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Introduction to the RHI
The Renewable Heat Incentive (RHI) is a financial incentive scheme set up by the UK Government to encourage people to use renewable heat technologies in homes, businesses and local communities.
In order to meet its Renewable Energy Directive target of generating 15% of energy from renewable energy sources by 2020, the UK Government “anticipates that around 12% of heat will need to come from renewable energy".
Domestic RHI
The domestic renewable heat scheme opened for applications on 9 April 2014. Everyone who has installed an eligible heat system since 15 July 2009 is entitled to apply.
Current and historical tariffs for the Domestic RHI are logged on the Ofgem website.
The Department for Business, Energy and Industrial Strategy (BEIS) has an online domestic RHI calculator which will help you work out how much money the different technologies could earn in your particular home.
What technologies are eligible for the domestic RHI?
- Biomass boilers (not stoves apart from pellet boiler stoves).
- Ground and water source heat pumps.
- Solar thermal.
- Air to water heat pumps (but not air to air or heat pumps with cooling).
What are the domestic RHI scheme rules?
To be eligible you must use an installer who is MCS certified and a member of the Renewable Energy Consumer Code (RECC).
The heating system you choose must also be MCS certified or equivalent (for example, Solar Keymark) and meet relevant required standards. NB not all MCS certified products are eligible. You can check for eligible products on the Ofgem website.
To be eligible for the RHI, householders will have to have an Energy Performance Certificate (EPC) for their property which is less than 2 years old , and install loft and cavity wall insulation where required by the assessment. Self-builders must get an RdSAP EPC.
The domestic RHI has been designed as a 'boiler replacement scheme'. The payments are intended to bridge the installation and running costs between fossil fuels and renewable alternatives. Unlike the feed-in tariff or the non-domestic RHI, it is not intended as a form of investment or payback.
Your fuel supplier must be on the Biomass Suppliers List for you to be eligible to receive RHI, even if you are already registered or register as a self supplier.
Payments will be made quarterly to householders over seven years for each kWh of heat produced for the expected lifetime of the renewable technology and based on deemed heat usage. Any money received upfront from other grants will be deducted from the RHI payments.
How do I apply for domestic RHI?
You can apply online at the Ofgem website. To do so you need your MCS certificate and EPC less than two years old. If you are applying for a biomass boiler you will also need an air quality certificate.
There are companies offering to do the application for you for a fee. This is not necessary as the system has been designed to be user-friendly. The date that you press submit on your online application is the date from which RHI will be paid.
A degression scheme, similar to the one introduced for the Feed-in Tariffs scheme, will be put in place to manage the RHI budget. This means that tariff levels will decrease by a set percentage once specified levels of deployment have been reached.
Frequently asked questions about the Domestic RHI
If you have questions about any of this, or there is something we haven't answered, you can ask it under this blog.
DOMESTIC RHI ELIGIBILITY CRITERIA
Am I eligible for the domestic renewable heat incentive?
The following people are eligible to apply for the RHI:
- Owner occupiers (including second homes)
- Private landlords
- Social landlords
- Self-builders
- Certain new build housing.
The scheme is for a system that heats a single domestic property. Systems that heat more than one dwelling (ie a block of flats or a house with a self-contained outbuilding) may be able to apply to the non-domestic scheme. Payments go to the owner of the scheme. You will be paid from the date you submit your application form. DECC expects the domestic RHI scheme to be open until March 2021.
I’m a private landlord, can I apply?
As long as you own the heating system, you can apply, and you will receive
the RHI payments. But you will be expected to get necessary permissions from
your tenants, both to install the system, and so you can comply with the
requirements on maintenance and possible site visits.
What do they mean by self-builder?
Someone who has built or commissioned a home for their own use, either by
building the home themselves or by working with builders.
I have already installed renewable heat. Can I get the
RHI?
Yes, as long as you installed it after 15 July 2009, and you have not
received any government support since then (other than from the renewable heat
premium payment scheme which will be deducted from the RHI payments). You come
under the heading legacy installation.
What are the eligibility criteria for legacy installations?
