What is the Renewable Heat Incentive?

Last updated: 10 September 2020

In this guide, you’ll learn the following:

  • What is the Renewable Heat Incentive scheme?

  • What recent changes have there been to the RHI?

  • What technologies qualify for the scheme?

  • Are there additional eligibility requirements?

  • How do I apply for the Renewable Heat Incentive scheme?

  • How are RHI payments allocated?

  • How does metering work?

What is the Renewable Heat Incentive?

The Renewable Heat Incentive (RHI) is a government scheme designed to encourage the uptake of renewable heat energy technology. It was rolled out to English, Scottish, and Welsh households in 2014 to help the UK meet renewable energy targets and reduce carbon emissions. 

In 2019, the UK sourced 12.3% of its energy in general – but only 7.9% of its heat in particular – from renewable sources. The Renewable Energy Directive attempts to set annual targets, with the UK’s target for 2020 currently set at 15% for all energy, and 12% for heat. To help meet these targets, the government promotes the use of renewable heat sources within the home by offering a cash incentive. The Department for Business, Energy & Industrial Strategy (BEIS) makes policy decisions about the RHI, and industry regulator Ofgem takes care of the day-to-day admin. 

Examples of eligible heat sources could include everything from solar thermal to air source heat pump systems. If your installation and household are eligible for the scheme, you could receive quarterly cash payments for seven years. The payment amount will depend on several factors, including the amount of renewable energy generated and the tariff rates. Thousands of people have already joined and received payments for their clean, green heat sources, including households both on and off the national grid. Switching to renewables also results in lower energy bills.

What recent changes have there been to the Renewable Heat Incentive?

Since it was first launched in 2014, there have been several changes to the Ofgem RHI rules. This is because the BEIS reviews its policies from time to time. In March 2016, important changes were announced which have come into effect in two stages:

  • Changes to the installation standards for heat pumps, effective from 31 July 2017:

If you’ve submitted an application for a heat pump with a first commissioning date after 30  October 2017, you’ll need to be sure it meets the latest criteria under the Microgeneration Certification Scheme (MCS) to ensure your installer complies with the latest industry standards. 

  • Payment frequency, from 1 May 2020:

Payments continue to be made on a quarterly basis but changes to the way payments are made mean the date you receive them may be slightly later than previously.

Be sure to check the Ofgem website when you’re applying for the Domestic RHI to keep up to date with any other changes in the scheme. 

Which technologies qualify for the scheme?

The Domestic RHI is designed for household energy improvement. To qualify, there are several different types of renewable heating technologies that you could install within your home. Suitable systems include the following:

  • Ground source heat pumps

  • Air source heat pumps

  • Biomass (wood-fuelled) boilers

  • Biomass pellet stoves with integrated boilers

  • Solar thermal panels to provide hot water 

Not all heat sources are supported by the RHI. Here’s a quick rundown of what’s not eligible for the scheme: 

  • Air-to-air heat source pump system

  • Pellet stoves without back boilers

  • Hybrid PVT

  • Log stoves 

If you opt for a biomass stove or boiler, the biomass fuel must be sourced from an approved sustainable biomass supplier.

The renewable energy list is not exhaustive and is subject to change, so be sure to check the Ofgem site for the latest rules. The payment amounts will depend on the type of technology, the available tariffs, and metering, so it’s worth weighing these different factors when determining which type of technology to install. 

Are there additional eligibility requirements?

Yes. In addition to choosing a supported heating technology, you need to meet the following additional eligibility requirements:

  • You must apply for the RHI within one year of your system’s commissioning date.

  • Single domestic dwellings are eligible. 

  • Owner-occupiers, private landlords, and self-builders who have installed qualifying technology are eligible. 

  • Registered providers of Social Housing may apply. 

  • The building must have an Energy Performance Certificate (EPC). 

However, while self-build projects are eligible for RHI support, other new-build properties don’t qualify under the Domestic scheme. 

How can I apply for the Renewable Heat Incentive scheme?

