By seeking to reduce the UK's reliance on gas to heat our homes, the Domestic Renewable Heat Incentive, is a landmark scheme for the UK domestic energy sector.
... and its introduction is very timely.
Trouble on the other side of Europe
UK households are heavily dependent on gas to heat our homes.
Up until the early 2000s the UK was a net exporter of gas. However, we are securing less and less of our gas supply from the North Sea. The UK is becoming much more reliant on the international gas markets and is now highly vulnerable to fluctuations in the world gas prices.
Ukraine may be on the other side of Europe but what is happening there could have major impact on our gas prices.
This is where the Renewable Heat Incentive comes in.
The Domestic RHI was launched 9 April 2014 and is open to homeowners, private landlords, social landlords and self-builders.
The RHI is the main scheme of the Government's Heat Strategy. The Government has hailed the RHI as "the world’s first long-term financial support programme for renewable heat."
How does the Renewable Heat Incentive work?
The RHI is a financial incentive scheme to encourage households to install renewable heating in their homes.
The RHI pays participants of the scheme that generate and use renewable energy to heat their homes. By increasing the generation of heat from renewable energy sources, the Government expects the RHI to help reduce our greenhouse gas emissions.
How much will the Renewable Heat Incentive pay participants?
The RHI will pay you a "tariff" per unit of heat generated for the first seven years.
The tariffs are paid per kWh of renewable heat generated based on the following rates (typical annual payouts in brackets):
air source heat pumps 7.3p/kWh (£850)
biomass boilers and biomass pellet stoves with back burner 12.2p/kWh (£2,000)
ground source heat pumps 18.8p/kWh (£850)
water source heat pumps 18.8p/kWh (£850) and
solar thermal (hot water solar panels) 19.2p/kWh (£400)
The above rates will rise annually in line with inflation. The tariffs are paid quarterly.
If you opt for a metering and monitoring package, you will receive and additional payment of £230 per year for heat pumps or £200 per year for biomass boilers.
Does my home qualify for the Renewable Heat Incentive?
If your heating system was installed after 15 July 2009 you may qualify.
You must use an approved system that has been fitted by an installer who is MCS certified or equivalent (for example, Solar Keymark) and a member of the Renewable Energy Consumer Code (RECC).
The Ofgem website provides an up-to-date list of approved systems.
Before applying for the RHI you will have to have a Green Deal Assessment. You will be expected to install loft and cavity wall insulation if this measure has been identified in your Green Deal assessment.
How do I apply for the Renewable Heat Incentive?
You can apply online at the Ofgem website.
You will need the following documents to hand:
- the MCS certificate that comes with your new heating system (this will be given to you by your installer), and
- your Green Deal Assessment (including the Energy Performance Certificate that forms part of the Green Deal Assessment).
Is the Renewable Heat Incentive worth it?
Households that are off mains gas and that install any of the approved systems could save on their energy bills plus receive a quarterly payment under the scheme.
Households that use mains gas will benefit from greater energy security and will be protected from fluctuations in gas prices.
The cost of installing many of the approved systems is likely to be substantial (A good biomass boiler can cost in excess of £10k). However, you may qualify for financing through the Green Deal to help cover the upfront costs.
Check out the Ofgem domestic RHI factsheet which has been prepared for people considering or intending to apply.