Legacy applicants are people that installed renewable heating systems between 15 July 2009 and 8 April 2014. There are two exceptions to the eligibility criteria for legacy applicants:
· the installation will need to meet the MCS standards that applied at the time of installation, rather than the current standards
· installations will not need to meet the air quality requirements that will apply from the launch of the scheme for new applicants.
What safety regulations are required to be eligible for the domestic RHI?
To be eligible the heating system must be MCS (or equivalent scheme) certified and the installer must be MCS certified and a member of the renewable energy consumer code (RECC) or Home Insulation and Energy Systems (HIES). However since launch, MCS (or equivalent) certification does not guarantee eligibility alone. A full list of RHI-eligible products can be viewed on the Ofgem website.
How long will they be paid for?
The tariffs will be paid for 7 years. Payments will be quarterly, in
arrears, by Ofgem. While paid over a seven year period, the rates have been
calculated over the expected 20 year life of the systems.
Is the RHI index-linked?
Yes, for applicants accredited before 1st April 2016 the tariff will change annually in accordance with the Retail Price Index (RPI). For applicants accredited on or after 1st April 2016 tariffs will change annually in line with the Consumer Price Index (CPI). Changes will come into effect on 1 April each year
When will rates change?
A degression scheme, similar to the one introduced for the Feed-in Tariff scheme, has
been put in place to manage the RHI budget. This means that tariff levels for
new applicants will decrease by 10 per cent once specified amounts of the
budget have been spent. The government will check every quarter to see if
triggers are met. If they are, a month's notice of the tariff reduction will be
given. The eligibility date for RHI is the date you press submit on your online
application. So when a tariff is about to reduce you must put your application
in before midnight the day before the change is due to get the higher rate.
Degression will be per technology, not for the scheme over all, so that one
technology is not allowed to dominate the budget.
What will the tariffs be applied to?
Tariffs are paid per kWh of renewable heat generated. The amount of heat
generated from your installation will be 'deemed'. This is an estimate of the
property's expected annual heat usage. You multiply the deemed heat load of
renewable heat by the tariff rate to calculate the annual payments.
For biomass, hybrid systems and heat pumps the estimated heat use of a property will be calculated after the installation of required energy efficiency measures (see below). This figure will be taken from the energy performance certificate (EPC).
For heat pump installations, the heat use figure will be combined with the heat pump's expected efficiency to estimate how much renewable heat should be generated.
For solar thermal, the deeming figure will be the estimated contribution of the solar thermal to the property's hot water demand. This calculation is part of the MCS installation process.
What's the thinking behind the tariff rates?
Rates are based on technology and installation costs; technology
efficiencies; technology lifetimes, the cost of financing; and the costs of
off-gas-grid fuels such as electricity and oil. It factors in a 7.5%
compensation for finance of the capital cost of buying and installing the
system.
How soon will my investment pay back?
The domestic RHI has been designed as a 'boiler replacement scheme'. As
such, the payments are intended to bridge the costs between the installation
and running costs of fossil fuel heating systems and the renewable
alternatives. Unlike the feed-in tariff it isn't talking in terms of
investment, or payback (do you expect a gas or oil boiler to 'payback'?).
HOW DO I CALCULATE THE POTENTIAL INCOME FROM THE DOMESTIC RHI?
The RHI will be paid on each kWh of renewable heat generated, for seven years. For most heat pump and biomass heating systems this will be an estimated figure (to avoid the cost of metering). It will be taken from the heat demand figures for space heating and hot water on your EPC. The solar thermal figure will be calculated by your installer.
Biomass calculation of RHI payments:
You install a biomass boiler (tariff rate is 4.21 p/kWh) in a home with
expected heat demand of 18,000kWh (15,000 for space heating, 3,000 for water
heating).
The calculation is 18,000 x 0.0421p = £757 RHI payment per year, for 7 years = £ 5304.
Heat pump calculation of RHI payments:
For this example we'll assume a heat demand of 18,000kWh, and an air source
heat pump (tariff rate is 7.51 p/kWh). The heat pump has an efficiency rate
averaged over the whole year (SPF) of 3, that means it generates an average of
3kWh of heat for every kWh of electricity used.
