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Domestic Renewable Heat Incentive (RHI)

28/11/2020

Jo Alsop

Heating Hero

The Heating Hub

Jo reviews the Government grants available for renewable energy systems.

 

Domestic RHI - payments for fitting a renewable heating system

The domestic renewable heat incentive (domestic RHI) is a financial incentive provided by the UK Government to encourage people to switch to renewable heat sources by paying them back for the high cost of installation.

The UK is under a legal obligation to produce zero carbon emissions by 2050. Homes account for 20% of greenhouse gases so this is a fruitful area for improvement. The RHI aims to fast track the uptake of renewable heat sources for domestic dwellings. The RHI is due to end on 31 March 2022 and it will be a hard cut off, i.e. you will need to have submitted your MCS certificate (which means the installation is completed and commissioned) and an EPC that is no more than 24 months old.

In this ultimate guide, we run you through every aspect of the RHI scheme including eligibility, payments, tariffs, EPCs, when metering is required and what you need to make an application.

Contents

  1. Your home
  2. Eligible technologies
  3. Eligible plant size
  4. Eligible uses
  5. Microgeneration Certification Scheme
  6. Tariffs and payments
  7. Metering
  8. Time limits
  9. RHI and other grant payments
  10. Making your application

1) Your home

Whilst any single domestic dwelling is eligible for the RHI you must make sure it is suitable for you. At present renewable energies better suit off-grid homes due to space requirements and the high cost of LPG, oil and electric heating systems. Off-grid homes have more to gain from a renewable system in terms of reduced fuel costs and better fuel security.

Property requirements

Your property must have an Energy Performance Certificate (EPC) that is less than 24 months old at the date of submission.

If loft or cavity wall insulation is recommended in your EPC, you must install it and then get a new EPC before you apply for the RHI.

The RHI supports single domestic properties. Where the renewable technology also supplies heat to outbuildings that form part of the main dwelling, for example garages, sheds, games rooms and gyms, that have the same EPC as your house, then you can apply for the domestic RHI.

Where your property includes outbuildings with a commercial use then the non-domestic RHI might be a more suitable option. This does not make you ineligible for the domestic RHI, but the payments will only be made on the EPC for the main dwelling.

Where your renewable technology provides heat to separate dwellings under their own council tax listing and/or with a separate EPC, you will not be eligible for the domestic RHI and should consider instead at the non-domestic RHI.

New builds

The RHI was designed to help homeowners retro-fit renewable technologies into their homes. For new builds the RHI only applies to ‘custom-builds’ whereby either a builder is contracted by the homeowner to build their home for occupancy by them or the homeowner is undertaking the build themselves, aka self-builders. In all cases the customer builder must be an individual and not a company, so this excludes new builds built by a developer.

2) Eligible technologies

The domestic RHI gives money back to households that fit: a biomass boiler, a wood pellet stove, a ground source heat pump, an air source heat pumps or solar thermal panels. In all cases the technology must work with a ‘wet’ system, i.e. radiators or under floor heating.

Biomass boilers: can use any solid biomass fuel (logs, chips or pellet) and must comply with air quality requirements.

Biomass pellet stove: must be designed to work exclusively with pellet stoves and have an integral heat exchanger to heat wet systems

NB: all biomass products must be issued with an RHI emissions certificate and you must use fuels that are listed on the certificate. Households will need to buy fuel from a supplier on the Biomass Suppliers List and keep a record of fuel purchases that shows the fuel authorisation number.

Air source heat pump: must have a seasonal efficiency of 2.5 and a compressor driven by electricity. Must be metered for performance. Can provide cooling. Air to air heat pumps do not qualify.

Ground source heat pump: must have a seasonal efficiency of 2.5 and a compressor driven by electricity. Must be metered for performance. Can provide cooling.

Water source heat pump: some models are eligible and they receive the same tariff as ground source. They must have a compressor driven by electricity.

Solar thermal: liquid filled flat plate or evacuated tube panels and for domestic hot water only

3) Eligible plant size

The domestic RHI scheme does not impose a limit on the capacity of an eligible heat source, however the MCS scheme only covers capacities upto 45kW. Products may have a combined capacity of not more than 70kW to meet larger heat demands.

In reality 45kW is enormous! Even very large homes rarely have a heat demand over 25kW, which is still peak demand on a very cold day.

4) Eligible uses

Biomass, ground source heat pumps and air source heat pumps can be used for providing space heating and hot water to a single domestic property. They cannot be used to heat a swimming pool for example (this is called a non-eligible use). That is not to say a biomass boiler or heat pump cannot provide heating for your home plus your swimming pool, they can, but you will only receive the RHI payment for your heating and hot water use (as stated on your EPC).

Solar thermal can be used for hot water only. If solar thermal panels heat a ‘thermal store’ that produces water for heating and hot water, then the solar aspect of your installation will not qualify. If the thermal store is also heated by another qualifying technology, you can apply for the RHI payments for that technology, but it will have to be metered. 

5) Microgeneration Certification Scheme (MCS)

The make and model of your renewable energy technology must certified under the MSC scheme (you can check the Government’s Product Eligibility List to confirm this) and your installation must be installed by an MCS certified installer.

Many installers and installation companies are MCS registered in their own right. However it is an onerous process for many and for that reason many product manufacturers have taken on the MCS responsibilities on behalf of an installer network. This means installers stick to installing and manufacturers certify the installation complies with MCS standards.

