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How much will I earn from my renewable heating system?

Posted by Tasha Kosviner on 4 August 2014 at 8:46 am

If you’re wondering how much you could earn in government incentives from a renewable heating system in your home then an answer is at hand.

The Department of Energy and Climate Change have launched their online domestic renewable heat incentive calculator which allows you to estimate the income you could receive based on your choice of technology.

The calculator, which YouGen was involved in testing during development, allows you to enter the type and size of your house and select the different types of technology you’re interested in. It will then calculate your likely return from the domestic renewable heat incentive (RHI).

The RHI is a system of quarterly payments made for seven years to households who install eligible renewable heat technologies. These could be biomass boilers, solar thermal panels (as opposed to solar electricity panels) and air source or ground source heat pumps.

We welcome the calculator as one part of the jigsaw for any household considering using renewable heat. However, RHI should be only part of the equation.

The calculator will only tell you what return you can expect through the RHI. It will not tell you whether a particular technology is suitable for your home, and many may not be, nor will it tell you the cost of installing, running and maintaining a renewable heating system. Finally it will not tell you whether your home is eligible for RHI. To qualify for RHI you must ensure your home has minimum levels of insulation.

Anyone considering installing a renewable heating system in their home should seek independent advice and take quotes from numerous installers before committing.

To find out more about how to qualify for the renewable heat incentive click here.

To read more independent advice about the different heating technologies that are eligible for RHI click on biomass boilers, heat pumps and solar hot water

Photo credit: Images_of_money

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

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2 comments - read them below or add one

Cathy Debenham

Cathy DebenhamComment left on: 31 October 2014 at 11:07 am

Hi peedee You are right that only heat pumps with an SPF of 2.5 or above are eligible for the domestic RHI. However, there is an exception to the rule for heat pumps which were installed between the announcement of RHI in July 2009 and its start in April this year. Their installation will be deemed to have an SPF of 2.5. Alternatively they can pay an MCS installer to do the newly agreed calculations to get a more accurate figure, which may be higher or lower. I'm not sure what happens if it's lower.

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peedeeComment left on: 31 October 2014 at 8:38 am

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1: 'To be considered 'renewable' (under EU legislation) heat pumps must have a SPF of at least 2.5, and this is the minimum performance that is eligible for the domestic renewable heat incentive.'

2: 'The domestic renewable heat incentive will pay on renewable heat only, so the more efficient the heat pump, the greater the payment you will receive.'

[At this point I would conclude that any heat pump with an SPF of less than 2.5 would receive zero RHI subsidy, on the basis of these two statements.]

3: 'To calculate the payments you will receive, follow the formula in this example:

House with a heat demand (space heating plus hot water) of 18,000kWh per year. The heat demand figure will be taken from your EPC.

Installing an air source heat pump with an efficiency rate averaged over the whole year (seasonal performance factor or SPF) of 3 - ie it generates an average of 3kWh of heat for every 1kWh of electricity used. 

Tariff rate of 7.3p per kWh.

The RHI is only paid on the renewable element of the heat, not the electricity used. To find that figure use the formula 1 - 1/SPF:

1 - 1/3 = 2/3 of the electricity will be counted as renewable.

18,000 x 2/3 = 12,000kWh x 0.073p = £876 per year x 7 years = £6,132'

[So, using say SPF=2.0, the calculation 1-1/SPF gives 1-1/2=1/2 and the assessed subsidy is £4600. Statements 1: and 2: make it clear to me that the RHI subsidy should be zero. Can you explain the apparent contradiction?

I should also point out that in a recent test of 289 heat pumps installed under the RHI, the mean and median SPFs were below 2.5. Half the pumps failed the SPF=2.5 criteria and should not have received the RHI subsidy or so it seems to me. Would you agree?

Moreover, with an average SPF below 2.5, all 289 pumps failed to achieve any 'greenness' at all. Overall, this looks like a worse than futile exercise to me, bearing in mind all the extra costs.]

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