Apply on the Ofgem website, or phone the Domestic RHI Applicant Support Centre on 0300 003 0744. The phone line is open from Monday to Friday between the hours of 09:00 and 17:00. You can also email DomesticRHI@ofgem.gov.uk. 

To get started, gather all the relevant information about your property and the heating technology you’ve chosen to install: 

  • Your name and address

  • Energy Performance Certificate (EPC) number for your property

  • The MCS installation certificate number for your heating system

  • Your banking details

  • The Seasonal Performance Factor (SPF) if applying for a heat pump

  • Installing Metering Questions form (if you’re applying for systems requiring metering)

You still may be eligible for RHI assistance if you’ve received a government grant or public funds. However, in this case the application will ask for additional information, including the date you received funds, the amount you were paid and any other figures regarding the cost of installation. 

How are RHI payments allocated?

If your application is approved, you’ll receive quarterly payments from Ofgem for the next seven years. The specific amount will depend on the type of technology you’ve installed, and the current tariffs defined by the UK government. The idea is that these tariffs compensate for the cost of installing and operating your renewable heating system. 

The heat required to warm your property will be estimated, with payment amounts based on this amount. This is calculated in different ways depending on the type of technology. The following table covers systems that don’t need metering for payment:

TechnologyBiomassAir source heat pumpGround source heat pumpSolar thermal system
Heat demandHeat demand figure listed on your EPCHeat demand figure listed on your EPC, adjusted by your heat pump’s efficiency**Heat demand figure listed on your EPC, adjusted by your heat pump’s efficiency**Estimated annual generation from your MCS certificate
Annual Heat Demand Limit (kWh)**25,00020,00030,000N/A
Current Tariff Rate6.97 p/kWh10.85 p/kWh21.16 p/kWh21.36 p/kWh
Annual paymentHeat demand x Tariff rate = Annual payment***Heat demand x Tariff rate = Annual payment***Heat demand x Tariff rate = Annual payment***Heat demand x Tariff rate = Annual payment***

*Measured as a Seasonal Performance Factor (SPF) rating

**Applies to applications for systems after 20th September 2017.

***The annual payment is divided by four and paid quarterly.

Annual changes to payment rates

Rates are adjusted annually according to the Consumer Prices Index (CPI). Tariffs might also be reduced over time for new applicants, due to the scheme’s ‘degression’ system to regulate payments. There has been no digression applied to the tariff rate since 2017.

Other adjustments

Your payment amounts will also be adjusted if you’ve already received public funds or a government grant. One example of this would be the Renewable Heat Premium Payment. You’ll need to note this on your application, and this amount will be used to offset your domestic RHI payments

How does metering work?

In most cases, domestic systems payments are based on estimated figures pertaining to your system’s heat output. While this is based solely on the EPC in the case of biomass technologies, in others, meters are used to determine how much heat is produced. One of the most recent changes to the RHI scheme states that any new heat pumps registered must be metered, for this reason. 

There’s also an optional monitoring service called the Metering and Monitoring Service Packages (MMSP). These are used to ensure your renewable heating system is in full working order. You can sign up for MMSPs with your systems installer, providing a smart feedback loop of data that alerts the installer if something isn’t working correctly. They’re available for ground source heat pumps, air source heat pumps and biomass pellet boilers. If you decide to sign up for an MMSP, you’ll be paid a bit extra as part of the RHI to cover the cost of this added package. Sign up for this at the same time as your application to receive MMSP payments right from the start. 

Is the Renewable Heat Incentive right for me?

If you meet the eligibility requirements and are willing to do a little research to see which renewable heat source is best for your property, the RHI could be a great option. Systems like ground source heat pumps are impacted by the soil conditions, while solar panels won’t be as efficient in shaded areas. Clay-based soil retains more heat than sand, for example – so a good systems installer will assess your ground conditions, home layout, and other factors to give personalised advice. 

Although it does take some time and effort, the benefits of installing renewable heating are huge. You not only have access to a more efficient source of heating for your home, but you could be eligible for quarterly cash payments from the government to offset your energy bill.

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Published on Wed 23 Oct 2019 03.30 GMT