Renewable Heat Incentive (RHI)
The Renewable Heat Incentive (RHI) is a UK Government scheme set up to encourage uptake of renewable heat technologies among householders, communities and businesses through the provision of financial incentives. The UK Government expects the RHI to make a significant contribution towards their 2020 ambition of having 12 per cent of heating coming from renewable sources. The Renewable Heat Incentive is the first of its kind in the world.
There are two phases to the introduction of the RHI:
- Phase 1: the introduction of the RHI for non-domestic installations in the industrial, business and public sectors.
- Phase 2: the domestic element of the RHI, is expected to be introduced in spring 2014 following the consultation published in September 2012 and more recently the UK Government Heat Strategy.
Phase 1 – Non-domestic RHI scheme
Phase 1 of the RHI provides financial incentives to eligible, non-domestic renewable heat generators and producers of biomethane, for the life of the installations or up to a maximum of 20 years.
Non-domestic sectors include industrial, commercial, public and non-for-profit sectors. A non-domestic installation might be a large-scale industrial heating systems or a smaller community heating project.
Ofgem is responsible for administering the scheme.
Phase 2 – Domestic RHI scheme
The details of the domestic Renewable Heat Incentive (RHI) were announced by the UK Government on 12 July 2013. The Government has released a document setting out the final policy for the domestic RHI, subject to state aid and parliamentary approval.
The main details of the scheme are listed below:
- The domestic RHI is a UK Government financial support scheme for renewable heat, targeted at, but not limited to, off gas grid households.
- the domestic RHI scheme covers England, Wales and Scotland only
- DECC intend that the scheme will open to applications in Spring 2014 and will be administered by Ofgem
- Ofgem guidance will be available before the launch of the scheme on how to apply and the information that will need to be provided
- the scheme will cover single domestic dwellings and will be open to owner-occupiers, private landlords, Registered Providers of Social Housing, third party owners of heating systems and self-builders. It will not be open to new build properties other than self-build
- it will be open to anyone in these groups who installed an eligible technology since 15th July 2009, provided they met the scheme criteria
- for those who have installed a renewable heating system before the launch of the scheme in Spring 2014 and since 15 July 2009 (legacy applications), the date they can submit their application may not be from when the scheme first opens and will be phased over time. This is to help manage the potentially large volume of applications submitted when the scheme opens and to avoid a backlog. Further details on the phasing will be provided by Ofgem prior to launch
- the financial support will be paid at a set rate per unit of renewable heat produced (kilowatt hour or kWh), for seven years, to the owner of the heating system
- the scheme will support air source heat pumps (ASHP), biomass systems, ground source heat pumps (GSHP) and solar thermal technologies. The support rates vary depending on the technology installed:
Air source heat pump |
Biomass | Ground source heat pump | Solar thermal | |
| Tariff (p/kWh renewable heat) | 7.3 | 12.2 | 18.8 | 19.2 |
- for biomass the renewable heat generated will be based on an estimated figure of heat demand from an Energy Performance Certificate (EPC)
- for heat pumps the renewable heat generated will be based on an estimate of the heat demand from an EPC combined with an estimate of the heat pump’s efficiency
- for solar thermal systems the renewable heat generated will be based on the estimate of system performance completed as part of an Microgeneration Certification Scheme (MCS) installation.
- to help improve performance of renewable heating systems, there will be an extra incentive for applicants who install metering and monitoring service packages, of £230 per year for heat pumps and £200 per year for biomass boilers
- to be eligible the system must be certified under the Microgeneration Certification Scheme (MCS) scheme and meet relevant standards for each technology, including limits on harmful emissions for biomass systems
- legacy biomass installations, installed between 15th July 2009 and the launch of the scheme in Spring 2014, will not need to meet the emissions limits requirement.
- all applicants are required to complete a Green Deal Assessment (GDA) before applying and to ensure they meet minimum energy efficiency requirements of loft and cavity insulation where required by the GDA
- any public grants previously received, including RHPP, will be deducted to avoid a double subsidy
- tariffs will change annually in line with the Retail Price Index (RPI)
- DECC intend to introduce a system of degression to control the costs of the scheme. This is where tariffs are reduced over time for new applications to the scheme.Those who have already secured their tariff will not have their tariff reduced due to cost control. DECC will announce further details on the cost control policy in Autumn 2013.
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