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Renewable Heat Incentive

The Renewable Heat Incentive (RHI)

The Renewable Heat Incentive (RHI) has been developed by the Renewable Energy Association (REA) to provide financial support to encourage homeowners, businesses and communities to switch to renewable heating technology.

The scheme & information in this article was last checked on 9th January 2019

PLEASE NOTE: The Renewable Heat Incentive will continue until March 31st 2022 when it will be replaced by the new Clean Heat Grants scheme. Under this scheme, homeowners can receive up to £4,000 towards the upfront cost of installing eligible renewable heating systems. Find out more about Clean Heat Grants.

The aim of the Renewable Heat Incentive scheme was to increase heating generation from renewable energy sources to 12 per cent which could potentially save up to 60 million tonnes of CO2 by 2020. Heating currently accounts for 47 per cent of the UK’s CO2 emissions and 60 per cent of average domestic energy bills.

The Renewable Heat Incentive went live in April 2014. It is open to homeowners, social and private landlords and self-builders. New installations and systems installed since 15 July 2009 are eligible as long as they meet the criteria.

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What’s the purpose of it?

The aim of the RHI is to offer the first comprehensive framework of support for renewable heat in the UK. The REA has put forward the scheme to encourage individuals to switch to renewable heat alternatives as heat is the biggest use of energy in the UK, and is mainly supplied by fossil gas. And heat also accounts for 47 per cent of the UK’s CO2 emissions.

The UK is in fact has one of the lowest contributions of renewable heat of all EU countries. The likes of Sweden produces half of its heat through renewable and the EU average is over 10 per cent.

So to counteract the UK’s shortfall in renewable heat energy, the RHI is offering a long-term stable framework of tariffs to inspire confidence in consumers to deflect to renewable and drag the technology into the mainstream for all types of heating requirements.

How will it work?

The RHI will pay a fixed amount per year to those who opt to change from heating systems operated by fossil fuels to renewable options such as:

The payments made will either be made on the exact amount of heat produced or on the amount it is anticipated the installation will provide. The former means you’ll need to have a meter fitted to your system, in the same way as gas and electricity is metered, to account for the heat produced while the latter is paid on an estimate.

And unlike the Feed-in Tariffs which limits payments to installations with a maximum of 5MW, the RHI will apply to heat installations of any size.

The Government has confirmed that payments will be made on a quarterly basis over seven years. The following tariff rates for the domestic RHI apply to applications submitted between 1 January 2019 and 31 March 2019:

Solar thermal panels (flat plate and evacuated tube) 20.66p/kWh
Ground source heat pumps 20.46p/kWh
Biomass boilers and biomass pellet stoves with a back boiler 10.49p/kWh
Air source heat pumps (air-to-water) 6.74p/kWh

Households with biomass boilers and heat pumps who install a metering and monitoring package could potentially also receive additional payments per annum of £200 and £230 respectively.

To be eligible for RHI payments you will be required to have a Green Deal assessment and where appropriate have cavity wall insulation and a loft insulated. If you have a biomass system the installation will need to adhere to fuel sustainability and air quality requirements.

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What are the benefits?

  • The first benefit will be a cut in the cost of your energy bills. Renewable heat production means you’ll get paid for the heat you generate. Even the additional costs of powering your system (e.g. electricity to power a heat pump) will be far less than or roughly the same as the payment you receive from the RHI. In fact, the REA is predicting a £600 net profit for the average homeowner.
  • By generating your own renewable heat you won’t be relying on either gas or oil – both of which the price has fluctuated a lot in recent years. You’ll still be affected as the systems rely on electricity or other fuel to run, but you won’t feel the brunt of the changes like you would with a conventional heating system.
  • A grand total of just one single per cent of heat currently generated in the UK comes from renewable – that means 99 per cent is generated from oil, gas fuel or electricity power stations. The aim of the RHI is to improve the renewable count to 12 per cent to reduce the CO2 emissions of the country.

What are Renewable Heat Systems?

A renewable heat system is any type of installation which allows a property to generate central heating and water heating from a renewable source of energy like the sun.

Which technologies are eligible?

The following all qualify for the RHI:

  • Air source heat pumps (air to water only)
  • Ground source heat pumps
  • Solar thermal panels (flat plate or evacuated tube only)
  • Biomass boilers
  • Biomass pellet stoves with an integrated boiler predominantly designed for space and hot water heating

The introduction of the Ecodesign of Energy-related Products Directive (ErP) has created changes which affect heat pump eligibility. More information about this and other eligibility criteria can be found on the Energy Saving Trust website.

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