What is the Renewable Heat Incentive? A guide

What is the Renewable Heat Incentive? A guide

Renewable RHI Scheme Guide

An Overview of the UK’s RHI scheme

The Renewable Heat Incentive (RHI) was set up by the government to incentivise individuals and businesses in England, Scotland and Wales to make the switch to a renewable energy source.

The aim of the Renewable Heat Incentive is to financially compensate those who use renewable energy sources, by making payments for a set period of time after the system has been installed, thus providing an attractive rate of return on investment.

This financial reward is in the country’s best interest; the more households adopting green technologies, the less carbon emissions the UK produces, and the easier it is for us to meet our renewable energy targets.

Whether your property be on- or off-grid, domestic or non-domestic, here’s some information on how you can reap the rewards of the RHI, reduce your carbon emissions, cut your energy bills and increase your property’s value…


Is it right for you?

If you’re looking to switch to a more energy efficient method of running your home or business, it’s likely you’ve already looked into the technologies available. The Renewable Heat Incentive supports most green technologies; Air Source Heat Pumps (ASHPs), Ground Source Heat Pumps (GSHPs), certain Solar Panel Technologies and Biomass Boiler Systems.

While properties both on and off the grid are accepted onto the scheme, off-grid properties often have the most potential to save on bills, seeing more benefits from converting to a renewable heat source and registering with the RHI.

To apply, you must be the owner of the property and meet certain criteria. Be aware – most new-build properties won’t be eligible, unless you are building your own home, as the scheme is intended for those replacing existing fossil fuel burning heat sources.


Domestic and Non-Domestic Renewable Heat Incentive Schemes

There are two different schemes, depending on the property’s usage; Domestic for single households, and Non-Domestic for business premises, buildings of multiple occupancy, public sector buildings and non-profit organisations.

The two schemes have different application processes, tariffs, rules and joining conditions, so it’s worth knowing the differences, although usually it is fairly clear which scheme you would be eligible for.


The Domestic Renewable Heat Incentive

Since 2014, over 56,000 households have been accepted onto the Domestic Renewable Heat Incentive Scheme, which is available to private households in England, Scotland and Wales. To apply to the scheme you will need an Energy Performance Certificate (EPC), which will be proof that the building’s use is domestic, and that the heat source would be used for a single dwelling.

Your EPC will state whether your loft and cavity wall insulation is sufficient, to make best use of the energy your new heat source will produce. If deemed inadequate, or if you currently do not have loft or cavity wall insulation, you will most likely need to have it improved, or installed, before the renewable energy source.

If you work from home, you would still be classed as a domestic applicant, based on the proof that the technology would be used in your single property only. However, if you work from a separate building from your main home, with it’s own heating system, it’s likely you would be classed as Non-Domestic (see more on that below).

In the Domestic RHI scheme, successful applicants will receive quarterly payments for seven years from the commissioning date of the heat source; be it Air Source Heat Pump, Ground Source Heat Pump, Solar Panels or Biomass System.


The Non-Domestic Renewable Heat Incentive

Generally, if the property is for commercial, industrial or public use, it would be classed as a Non-Domestic setting. This could be a premises such as a school, hospital, residential building – where the same energy source is shared by multiple occupants, or business premises.

Where things are not so clear-cut, are when it comes to homes with multiple buildings. If your home has a main building and separate outbuilding(s), such as a granny annexe, home studio or guest suite, with it’s own heating system, it’s likely you would have an EPC certificate for each building, and therefore it would be classed as a Non-Domestic setting.

The energy usage in these types of buildings can often be a lot greater than a Domestic setting, so the rewards, and savings, can be higher. Payments are made quarterly, like in the Domestic scheme, but for a 20 year period following installation of the renewable energy source.


How do the payments work?

Most participants in the Renewable Heat Incentive schemes, will receive estimated payments, based on the technology you have installed and the building’s credentials i.e. the size, age and energy efficiency rating. With some technologies, you may be required to have a meter fitted to work out how much to pay you. The governing body, Ofgem, will decide whether you need a meter or not.


What will you get paid?

The payments are based on a set rate per unit of renewable energy produced, in kilowatt hour (kWh), but the rates will vary depending on the technology installed.

Currently, Solar Panels offer the highest rate of pay back per kWh, however they usually produce the least amount of energy so the payments are relatively low. Sometimes the repayments alone do not cover the initial cost of installation, although in combination with reduced bills, you would certainly feel a financial benefit.

In comparison, Ground Source Heat Pumps have a lower rate per kWh, but with this technology, most households would easily earn back the initial installation costs over the repayment period, as well as benefit from lower energy bills.

Other financing (borrowing) options are available for installing renewable energy technologies in your home. This may be achieved through the recently relaunched (and privatised) Green Deal, plus other initiatives and specialist lenders.


What to do next

At Franck Energy we love renewable energy. The Renewable Heat Incentive can make replacing your current heating system with a green alternative easy – a move that can reward you financially, as well as benefitting the environment.

We set the whole installation process up, survey your property, calculate your savings, and manage the project. You know that you’ll be safe in the knowledge that your renewable energy source will be running effectively and efficiently, whilst maximising your RHI qualification.

If you are intending to adopt renewable heating for your home or business, it is definitely worth investigating RHI further – there really is nothing to lose. Find out immediately whether you would be eligible to apply. Give our team a call, today.