Renewable Heat Incentive Tariffs

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Renewable Heat Incentive (RHI) Explained

 

The renewable heat incentive scheme was introduced by the government to provide financial assistance for the installation of renewable heating systems. You will be paid for the renewable heat energy you produce! Technologies eligible for the RHI are: ground source heat pumps, air source heat pumps, biomass boilers, biomethane and solar thermal. The RHI is open to both the commercial and domestic sectors.

Commercial  Renewable Heat Incentives RHI

The renewable heat incentive phase 1 was introduced in November 2011 for the non-domestic sector which includes industrial, commercial, public sector and not-for-profit organisations. RHI payments are made over twenty years and are paid quarterly to the system owner.  It has also been announced that from 2014 air to water heat pumps will receive a payment of 2.5p/kWh.

Renewable heat incentive tariff rates for commercial installations are shown in the table below.

TechnologySystem size(kW)8.7
Ground source heat pumpsUp to 2008.7
Air source heat pumpsAll2.5
Solar thermalUp to 20010.0
Biomass boilersUp to 2008.6
200 - 10005.0
Over - 10002.0
BiomethaneAll 7.3

 Domestic RHI

The renewable heat incentive phase 2 will be introduced for householders in the Spring of 2014. RHI payments will be made for seven years and broadly speaking is designed to cover the cost of equipment and installation. This is only applicable to technologies which are 45kW or less in size.

Renewable heat incentive tariff rates for domestic installations are shown in the table below.

TechnologyTariff (p/kWh)
Ground source heat pumps18.8
Air source heat pumps7.3
Solar thermal19.2
Biomass12.2

Minimum requirements in order to be able to claim RHI payments

In order to qualify for RHI payments the following is required:

  1. Minimum of 200mm loft insulation and cavity wall insulation. This will be qualified as part of a Green Deal Assessment (GDA) of your property where an EPC certificate will be issued.
  2. Equipment and installer must be MCS certified.

How RHI payments are made

Payments are based on kWh of renewable heat generated and calculated by estimating the property’s expected heat use per year. The annual payment is calculated by multiplying this ‘deemed’ heat use/load by the applicable tariff rate.

TechnologyCalculation basis
Heat pumps, biomass and hybrid systems The estimated heat use of a property is determined by a Green Deal Assessment and recorded on an EPC certificate.
Heat pump installationsThe renewable heat generated by a heat pump is determined by the heat pumps efficiency and the heat demand of the home.
Solar thermalHot water production as determined by the MCS installation process is what is used to calculate a deemed annual payment figure.

Example of a heat pump Renewable Heat Incentive calculation

A four-bedroomed house has an EPC certificate indicating that its heat demand is 30,000kWh per year. An air source heat pump with a Seasonal Performance Factor (SPF)of at least 2.5 has been installed.

RHI payments for this example are calculated by using the formulae:

Renewable heat produced = total heat demand x (1-1/SPF)

Where,

  • Renewable heat produced, is what the RHI payments are made against.
  • Total heat demand, is the property’s heat demand as indicated on an EPC certificate.
  • SPF, is short for Seasonal Performance Factor or the efficiency of the heat pump e.g. a heat pump with an SPF of 2.5 produces 2.5kWhrs for every 1kWh of electricity used.

(Heat pumps must have an efficiency of 2.5 or better for RHI eligibility).

So in the example,

Renewable heat produced = 30,000 x (1-1/2.5)
Renewable heat produced = 18,000
RHI for an air source heat pump = 7.3p/kWh
Therefore, RHI payments per year = 18,000 x 0.073 = £1314.00

Seasonal Performance Factors (SPF)

renewable heat incentive scheme

SPF is used to calculate the renewable energy contribution from a heat pump, therefore, the higher the SPF, the higher the renewable contribution and hence higher the RHI payments.

A star rating system determines how efficient a system has been designed and installed. This is a measure of the heating circuits flow temperature, where 6 stars are awarded to the lowest flow temperature, with two stars being the lowest eligible for RHI payments.

Hybrid heating system

Where a renewable heating system is installed alongside another heating system (fossil fuel or even another renewable heating source)RHI payments will be made against metered energy use and not from deemed calculation. These payments will be capped at the deemed amount. Metering means that extra equipment is needed to measure the proportion of energy usage from the renewable source, and DECC is offering a metering and monitoring support package to cover the cost of this. For heat pumps the package will pay £230 per year and for biomass this will be £200 per year for the 7 year duration of the RHI.

Non hybrid system

You can still opt to have your renewable heating system metered if you have a single renewable heat source and receive the additional annual payments from DECC’s metering and monitoring support package.

For more information about metering click here => A Guide to Metering

Application for  Renewable Heat Incentive RHI

Applications will open in spring 2014 and will staged to allow Ofgem to manage legacy and new applicants of renewable heating systems. Legacy owners are those who installed between the 15th July 2009 and launch of the RHI scheme.

Applicants are invited to apply according to the schedule shown in the table below:

PhaseNew applicantsLegacy applicants RHPP*Legacy applicants No RHPPLegacy applicants RHPP voucher before 20 MAY 13
Months 1 to 3YesYes
Months 4 to 6YesYesYes
Months 7 to 12YesYesYesYes
Year 2Yes

*RHPP – A voucher scheme running up until the end of March 2014 for one of upfront payment towards the cost of heating technology. This is replaced by the RHI scheme.

All legacy applicants must apply within the first year of the RHI being introduced and new applicants can apply as soon as the system is commissioned but within a year of the commissioning date.

Click on this link to learn more about the renewable heat incentive.

https://www.ofgem.gov.uk/environmental-programmes/renewable-heat-incentive-rhi
See also:

Grants and Incentives
Feed in Tariff
Grid Tied Scheme Explained
Low Carbon Emission