Renewable Heat Incentive

Renewable Heat Incentive

The Renewable Heat Incentive (RHI) is a financial incentive scheme set up by the UK Government to encourage people to use renewable heat technologies in homes, businesses and local communities.

In order to meet its Renewable Energy Directive target of generating 15% of energy from renewable energy sources by 2020, the UK Government “anticipates that around 12% of heat will need to come from renewable energy".

The qualifying technologies for the Renewable Heat Incentive are:

  • Solid biomass and solid biomass contained in municipal waste, including combined heat and power (CHP).
  • Ground and water source heat pumps.
  • Geothermal, including CHP.
  • Solar thermal; at capacities of less than 200kWth.
  • Biogas combustion (excluding from landfill gas but including CHP); at capacities of less than 200kWth.
  • Biomethane injection.

The Renewable Heat Incentive scheme is managed by the Department of Energy and Climate Change (DECC) and administered by the Office of Gas and Electricity Markets Authority (Ofgem). The scheme started in November 2011 for systems installed/commissioned after 15th July 2009. There are two phases to the introduction of the Renewable Heat Incentive:  

Phase 1 – Non-domestic Renewable Heat Incentive

The introduction of Renewable Heat Incentive for non-domestic installations in the industrial, business and public sectors effectively provides incentives to eligible, non-domestic renewable heat generators and producers of biomethane; for the life of the installations or up to a maximum of 20 years. Non-domestic sectors include industrial, commercial public and not-for-profit; and can also include both large-scale industrial or smaller scale community-based heating projects.

Within the small-scale and medium-scale commercial biomass systems there are tired tariffs, which are designed to act as a disincentive to generate wasteful heat purely to maximise Renewable Heat Incentive payments. The tier 1 to tier 2 change point is set at the amount of heat corresponding with a 15% load factor of the installation which is equal to the installation running at full capacity for one year. This 15% corresponds to 1,314 peak load hours. For information on current Renewable Heat Incentive rates, please refer to the Ofgem tariff tables.

An RHI application can take some time to complete, and can seem overly complex. Also, an incomplete or incorrect application can significantly delay receipt of the payment. We have significant experience of the RHI application process, and can help you through all its stages.

Phase 2 – Domestic Renewable Heat Incentive

The Domestic Renewable Heat Incentive went live on the 9th April 2014. Householders can receive payment for producing heat from a renewable source for all eligible technologies installed since 15th July 2009.

Eligible technologies are:

  • Biomass boilers (not stoves apart from pellet boiler stoves).
  • Ground and water source heat pumps.
  • Solar thermal.
  • ​Air to water heat pumps (but not air to air or heat pumps with cooling).

For a biomass boiler to qualify it must meet certain air quality criteria, so that the emissions are not more than 30g/GJ for particulate matters (PMs) and 150g/GJ for nitrous oxide (NOx).  From autumn 2014, it will also be necessary to buy wood fuel from a registered RHI biomass fuel supplier. To be on this list, the wood fuel supplied has to meet defined sustainability criteria.

To be eligible, the heating appliance must be MCS certified and be installed by an MCS certified installer. It also needs to be listed on the Domestic Renewable Heat Incentive product eligibility list.

In order to qualify for the domestic RHI, a householder also needs to:

  • Have a Green Deal Assessment carried out.
  • Have loft insulation of at least 250mm installed and cavity wall insulation, if recommended in the EPC.
  • ​Make an annual declaration that the system is operating correctly and maintained in accordance with the manufacturer’s instructions once it has been installed.

Heat generation will be assumed for most households – for biomass heating systems, this will be based on the figure on the EPC. This figure will also be used for heat pumps, although it will be adjusted downwards to take account of the electricity used to run the heat pump. For solar thermal systems, the figure for heat generation will be taken from the MCS documents produced by the installer. 

Heat metering is only required for second homes or where a proportion of the central heating could be supplied from another non-renewable heat source.

Payments made under the Domestic Renewable Heat Incentive scheme are made quarterly for seven years.

For more information about eligibility payment rates and application forms, please visit the Ofgem website.