The RHI is only paid on the renewable element of the heat, not the electricity used. To find that figure divide the heat demand by the SPF:
18,000 / 3 = 6,000
In this case 2/3 of the electricity will be renewable
6,000 x 2 = 12,000kWh x 0.0751p = £901.2 per year x 7 years = £6,308
Solar thermal calculations:
Hot water demand of 2,000kWh, tariff rate 19.74p
2,000kWh x 0.1974p = £394.8 x 7 years £2,763.6
Because there is only one tariff rate, whatever the size of heating system installed, and there are economies of scale on installation costs, larger systems will tend to get a better rate of return.
As well as the RHI payments, you will also want to consider any energy savings you get from installing a renewable system in your decision making. These vary considerably between technologies.
DOMESTIC RHI SCHEME REQUIREMENTS
All heating systems and installers must be accredited by MCS (the microgeneration certification scheme) or an equivalent scheme. In addition, installers must be members of the Renewable Energy Consumer Code (RECC).
What does it mean by MCS or equivalent?
MCS is the UK’s accreditation scheme. DECC will also recognise
certification schemes that meet standards such as European standard EN 45011,
or ISO/IEC 17065 which has replaced EN 45011. Your installer must issue you
with an MCS compliance certificate. You will need this certificate when making
your application for RHI.
What are the energy efficiency requirements?
Everyone has to have an Energy Performance Certificate less than two years old. This records the energy performance of your property, and will give you a list of measures that you could consider installing to increase its energy efficiency. It will include guidance as to how much they are likely to cost, and what savings they will generate on your energy bills. You will be eligible to apply for the RHI even if your chosen renewable energy system is not recommended on your green deal advice report.
If loft and/or cavity wall insulation are recommended by the assessment you must install them and obtain an updated energy performance certificate (EPC) before applying for the RHI. If installing them is not feasible, you will need to present valid evidence of why not. Self-builders will have to get an RdSAP EPC on completion of the property, and the deemed heat load figure will be taken from that.
Why has DECC set energy efficiency requirements?
Installing energy efficiency measures, such as cavity and loft insulation
is the most cost effective way to reduce energy consumption and carbon
emissions. If you increase energy efficiency, you will be able to install a
smaller (and cheaper) heating system, and it will run more efficiently.
Are there any conditions I must meet?
You must have your heating system maintained regularly. You will have to
confirm that your system is operating correctly as part of the application
process, and will need to confirm annually that it is being maintained
according to the manufacturer’s instructions.
Will I have to install a meter?
For biomass and heat pumps, meters will be required in two situations:
a. If the renewable heating system is installed alongside another fossil fuel
or renewable space heating system (this includes hybrid systems);
b. in second homes.
You can also choose to install a meter under the metering and monitoring
package, and this cost will be covered by an additional payment of £230 per
year for heat pumps, £200 per year for biomass boilers. This is just for your
peace of mind, so you know your system is performing as expected. Your payments
will still be on the 'deemed' figure from your EPC.
Why do installations have to be ‘meter-ready’?
DECC wants to check its assumptions about fuel bill savings and renewable
energy generation. Selected installations will have DECC’s metering equipment
fitted, so all applicants will have to agree to this as part of the application
process. DECC is working with MCS to make it an MCS standard to make all new
domestic systems meter-ready where possible. It will not apply to legacy
installations. This is not the same as getting a metering and monitoring package,
and data will not be available for installers and householders to view in the
same way.
DOMESTIC RHI BIOMASS CRITERIA
What biomass heaters are eligible?
You can install either a biomass-only boiler, fuelled by wood pellet, wood
chip or logs, or a biomass pellet stove with a back burner (these are sometimes
referred to as boiler stoves). It must meet the air quality and fuel
sustainability criteria set out by DECC. Condensing biomass boilers are not
eligible initially, but this will be kept under review, and may change.
What are the air quality requirements?
Systems must not exceed the maximum permitted emissions limits of 30g per
gigajoule (g/GJ) net thermal input of particulate matter (PM) and 150g/GJ for
oxides of nitrogen Nox. You will need an air quality certificate when you
apply. You can find a list of eligible boilers and stoves on
the Ofgem website. Legacy installations (those installed between 15 July 2009
and the start of the scheme) do not need to meet these requirements.
