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Guidance on acceptable third party finance for RHI available for trade

Posted by Cathy Debenham on 16 January 2015 at 10:24 am

Do your customers want to install renewable heat, but struggle with the upfront cost? Unlike the feed-in tariff, where rent a roof (FIT) schemes are possible because FIT payments can go to a third party, the rules of the domestic renewable heat incentive (d-RHI) do not currently allow third parties to apply directly for the d-RHI payments. This makes it harder for companies to put together finance packages.

DECC (the Department of Energy and Climate Change) is keen to include third party schemes in the d-RHI, and is investigating how best it might achieve it. In the meantime, there are opportunities under the current scheme. Ofgem has just issued a factsheet on third party finance and ownership arrangements. This information is aimed at organisations planning to offer funding packages to homeowners. Guidance for homeowners is expected to follow soon. 

There are four key requirements for a finance scheme to be acceptable:

1. The applicant must be the full or joint owner of the renewable technology.

2. The applicant must own or occupy the property that the renewable heating technology is supplying heat to.

3. The applicant must be named on the bank account that the domestic RHI payments are paid into.

4. An owner of the renewable heating technology must have made a financial contribution towards its purchase or installation.

All applications will be assessed on a case by case basis, so eligibility is not guaranteed. Examples of eligible and ineligible agreements are illustrated in the flow chart pictured below. More detail is available in the Ofgem factsheet.

Situations where the finance company takes a lease on (or buys a portion of) the homeowner’s (or landlord’s) property are not eligible.

If you have questions about whether or not a scheme is eligible you can call Ofgem: 0300 003 0744 or email:

More information about the Renewable Heat Incentive (RHI) on YouGen.

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