 £1,057 £559 £1,616
Option 2 23,000 7.3p 40C 5 3.4 16,235 £1,185 £769 £1,955

* savings compared to oil heating (those on mains gas will save significantly less)

So as you can see, getting a better Star Rating by reducing your system design flow temperature will improve your benefit under the RHI. You should note also that for heat pumps, the RHI has a minimum SPF requirement of 2.5 which, using the heat emitter guide, will mean your system will have to be designed to run at 50°C water temperature and your radiators sized accordingly.

A few other important facts

You will be able to claim the RHI from Spring 2014, however between now and then the Renewable Heat Premium Payment (RHPP) scheme is still available and you will be able to claim both the RHPP and be eligible for the full RHI.  Although the value of the RHPP will ultimately be deducted from your overall RHI payment, this still represents a great “interest free” contribution towards your investment costs, so now is a great time to make the leap. The rates have recently been increased to £1,300 for an air source heat pump and £2,300 for a ground source heat pump. 

NB: you can only get the RHPP if you live off the gas grid. However, you will be able to claim the RHI even if your home is currently heated by gas.

The details of the RHI have also confirmed that hybrid systems will be allowed, although these will have to be metered.

Pay to have your heat pump system monitored

It has also been confirmed that a further £230 per year will be offered to systems which have a monitoring system supplied with them.  The idea of this is that monitoring systems allow you to see how well your system is working and help you change your behaviour.  The additional payment is intended to cover the additional costs of having a monitoring system installed.

And finally, remember that you will also need a Green Deal Assessment to be performed as part of the application process, in addition to confirming that you have loft and cavity wall insulation fitted (where possible).

Photo: Dimplex

About the author: Chris Davis is commercial director for Kensa Heat Pumps

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

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Comments

3 comments - read them below or add one

popsiclecat

popsiclecatComment left on: 23 July 2014 at 10:06 pm

Hi, I have a Mitsubishi Ecodan heat pump which was installed in April 2013 and has shaved 2/3 off my heating bills (I used to have LPG). I have recently had a GDA with EPC and the heat load of my property has been estimated at only 1/3 of what the MCS installer calculated, I am assuming this is because my bills for the last 12 months were considerably reduced compared to when I had LPG so in this case do they have a different formula for calculating the RHI for retro fits? 

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Graham Hunter

Graham HunterComment left on: 6 March 2014 at 9:55 am

A really good and clear explanation of RHI with regards to Heat Pumps. It would be interesting to know more though about how the results in the table above were calculated, i.e. what type of oil boiler are savings compared to? I assume not a top spec condensing one given the running cost savings are quite good. The other thing to bear in mind is that these savings will depend on the operational Coefficient of Performance (COP) of the heat pump, which was recently found by Energy Savings Trust field trials to be considerably lower than the figures that a Green Deal Assesment uses for both air and ground source. If we view the EST figures as more realistic ones, given the less than tropical UK climate, it is entirely possible that a heat pump could infact cost more to run than a condensing gas boiler, or possibly an oil boiler, although the RHI payments might help to counter this loss, at least over the first 7 years after install. 

Putting these details aside, the real elephant in the room for me seems to be the issue of where the domestic RHI fits with low-energy retrofit. As the table above shows, RHI payments are affected by the space heating demand of the household, i.e. the bigger your heat demand the greater your RHI payments. Since to receive RHI you only need to address uninsulated cavity walls and loft spaces, this leaves householders with the dilema: do they upgrade the fabric of their property and accept lower RHI payments, or do they just do nothing but install low carbon heating? 

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nicholas72

nicholas72Comment left on: 31 January 2014 at 12:56 am

ASHP RHI? Total Nightmare!! I paid £25,000 to an MCS approved renewables company who installed 2 x14KW HT Daikens and 1 x 14Kw Mitisibishi all inside one of my out buildings to replace a 60KW Worcester Bosch Oil boiler. The pipework that ran from the outhouse to my actual house was over 30 mtrs in length and the company thought it would be OK to use copper pipe with some simple foam lagging (the type you see in your garage) when the winter came and snow fell on the lawn, the underground pipes were losing that much heat there was a path across the lawn with no snow on it because of the massive heat loss! All three ASHP’s froze up solid and the company (Based in Towcester) made over 15 visits to defrost the units and try to get them working. To date the heat pumps do not heat my house properly and we have lost out tens of thousands of pounds in increased electricity consumption that actually overtakes the heating oil costs we originally had. We have had to hire calor gas bottles and space heaters to defrost the units and keep the house from freezing. What makes this particularly sad is that one of the company directors knows we have two young children aged 6 and 7 and was happy to take my money for a system that leaves my family cold in Dec/January months when the heat pump units can not deliver enough heat to the house!! I have now complained to both the Renewable Energy Consumer Code and also commenced legal proceedings against the company to recover my losses. Be VERY careful with renewables, things are NEVER what they appear and actually getting the payments that are designed to attract you is both hassle and continued hassle for many years.

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