Installations will also need to comply with national air quality and planning
legislation.
What are the fuel sustainability requirements?
Fuels must be sourced from a supplier registered on an approved list (this
will be mandatory from autumn 2014, recommended prior to that). You will have
to make an annual declaration that you are doing so, and keep receipts as
evidence.
I’ve got my own wood supply, can I use that?
Yes you can, as long as you do not also supply to other biomass
installations. “Woody biomass feedstocks” (this includes perennial energy crops
such as miscanthus as well as wood) grown on the same “estate” as an eligible
biomass system will be automatically treated as meeting the sustainability
criteria. DECC is also looking at a ‘proportionate approach’ for local
suppliers of wood fuel.
DOMESTIC RHI HEAT PUMP CRITERIA
Can I use my heat pump for cooling too?
No. Any cooling from heat pumps is not eligible.
How do I calculate the ‘renewable heat’ generated by a
heat pump?
The renewable heat is the heat taken from the ground, air or water, net of
the electricity that is needed to run the heat pump. The more efficient the
heat pump, the more renewable heat will be produced.
This efficiency is measured as a seasonal performance factor (SPF). For example: for every 1kWh of electricity used, the heat pump will generate 2.5 kWhs of heat averaged out over a year. To work out how much heat is renewable use the following formula:
Eligible heat demand = total heat demand x (1 – 1/SPF)
So if the SPF=2.5, 1 - 1/2.5 = 0.6 of the heat output will be eligible for RHI payments.
Is there a minimum efficiency for heat pumps?
The minimum SPF (seasonal performance factor) allowable for a heat pump to
qualify for the RHI is 2.5. This is based on an EU classification which states
that only those heat pumps with a SPF of 2.5 or more are considered renewable.
THE DOMESTIC RHI APPLICATION PROCESS
How do I apply?
Applications opened on 9 April 2014. For most people application is online at the Ofgem website. There are alternatives to make it accessible to all.
Don't be tempted by people who say they will do it on your behalf (for a fee). It's designed to be easy, and doing so may jeopardise your eligibility as the regulations don't allow for third party applications.
Is there anything else I’ll have to do?
You will have to declare annually that the system is still in use and meets
the scheme requirements; that it is in working order and maintained in line
with manufacturer’s instructions; and the current recipient is still entitled
to the payments. This is to ensure that you’re not continuing to receive
payments for heat that isn’t being generated.
You may be selected for spot checks. Ofgem will be checking some installations while they process applications, and some after they have been accepted onto the RHI. MCS certifying bodies will also be checking to make sure installers are carrying out work to a high enough quality. There is also a checking process in place for green deal advisors, to ensure standards are met.
Some installations will be chosen for metering to provide DECC with information about how the technologies perform.
If you refuse to comply with any of the above it may delay or prevent acceptance onto the scheme. If you are not meeting the ongoing requirements, your payments will stop.
I have already received a renewable heat premium payment,
can I apply for the RHI?
You must declare that you have received the RHPP – or any other public
funding you have received for the heating system – as part of your application.
It will be deducted from your quarterly payments over the life time of the
tariff. The deduction will also be altered in line with the RPI each April.
DOMESTIC RHI FUNDING
Is there any help with the upfront cost of installing a renewable heating system?
You may be able to get some financial support through a range of schemes which enables you to pay off the loan through the savings that result on your energy bill. This will not cover the whole cost of any of the renewable heating systems.
OTHER DOMESTIC RHI QUESTIONS
Who will benefit most from the domestic RHI?
The scheme is targeted at those off the gas grid and living in rural areas.
There are about 4 million off-gas homes in the UK, evenly split between rural
and urban areas.
The rural off-gas homes are generally heated by oil, LPG or electricity, and tend to be older, larger, solid walled properties that are not energy efficient. Because they are sparsely populated, and not suitable for heat networks, they are the properties that the tariff rates have been calculated for. BEIS hopes to support around 750,000 renewable systems by 2020, predominantly off the gas grid.
In 2011, the average cost of heating a three bedroom house was almost 50% higher for oil, and over 100% higher for LPG, compared with mains gas.
