What is the Renewable Heat Incentive (RHI)?

renewable heat incentive London

The Renewable Heat Incentive (RHI) is the world’s first long-term financial support programme for renewable heat. The RHI pays participants of the scheme that generate and use renewable energy to heat their buildings. By increasing the generation of heat from renewable energy sources (instead of fossil fuels), the RHI helps the UK reduce greenhouse gas emissions and meet targets for reducing the effects of climate change.

There are two parts to the RHI:

  • Domestic RHI – launched 9 April 2014 and open to homeowners, private landlords, social landlords and self-builders
  • Non-domestic RHI – launched in November 2011 to provide payments to industry, businesses and public sector organisations

Domestic RHI scheme

It is a financial incentive scheme designed to encourage uptake of renewable heating among domestic consumers. The domestic RHI is targeted at, but not limited to, homes off the gas grid. Those without mains gas have the most potential to save on fuel bills and decrease carbon emissions.

The scheme will cover single domestic dwellings and will be open to homeowners, private landlords, social landlords and self-builders. It will not be open to new build properties other than self-build. The tariffs have been set at a level that reflects the expected cost of renewable heat generation over 20 years. Payments will be made on a quarterly basis over a 7 year period and include the following technologies:

  • Air-source heat pumps
  • Ground and water-source heat pumps
  • Biomass-only boilers and biomass pellet stoves with integrated boilers
  • Solar thermal panels (flat plate and excavated tube for hot water only)

For more information on tariff payments or for an estimate of how much you would receive by installing a renewable heating system, please visit https://www.gov.uk/government/policies/increasing-the-use-of-low-carbon-technologies/supporting-pages/renewable-heat-incentive-rhi

Non-domestic RHI scheme

The non-domestic Renewable Heat Incentive (RHI) helps businesses, public sector and non-profit organisations meet the cost of installing renewable heat technologies. You can apply if your equipment was installed in England, Scotland or Wales on or after 15 July 2009 and payments are made over 20 years based on the heat output of your system. The types of equipment included under the scheme include:

  • biomass
  • heat pumps (ground source, water source and air source)
  • deep geothermal
  • solar thermal collectors
  • biomethane and biogas
  • combined heat and power (CHP) systems

The government response published in December 2013 sets out a series of improvements and increased support under the non-domestic scheme. Response documents for the consultations are available from https://www.gov.uk/government/policies/increasing-the-use-of-low-carbon-technologies/supporting-pages/renewable-heat-incentive-rhi

Key features of the new policy are:

  • An increase in support for renewable CHP, large biomass boilers (over 1MW), deep geothermal, ground source heat pumps, solar-thermal and biogas combustion;
  • New support introduced for air-water heat pumps and commercial and industrial energy from waste;
  • An evolved approach to budget management.

Success so far

Figures revealed as of May 31 2014, a total of 79 households had installed renewable heat technologies since the scheme launched back in April (domestic), leading to some commentators describing take up as “deeply depressing” and comparisons with the Government’s Green Deal (Green Wise, 2014) However, the Department of Energy & Climate Change said the 3 month figures were in line with Government targets

DECC pointed to more than 2,000 applications (as of July 2014) that had been received for the domestic RHI. A total of 1,075 low carbon heating installations had been accredited under the scheme by July. The figures published in July 2014 by DECC showed that the non-domestic scheme had received 5,819 full applications and 4,464 accredited installations (Green Wise, 2014)

Social landlords are declining to take up the Renewable Heat Incentive (RHI) due to upfront costs. Department for Energy and Climate Change (DECC) data released in October 2014 showed only 510 measures had been installed by social landlords since the scheme launched in April, compared with 9,287 by owner-occupiers (Inside Housing, 2014). Leading figures in the sector said that to improve take-up of the scheme, the government must offer more financial incentives and promise to maintain the terms and conditions of RHI, as opposed to changing them as it has with other sustainability schemes.