Renewable Heating Incentive Caps For Domestic Systems

As of the 20th September 2017 a budget cap is to be introduced to the Renewable Heat Incentive (RHI) scheme for domestic installations.

The Department of Business, Energy and Industrial Strategy (BEIS) is introducing annual heat demand limits for technologies including air-source heat pumps (ASHP), ground-source heat pumps (GSHP), biomass burners and solar thermal. The cap prevents domestic users earning on their installations above 25,000kWh per annum. Hence for 30,000kWh per annum installations, users will lose out on 5,000kWh worth in RHI.

The BEIS has, however, outlined that the RHI rates for the above technologies stated are set to increase. Currently for biomass boilers and ASHP the RHI rates stand at 3.85p and 7.63p respectively. As of the 20th of September these are set to increase to 6.54p for biomass boilers and 10.18p for air source heat pumps.

The increase in GSHP tariffs shows a marginal increase (22p) whilst tariffs for solar thermal technologies are set to remain at 20.06p. However, this financial payback scheme is only in applicable to the consumer for the first 7 years of installation. After this time no payments for production will be received.

Potential domestic consumers should therefore consider each specific technology, the current RHI and the overall capital cost of installation to determine the overall payback time. Further information regarding the RHI and the most recent tariffs can be found on the BEIS website.

The Greener Group offers a 16,000kWh ASHP installation for approximately £11,000. The table below provides a rough payback time guide for the first 10 years after installation. The RHI scheme is taken into account for the first 7 years after installation based on the most recent BEIS tariffs. Typical Domestic Consumption Values (TDCVs) are obtained from the Ofgem website, where the price per kWh of gas is estimated at 4.3p.

It should be noted that the payback time does not take into account the cost of electricity. It is estimated that for every 4kWh of power produced, the ASHP requires 1kWh of electricity.

More information regarding ASHP, GSHP and Biomass Burners can all the found here.

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