Can I keep a back-up system alongside my renewable heating?
You can have another heating system (either renewable or not), but if you want to claim the RHI you will have to install a meter on your heat pump, biomass boiler or hybrid system. The RHI will then be paid on meter readings (as opposed to deemed heat use). However, payments will be capped at the deemed amount of heat use. You will be responsible for the installation of any required meters, and ensuring they meet the requirements in the metering for payment technical supplement.
The exception to this is if you install solar thermal with a
heat pump or biomass system. Then you can make two claims for RHI – one for the
solar thermal, one for the heat pump or biomass. Both systems will be paid
according to the deemed amount, and will not need to be metered.
Room heaters, such as a wood burning stove (without a back boiler) do not count
as another heating system in this context.
What is the metering and monitoring package?
It is similar to a service contract. The meters will enable you and your installer to see the measured performance of your system online. The aim is to give you peace of mind that your system is working properly, and allow the installer to improve performance where possible and diagnose problems as they occur. The payment of £230 per year for heat pumps and £200 for biomass boilers is to reimburse you for the cost of the package over the 7 year life of the RHI payments. This package is not available for biomass stoves. In the first instance, it is only available to the first 2,500 applicants in the first year of the scheme.
What happens if I sell my property?
You must inform Ofgem, so payments can be transferred to the new owner.
What do I do if things go wrong?
If you can’t sort it out with your installer, then the process for
complaints is available on the Renewable
Energy Consumer Code website.
Can I install a log boiler stove that connects to the
heating system?
No, these are not allowed, as there's nothing to stop you burning coal in
them too. The only boiler stoves that are eligible are those burning biomass
pellets.
Non-domestic RHI
The RHI is open to all non-domestic installations of renewable heat. All systems must be metered. The incentive will be paid for 20 years to eligible technologies that have installed since 15 July 2009, with payments made for each kWh of renewable heat produced. The payments will be index linked.
The following technologies are eligible:
- commercial biomass (small, medium, large)
- solid biomass CHP systems (commissioned on or after 4 December 2013)
- water and ground-source heat pumps
- air-source heat pumps
- deep geothermal (commissioned on or after 4 December 2013)
- solar thermal
- biogas
- biomethane injection.
Tariff rates for the Non-domestic RHI:
Current and historical tariffs for Non-Domestic RHI are logged on the Ofgem website.
FAQs: non-domestic RHI
I understand the non-domestic 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. Ground source heat pumps capable of simultaneous
heating and cooling will have to measure heat drawn from the ground and provide
quarterly meter readings. They must also provide a capacity value based on the
heating function only.
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. In practice the decider tends to
be whether or not you pay business rates. If you don't it will probably count
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 non-domestic 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 to air heat pumps included?
The government says that although these do produce renewable heat, it does not
want to risk incentivising the installation of separate heating and cooling
AAHPs in order to claim the RHI, rather than the more energy efficient
reversible air to air heat pumps. It will revisit the potential to include
reversible AAHPs in the 2014 review.
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% internal 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.
More information on the renewable heat incentive
From the blog
Important changes to the Renewable Heat Incentive scheme coming on September 20th (Sep 2017)
Changes to Renewable Heat Incentive tariffs from 1 January 2017 for new applicants (Dec 2016)
Owners of new builds no longer need to wait to get the Renewable Heat Incentive (April 2016)
Changes to the Renewable Heat Incentive tariff rates and scheme came into effect on 1 April 2016 (April 2016)
DECC announces Renewable Heat Incentive changes and consultation (Mar 2016)
Lower RHI and tighter related fuel use regulation from Oct 2015
Risks to being an early adopter of renewable energy (Feb 2014)
I've got RHPP - is it worth applying for RHI? (Oct 2013)
I'm on mains gas, am I eligible for the domestic RHI? (Nov 2012)
Domestic or not: where's the divide for RHI? (Nov 2012)
Can I get domestic RHI if I'm replacing a renewable heating system? (Sep 2013)
How is the seasonal performance factor of my heat pump calculated? (Sep 2013)
Will my Immersun qualify for RHI payments? (Aug 2013)