Guides

Renewable Heat Incentive (RHI) Explained

Plans for a Renewable Heat Incentive (RHI) - the first scheme of its kind in the world - have been unveiled by the UK government for England, Scotland and Wales. Here we answer your questions on what the Renewable Heat Incentive is - and how you could benefit from it.

to find out how to apply for the RHI payment to install green heating technology in your home see our guide here   http://www.energyshare.com/guides/funding/2991/

What is the Renewable Heat Incentive?

The RHI is a government incentive scheme designed to reward buildings that are heated using renewable energy. Industrial, commercial, public sector, community buildings - and in a second phase, residential homes - that install renewable home heating will all be eligible to apply for the RHI, which will guarantee regular 'tariff' payments for 20 years based on the amount of renewable energy they generate.

A total of £860m has been earmarked for the RHI, to help encourage the installation of more renewable heat technologies such as solar thermal (water heating) panels, heat pumps and biomass boilers (which use wood pellets, chips or logs), and ultimately reduce UK carbon emissions by 44 million tonnes by 2020.

When will the RHI be introduced?

The first phase of the RHI, announced in March 2011, will be focused on larger industrial and commercial, as well as public and community buildings. Then from October 2012, when the government's Green Deal plankicks in, homes will also be able to join the RHI scheme.

Before that, in order to encourage take-up of renewable heat technologies, RHI 'Premium Payments' are being made available from 1 August 2011. These are one-off payments to help homes cover the initial cost of getting a new renewable heating system installed. £15m have been set aside for this and will help around 25,000 households. See 'What is a Renewable Heat Premium Payment?' below for more details.

How will the RHI payments work?

After joining the RHI scheme, homes will receive a quarterly 'tariff' payment for every kilowatt hour (kWh) of renewable heat they produce, measured using an installed 'heat meter', and payable for 20 years. Tariff levels have not yet been set out but are likely to vary between different technologies.

Once the scheme is up and running, energy regulator Ofgem will be responsible for dealing with applications and payments.

Which renewable heat technologies will be eligible?

• Solar thermal heating system
• Biomass or woodburning boiler
• Ground source heat pumps
• Air source heat pumps

You can find out more about these technologies - including how to determine if your home will be suitable to install any of them - in our dedicated guides: ground source heat pumps, solar panels, wood heating systems and more home heating systems.

I already have a renewable heating system installed. Will I be eligible for the RHI? 

Owners of all eligible renewable heating systems installed on or after 15 July 2009 will be able to apply for the RHI once it's introduced. If your heating system was installed before this date, you will not be eligible for RHI payments.

How much can I earn from the RHI?

The RHI (along with RHI premium payment - see below) will help to reduce the time it takes for households to recoup the initial costs involved in installing and maintaining a renewable heating system, and start saving you money overall.

However, the government has not yet revealed how much it will pay to domestic homes though RHI tariffs, so it's not possible to calculate how much the payments or payback time might be. It's likely that different technologies will have different tariffs.

to find out how to apply for the RHI payment to install green heating technology in your home see our guide here   http://www.energyshare.com/guides/funding/2991/

What is the RHI Premium Payment?

£15m has been set aside to help around 25,000 households install a solar water heating system, a biomass boiler or heat pump technology ahead of the RHI starting for homes in October 2012.

As with the boiler scrappage scheme, there is a limited pot of money and is given as a first come first serve basis, so there may be households that miss out on the grant. Householders can apply for the one-off payment from 1st August 2011 and until 31 March 2012.

• £300 for a solar thermal heating system (available to all households regardless of the type of heating system used)
• £850 for an air source heat pump (for homes without mains gas heating only)
• £950 for a biomass boiler (for homes without mains gas heating only)
• £1,250 for ground source heat pump installations (for homes without mains gas heating only). 

Bear in mind that these are relatively small amounts when set against the costs of these technologies including installation (about 10%) - which can run into thousands. Homes receiving this payment will then go on to receive RHI tariff payments from October 2012, provided they meet the eligibility criteria (details of which are not yet available).

How much does it cost to install a renewable heating system?

Renewable technologies can widely differ in size, scope and complexity, so pinpointing a typical cost is tricky. However the Energy Saving Trust has the following guidance: 

• Solar water heating: around £4,800
• Biomass boiler: around £11,500
• Ground source heat pumps: between £9,000 and £17,000
• Air source heat pump: between £6,000 and £10,000

Is the RHI different to the Feed-in Tariff?

The RHI is similar to the Feed-in Tariff (FIT) scheme, but supports different types of renewable technology.

The FIT pays households and communities which generate their own electricity from renewable sources such as solar electricity (PV) panels or wind turbines, while the RHI is designed specifically for technologies that heat buildings. FIT pays households for excess electricity exported out to the National Grid.

Because heat cannot be sold to other users, there's unlikely to be an equivalent to the export tariff element that's available with the FIT.

How do I apply for the RHI?

The Premium Payment scheme is run by the Energy Saving Trust and an information line and website are available to provide people with more information. 

Householders can call 0800 512 012 or visit  www.energysavingtrust.org.uk/RHPP

What's the Which? verdict on the Renewable Heat Incentive?

Here's what Which? chief executive Peter Vicary-Smith had to say: 'With energy prices such a concern for consumers, many thousands of households will be eager to take advantage of the RHI and start generating their own energy.'

'But it's vital that people are sold the right renewable heating system to suit their home. If horror stories start to emerge of people spending thousands of pounds on equipment that's either unsuitable or isn't installed properly, then confidence in the scheme will be severely undermined.'

Which? has already uncovered problems with mis-selling of solar thermal heating systems so we believe it's vital that the trade authorities monitor the market and come down hard on rogue firms. A Which? investigation in May 2010 found that 10 out of 14 firms made misleading claims about the benefits of installing a solar thermal heating system, one of the technologies included in the RHI.

What can I do now?

If you're considering installing a renewable heating system in your home to take advantage of the RHI when it is introduced for homes, we recommend taking the following steps first.

• Get your 'house in order' – before spending thousands on renewable technology, make sure you're keeping your heat in your home. You should have good loft insulation and, if appropriate, wall insulation.
• Make sure the renewable technology you choose is right for your home and your specific needs - the Energy Saving Trust's home energy generation tool is a good first port of call to decide which, if any, are suitable.
• Don't take the first quote - shop around.
• Use a reputable company accredited by the Microgeneration Certification Scheme. Try Which? Local for recommended firms in your area.

to find out how to apply for the RHI payment to install green heating technology in your home see our guide here   http://www.energyshare.com/guides/funding/2991/

http://www.which.co.uk/environment-and-saving-energy/energy/guides/renewable-heat-incentive-rhi-explained