Grants Explained – Renewable Heat Incentive (RHI)

The Renewable Heat Incentive (RHI) is a UK Government scheme set up to encourage uptake of renewable heat technologies among householders, communities and businesses through the provision of financial incentives. The UK Government expects the RHI to make a significant contribution towards their 2020 ambition of having 12 per cent of heating coming from renewable sources. The Renewable Heat Incentive is the first of its kind in the world.

There are two phases to the introduction of the RHI:

  • Phase 1: the introduction of the RHI for non-domestic installations in the industrial, business and public sectors.
  • Phase 2: the domestic element of the RHI, is expected to be introduced in spring 2014 following the consultation published in September 2012 and more recently the UK Government Heat Strategy.

 

Phase 1 – Non-domestic RHI scheme

Phase 1 of the RHI provides financial 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 non-for-profit sectors. A non-domestic installation might be a large-scale industrial heating systems or a smaller community heating project.

Ofgem is responsible for administering the scheme.

Find out about eligibility criteria and the application process at Ofgem’s RHI website.

For comprehensive insight into the eligibility requirements for the scheme, download volume one of the Guidance document from the Ofgem site..

Tariffs applicable for Non-Domestic RHI for Great Britain from 1 April 2014

Ofgem are responsible for publishing quarterly tariff tables showing the tariffs that will be applicable for each tariff period following DECC’s quarterly degression announcement. DECC have published their quarterly expenditure forecast statement as at 31 January 2014 for the RHI scheme.

DECC have announced that for the quarterly period starting on 1 April 2014 there will be no reduction to any tariff.

The tariff table below shows the tariffs that will be applicable for all technologies from 1 April 2014 following DECC’s announcement that there will be no degression reduction. This table also shows the RPI adjustment that will be made to current and existing tariffs from 1 April 2014.

Payments

Tariff Name Eligible Technology Eligible Sizes Tier Current applicable tariffs  RPI adjusted tariff for 1 April 2014 (2.7%)
Small commercial biomass Solid biomass including solid biomass contained in municipal solid waste and CHP Less than 200 kWth Tier 1

Tier 2

8.6

2.2

8.8

2.3

Medium commercial Biomass 200 kWth and above; less than 1MWth Tier 1

Tier 2

5.3

2.2

5.4

2.3

Medium commercial Biomass (w/e from 1 July 2013) Tier 1

Tier 2

5.0

2.1

5.1

2.2

Large commercial Biomass 1MWth and above N/A 1 1

 

The Non-Domestic RHI provides financial support for renewable heat technologies for the lifetime of the installation (for 20 years). We make payments on a quarterly basis. Once you are accredited, a tariff level will be assigned to your installation based on its technology (e.g. biomass, heat pump, solar) and size. Payments will be made based on the actual heat output of the system.

Payments begin to accrue from the date of accreditation of the installation. The date is confirmed in the accreditation confirmation letter emailed to successful applicants.

How payments are calculated

You are paid a certain amount per kilowatt hour (kWhth) and calculations are made according to whether your system is designated “simple” or “complex”, or for applications submitted from 24 September 2013, ‘standard’ or ‘multiple’.

For a simple system

Payments are calculated by multiplying the appropriate tariff by the amount of eligible heat generated in the relevant quarterly period. The formula is:

Payment = Tariff level x Heat generated by RHI installation

For a complex system

Once you have entered the meter readings and the three heat data figures required by the IT system on the Non-Domestic RHI Register, the ‘Eligible Heat Output’ (EHO) figure in kWhth wil be calculated and displayed.  This is the amount that will be multiplied by your tariff to determine the payment amount.

The formula to determine how many kWh have been produced is:

Eligible heat used on system  *  Heat generated by RHI Installation/Total heat generated on system

For a standard system

Installations using ‘standard’ metering for RHI payment purposes have two options for calculating the eligible heat output (EHO):

Option 1
Payment = Tariff Level x Heat Generated by RHI Installation (EHO)
(NB where there are NO Ineligible heat uses on the system)

Option 2
Payment = Tariff level x Eligible Heat Used by the RHI Installation (EHO)
(NB where there is NO additional ineligible heat generation plant)

For a multiple system
Installations using a ‘multiple’ metering arrangement have to submit:
• the eligible heat generated
• the eligible heat used
• the total heat generated on the system or the total heat used on the system.

