Renewable Heat Incentive in the UK

What Is the Renewable Heat Incentive (RHI)?

In addition to heat pump incentives, the UK government created the Renewable Heat Incentive (RHI) program to encourage individual households, communities, and enterprises to install renewable energy systems for heating.

Recent Modifications to the RHI Program

The RHI scheme has undergone revisions that become effective on April 1, 2021. The RHI scheme now accepts applications from applicants who installed their qualifying heating system on or after March 1, 2019, for accreditation. Applications that have previously failed to submit within the required 12-month period are now eligible to reapply until the program's termination on March 31, 2022. On the Ofgem website, read more.

The RHI was initially founded in April 2014, and the most recent regulations took effect on May 22nd, 2018. In addition to being the primary force behind the UK's objective for 2020 of having 12% of heating come from renewable energy sources, RHI was established to lessen the effects of climate change.

Both domestic and non-domestic Renewable Heat Incentive programs exist.

• Domestic RHI is made for setups that heat just one residence. In other words, it covers private homes.

• Renewable heating systems used in public, commercial, or industrial buildings fall under the non-domestic RHI category.

But this article only discusses the residential Renewable Heat Incentive (DRHI).

Only the following types of renewable heating systems are eligible for the domestic RHI scheme:

  • Ground Source Heat Pumps
  • Air Source Heat Pumps
  • Biomass Boilers
  • Solar Thermal

How Does the Renewable Heat Incentive Work?

For homes with renewable energy heating systems, the domestic RHI functions as a financial assistance programme. If they have qualified heating systems like heat pumps installed in their home, households can save a sizable sum of money over time with the RHI.

It is crucial to be informed of every step in the application procedure if you want your application for the residential RHI to be accepted. The installation of renewable energy equipment and the home itself have different requirements at each stage that applicants must be aware of.

Quality time spent on investigating the right renewable heating solution and installer increases the chance of your RHI application being approved.


How Are Domestic RHI Payments Calculated?

The domestic RHI payments are calculated taking into consideration three major factors:

• Your property’s annual heating and hot water demand
• Your heating system’s Seasonal Coefficient of Performance (SCOP)
• Current RHI tariffs

Here is an example of how domestic RHI Payments can be calculated:

  • The Energy Performance Certificate (EPC) for the home can be used to determine the annual demand for heating and hot water, for instance, 30,000 kWh/yr.
  • The annual demand for heating and hot water is divided by the heating system's seasonal coefficient of performance to determine how much electrical energy the heating system will need (SCOP). For instance, 30,000 / 3 = 10,000 kWh/yr., which the MCS installer often estimates to be between 2.5 and 4.
  • The annual heating and hot water demand of the property is divided by the previously estimated amount to determine the renewable content, for instance, 30,000-10,000 = 20,000 kWh/yr.
  • The aforementioned amount is multiplied by the current RHI tariff (20.89 p/kWh for ground source heat pump) to determine the RHI annual payment. For instance, £4,178 is equal to 20,000 divided by 0.2089.
In case you do not want to make calculations yourself, use the RHI calculator to find out what payments you could receive from installing a renewable heating technology.

 New Rules for Customer Protection

On December 15, 2020, Ofgem unveiled new customer protection measures that will assist customers who are having trouble paying their energy bills.

The regulations will offer better credit management practices and durable payback arrangements to people who are vulnerable and momentarily unable to pay their energy bills.


How Do I Install an RHI Heating System?

After carefully examining all the RHI programme regulations, it is advisable to weigh the advantages and disadvantages of heat pumps and other qualifying renewable energy heating systems. Selecting the finest renewable energy heating system for your home is crucial since it will reduce your energy costs significantly while also acting as a source of energy. As a result, seeking professional advice before starting your home remodeling project is advised.

You may also be required to install metering along with your chosen renewable heating system. Metering comes in two flavors: metering for payment and metering for performance. Your choice of heating system will determine which type is necessary.

All new heat pumps must “meter for performance” in order to qualify. A prerequisite for heat pumps, biomass stoves, and boilers is “metering for payments.”

