Renewable Heat Incentive – April 2017 Update

Since writing this title, some news has emerged to suggest that any changes may not come into effect until June. The consolation report has now been put in front of parliament and a response/result could take up to 8 weeks. Whatever the case, some changes are coming to the Renewable Heat Incentive in the coming weeks or months – so be prepared.

The RHI story so far

The Renewable Heat Incentive (RHI) has been supporting the installation of renewable heating technologies since 2014. It is a scheme designed to support the uptake of renewable energy and can be neatly summed up by the new Minister of State for Energy and Intellectual Property:

“The Renewable Heat Incentive (RHI) was introduced to help kick-start the transition to low carbon heating in the UK, giving help to all in moving from conventional forms of heating to low-carbon alternatives. The scheme provides financial incentives to households and nondomestic consumers, including public bodies and charities, to help bridge the gap between the cost of renewable heating systems and those conventional alternatives.”

The scheme has seen the deployment of thousands of installations across a range of renewable and low energy heating products for both domestic and commercial uses. However, it has not been without its ups and downs – attributed to deployments caps, tariff cuts and installation deadlines. But, in general, the scheme has been a success and received a government pledge for further support for the next few years at least.

Following the pledge, it was also made clear that the scheme would undergo considerable reforms using the knowledge and experience gained from the last three years of operating the scheme.

Changes to the Renewable Heat Incentive – Spring 2017

The RHI will remain in the same format both commercially (non-domestic) and residentially (domestic) but both will undergo considerable changes. True to form, the government consultation is not easy to fully understand and there’s been no confirmation of dates when the changes will come into play. It has been described as “spring 2017”. To keep things simple, we’ve pulled out the main points from the document relating to each technology relating to the domestic RHI – you can find the full report here.

The Domestic RHI in Spring 2017

So, what is the RHI all about? To receive support through the domestic renewable heat incentive scheme, households must install an eligible technology to heat their home. They can then apply for financial support to help cover the cost of their systems. Eligible technologies include biomass boilers and stoves, air source and ground source heat pumps and solar thermal systems. The technologies must be fitted by a qualified installer, certified by the Microgeneration Certification Scheme (MCS). This helps protect consumers by ensuring the technologies meet certain standards and are fitted correctly.

Each technology is supported through a tariff which is set at a certain level. The tariffs are shown as pence per kilowatt hour (p/kWh) and how they are paid can vary.

The payments a household receives depends on the applicable technology tariff and the annual heating requirements of the property. For most participants, the property’s heating requirement is taken from the Energy Performance Certificate (EPC). This is referred to as “deeming” the heat requirement of the property. In some cases, for example in second homes, heat meters are required to determine the exact amount of heat being supplied by the system.

What’s happening to the Renewable Heat Incentive in 2017?

Firstly, the scheme will continue to support all four technologies currently supported by the scheme. The technologies included are air or ground source heat pumps, biomass boilers and solar thermal water heating.

Air Source and Ground Source Heat Pumps

It is generally goo news for heat pumps – the tariffs are being increased for both technologies. However with the tariff increases comes heat demand caps.

  • The tariffs for new ASHPs and GSHPs will be increased to 10.02 pence per kilowatt-hour (p/kWh) and 19.55p/kWh respectively.
  • All new ASHPs and GSHPs applying for support under the scheme will be required to have electricity metering to monitor their heating system.
  • Payments will continue to be on the basis of the deemed heating requirements of the property.
  • Heat demand limits will be introduced, to limit the level of annual heat demand in respect of which any household can receive support – 20,000kWh for air source and 30,000kWh for ground source.
  • GSHPs making use of a shared ground loop will continue to be eligible for the non-domestic scheme and will not be eligible on the domestic scheme.

* The reforms will require all new heat pumps supported by the scheme to have electricity metering to monitor their heating system.

* In second homes and where a renewable heating system is installed alongside another heating system payments will continue to be on the basis of heat metering.

* The reforms will not disqualify properties with higher heat demands from applying to the scheme.

Biomass Boilers

  • The tariff for new biomass installations will be increased to 6.44p/kWh, the level available between October and December 2015, adjusted for inflation.
  • The heat demand limits will be set at 25,000kWh for Biomass Boilers.

* The reforms will not disqualify properties with higher heat demands from applying to the scheme.

  • In second homes and where a renewable heating system is installed alongside another heating system payments will continue to be on the basis of heat metering.

Solar Thermal

  • There will be no heat demand limit for solar thermal.
  • The tariff will remain at the current level of 19.74p/kWh and there will be no other changes to terms of support for solar thermal systems.

Renewable Heat Incentive Changes – Summary

In general, the scheme will still offer attractive financial support for individuals looking for a renewable heating system. By adding heat demand caps we can read between the lines and see that the government is putting the emphasis into well insulated, energy efficient homes – which makes sense. By putting a cap on tariffs it should encourage home owners to look at the heat loss of their property and improve it, which is also being pushed by building regulations.

For any properties that have a deemed heat load below the caps, the RHI is better than ever. For properties that are above the caps a renewable installation will often still be an attractive heating option against a fossil fuel equivalent.

If you have a project you are working on now or in the pipeline and would like to know how you could benefit from the renewable heat incentive, please contact one of the team.