6) Tariffs and payments

Tariffs rates are paid per kWh hour and vary according to the technology you are fitting. Rates are reviewed and set on 1st April each year but can be changed quarterly. The current tariffs are as follows:

Biomass GSHP ASHP Solar thermal
6.97p 21.16p 10.85p 21.36p

Payments are calculated using the two figures in your energy performance certificate: one for ‘space heating’ and one for ‘hot water’. Both are given in kWh. These are added together to get a combined figure. This is what your payments will be based on for biomass heating and solar thermal. For heat pumps the payments will be made on a proportion of this figure based on the SPF (see below).

The table below gives some indicative figures of payments based on the number of eligible kWh. Each of the heating technologies has a cap - this is 20,000 kWh for air source, 25,000 kWh for biomass boilers and stoves and 30,000 kWh for ground source heat pumps. NB you can still apply if your heat requirement is higher on your EPC, it just won’t go any higher than the technology cap.

It is clear that for smaller homes, the money recouped will not cover the upfront cost of the installation,. However the returns are much higher as the heat requirement increases which makes renewables for larger homes much more viable.

kWh example Biomass GSHP ASHP
6,000 £2,927 £8,887 £6,750
10,000 £4,879 £14,812 £7,595
15,000 £7,319 £22,218 £11,393
Max kWh per technology £12,198 £44,436 £15,190

Once on the scheme, tariffs are adjusted annually according the consumer prices index and continue for a maximum of 7 years. You must comply with the schemes requirements, for example to keep the technology in good order, submit annual returns and use approved fuels (for biomass) or risk suspension or termination of payments.

Calculating payments based on Seasonal Performance Factor (SPF)

For ground, air and water source heat pumps, installers must use the Seasonal Co-efficient of Performance (SCoP) calculator to calculate SPFs. The minimum SPF must 2.5. The SPF number shows the number of ‘free’ units of energy gained from the air or ground. An SPF of 2.5 means that for every one unit of electricity used by the heat pump, 2.5 free units are generated.

The SPF factor is a calculation that determines how efficiently your heat pump will operate and consequently how much you will be paid for the RHI scheme. Systems with a high SPF, for example 4.5, will earn more money under the RHI than systems with a low SPF, because it will be deemed that the system runs on a higher proportion of renewable energy.

In order to achieve a high SPF, the system must run at lower temperatures. Heat pumps work at their most efficient when supply water at 35-40 degrees C. To heat your home at such low temperatures, the property needs to be very well insulated and ideally have underfloor heating. Radiators can be swapped out but will likely need to increase in size.

Heat pump can run at 45 – 55 degrees, but the SPF will be lower. Your installer will calculate the SPF by completing the MCS calculator. This requires them to complete the design temperature of each room and the heat loss of each room and specify the temperature of the water as it leaves the heat pump. This will generate the SPF for your home.

This number is entered onto the MCS database when the installation is registered and will be used when calculating RHI payments. Payments will only be made on the renewable proportion of your heat requirement (deemed by your EPC assessment).

 

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7) Metering

There are two types of metering for domestic RHI installations – metering for performance and metering for payment. Metering for performance allows data to be collected from fitted technologies so we can monitor our reduction in fossil fuels. Metering for performance only applies to heat pump installations. The meter records electricity used by the plant, supplementary heaters and immersion.

Metering for payment is required where it is not clear how much of the property’s heat demand is being met by the eligible renewable technology or the property is not your main dwelling, for example a holiday home. (A second home counts as a dwelling that is occupied for less than 183 days per year.)

Back up and hybrid metering

A hybrid system is one where a renewable technology such as a heat pump or pellet boiler stove heating your home for most of the year and a gas or oil boiler provides top up heating at peak times. For more see our Guide to hybrid heating systems.

Back up heating that does not need to be metered are: single room heaters (gas fire or plug in heater), electric immersion heaters for domestic hot water only and supplementary electric heaters controlled by the same control system as the renewable technology.

Multiple renewable sources

Where you fit two or more of the same technology, for example two air source heat pumps, that are commissioned at the same time then they can come under a single MCS certificate and you can apply for the RHI in the normal way.

The same applies if you fit two or more of the same technology type but use different eligible models. Products that are commissioned at different times are considered to be separate heating systems and you can only apply for one of the technologies. The installation will need metering.

Where you have used two different technology types, for example a biomass boiler and a heat pump, you can only apply for one of the technologies and it will have to be metered.

Metering and monitoring service package (MMSP)

Where a meter is required for monitoring or performance, you can opt for a combined MMSP. This attracts an upfront payment of £805 and additional payments of £115 per year for heat pumps and £700 upfront and £100 per year for biomass boilers.

Metering and payment caps Whilst the RHI payments will be made based on your meter readings, they will be capped to the EPC or the heat demand limits for each technology (as set out above).

8) Time limits

  • The scheme is currently scheduled to finish on 31 March 2022
  • Your EPC must be less than 24 months old
  • You must apply for the domestic RHI within 12 months of first commissioning. If the heating technology has been used before the commissioning date then it will not be eligible.
  • You must make annual declarations. Payments may be suspended if they are more than 28 days late.

9) RHI with other grants and funding

The RHI cannot be claimed as well as any other form of grant funding. The whole of the installation cost must be funded by the homeowner or landlord. Any grants already received will be deduced from the RHI and spread evenly over 7 years.

The recently launched Green Homes Grant gives homeowners a lump sum of up to £5k towards the cost of the installation (a maximum of 2/3rd of the total cost). This can be claimed and then deducted from the RHI payments.

The advantage is that you will receive £5,000 back quickly, rather than waiting to recoup the equivalent back over the first few years in RHI payments.

10) Making your application

You will need:

  • Microgeneration Certification Scheme (MCS). On completion of the installation, your installer must issue you with the MCS certificate
  • Energy Performance Certificate (EPC) less than 24 months old
  • You will also need to register the installation with the Distribution Network Operator for electricity.

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