On the other hand, you do not need to install metering if you decided to go with a solar thermal system after weighing the benefits and drawbacks of solar energy. The rationale is that solar thermal systems are not needed to be metered when used to heat domestic water.

Finally, you should take your time selecting the correct installer of renewable energy heating technology. Additionally, confirm that the person who installed your heating system has a Micro generation Certification Scheme (MCS) certificate.


RHI - How Do I Apply?

Living in England, Scotland, or Wales is a need to apply for the residential RHI. Subsequently, you must be a homeowner to apply for the domestic RHI. Create a new property by yourself while adhering to all requirements, whether it be private or social. A Micro generation Certification Scheme (MCS) installation certificate number, which you should acquire once the MCS certified installer completes the installation of your renewable heating system, is needed for the necessary paperwork.

After that, your building will need to undergo a Green Deal Assessment. Two documents make up this assessment:

  • Energy Performance Certificate (EPC) for your home, which rates the structure's energy efficiency from A (Very efficient) to G. (Inefficient).
  • Occupancy Assessment, which makes recommendations for enhancing the building's energy efficiency.

You must also be prepared to provide your bank account information and the payment amount for the installation of your renewable heating system. You must disclose any prior payments you may have received from public funds, along with the amount and date of those payments.

Necessary Documents

  • Micro generation Certification Scheme (MCS) certificate number
  • Energy Performance Certificate (EPC) number
  • Occupancy Assessment document
  • Personal information and bank details

Ongoing Renewable Heat Incentive Obligations

You instantly agree to all ongoing obligations associated with the domestic RHI programme the moment you apply. Maintaining the continuing obligations for your family and the particular renewable energy heating system you have installed is one of your duties.

You must complete an annual declaration each year. You may guarantee that you abide by all scheme rules and receive the correct payment for the heat you produce by filling out the declaration.

These are some of the annual declarations you will have to submit:

  • That you still own a heating system in your property

  • That the system is in good working order and has not been substituted

  • That the meter you have been required to install is in good operating condition

  • And other criteria that you need to fulfil regarding the occupants of the property and your heating system


Additionally, Ofgem conducts audit inspections to ensure that each domestic RHI member complies with the program's standards. Any applicant for the domestic RHI may be picked at any moment for the audit check. The selection of audit checks for renewable heating technology is made using a variety of criteria, including random sampling.


FAQ about the Domestic RHI

 How Do I Get RHI Payments?

Following your domestic RHI approval, you will start receiving payments on a quarterly basis (every three months). RHI payments will be sent by BACS transfer directly to your bank account. Only UK bank accounts that accept deposits in pound sterling will receive payments.

 How Do RHI Payments Work?

Owners of domestic homes who have installed one of the qualifying heating systems and have submitted an application for the financial incentive are eligible to receive domestic RHI payments. The type of renewable energy heating system installed, the most recent tariffs, and metering determine the exact amounts of these payments.

 How Long Do RHI Payments Last?

Upon receiving domestic RHI approval, you will start receiving payments, which will come once every three months for the next seven years. Remember that in order to continue receiving payments, you must continue to abide by the domestic RHI scheme's rules. You could lose out on compensation if you don't comply.

 How Much Can I Save with RHI?

Your heating system, the renewable heat it produces, and the current tariffs will all influence how much money you could save with RHI. Overall, solely from RHI payments, you may save anything from £200 to £4,000 every year.

 Is There VAT on RHI Payments?

The sort of RHI system you use generally has little impact on the taxes you pay (domestic or non-domestic). It depends on how you utilize renewable heat. For instance, the payments are not subject to income tax if you just use renewable heat for home purposes. RHI payments, on the other hand, are business receipts if you are a firm or trader, which means that standard income and corporation laws and deductions apply to the receipt.

 How Much Does it Cost to Install a Heat Pump System?

The price of the heat pump itself, which varies according to the system's heating capacity, as well as the cost of the installation method, are the key factors influencing the cost of heat pump installation. For instance, the price of installing a ground source heat pump, including installation fees, might range from £11,000 to £20,000.


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