Option 1
Payment =
Tariff Level x Eligible Heat Used on System x Heat Generated by RHI Installation/Total Heat Generated on System

Option 2 
Payment =
Tariff Level x Eligible Heat Generated by RHI Installation x Eligible Heat Used on System/Total Heat Used on the System

 

Phase 2 – Domestic RHI scheme

The details of the domestic Renewable Heat Incentive (RHI) were announced by the UK Government on 12 July 2013. The main details of the scheme which were announced, and which are subject to final clarification and parliamentary approval, are listed below:

The main details of the scheme are listed below:

  • The domestic RHI is a UK Government financial support scheme for renewable heat, targeted at, but not limited to, off gas grid households.
  • the domestic RHI scheme covers England, Wales and Scotland only
  • DECC intend that the scheme will open to applications in Spring 2014 and will be administered by Ofgem
  • Ofgem guidance will be available before the launch of the scheme on how to apply and the information that will need to be provided
  • the scheme will cover single domestic dwellings and will be open to owner-occupiers, private landlords, Registered Providers of Social Housing, third party owners of heating systems and self-builders. It will not be open to new build properties other than self-build
  • it will be open to anyone in these groups who installed an eligible technology since 15th July 2009, provided they meet the scheme criteria
  • for those who have installed a renewable heating system before the launch of the scheme in Spring 2014 and since 15 July 2009 (legacy applications), the date they can submit their application may not be from when the scheme first opens and will be phased over time. Further details on the phasing will be provided by Ofgem prior to launch
  • the financial support will be paid at a set rate per unit of renewable heat produced (kilowatt hour or kWh), for seven years, to the owner of the heating system
  • the scheme will support air source heat pumps (ASHP), biomass systems, ground source heat pumps (GSHP) and solar thermal technologies. The support rates will vary depending on the technology installed
  Air source heat pump Biomass Ground source heat pump Solar thermal
Tariff (p/kWh renewable heat) 7.3 12.2 18.8 19.2
  • for biomass the renewable heat generated will be based on an estimated figure of heat demand from an Energy Performance Certificate (EPC)
  • for heat pumps the renewable heat generated will be based on an estimate of the heat demand from an EPC combined with an estimate of the heat pump’s efficiency
  • for solar thermal systems the renewable heat generated will be based on the estimate of system performance completed as part of an Microgeneration Certification Scheme (MCS) installation
  • to help improve performance of renewable heating systems, there will be an extra incentive for applicants who install metering and monitoring service packages, of £230 per year for heat pumps and £200 per year for biomass boilers
  • to be eligible the system must be certified under the Microgeneration Certification Scheme (MCS) scheme and meet relevant standards for each technology
  • all applicants are required to complete a Green Deal Assessment (GDA) before applying and to ensure they meet minimum energy efficiency requirements of loft and cavity insulation where required by the GDA
  • any public grants previously received, including RHPP, will be deducted to avoid a double subsidy
  • tariffs will change annually in line with the Retail Price Index (RPI)
  • DECC intend to introduce a system of degression to control the costs of the scheme. This is where tariffs are reduced over time for new applications to the scheme. Those who have already secured their tariff will not have their tariff reduced due to cost control. DECC will announce further details on the cost control policy in Autumn 2013.

Please note that this is not an exhaustive list of all the criteria of the scheme and the details of the scheme are subject to further clarification and parliamentary approval therefore please keep this in mind when making a decision about installing a renewables systemYou can find further details about the scheme and link to all the related policy documents on the UK Government website.

www.ofgem.gov.uk

www.energysavingtrust.org.uk

www.gov.uk/government/organisations/department-of-energy-climate-change