Renewable Heat Incentive – Get Paid for Your Heat Pump

Renewable Heat Incentive – Get Paid for Your Heat Pump

Getting money for your renewable heating costs in your home for any type of heating is possible. This is based on the fact that your heating system makes use of renewable heat and you can claim payments over seven years. If this is agreed the RHI payments a household can receive will depend on the rate of energy consumption and on the applicable RHI programme rate.

In general, the programme is well received and is a success according to the Department for Energy and Climate Change (DECC) and the UK Government as a whole.

What is the Renewable Heat Incentive (RHI)?

The Renewable Heat Incentive is a government funding scheme aimed at encouraging the use of renewable heating which can help Britain reduce its dependence on fossil fuels for energy consumption.

The system is available for residential, municipal, and industrial premises where a renewable heating system for all or part of a household or commercial property serves as the primary heat source.

Households and other businesses earn an RHI refund for installing a renewable heating system that provides a certain amount of renewable and clean heat, which effectively means you are reimbursed for preferring a renewable heating system over a traditional heating system.

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What Technologies can you Claim RHI Support for?

You must incorporate registered technology to heat your home in order to receive funding under the Renewable Energy Incentive in the household programme. Then you can apply for financial assistance to cover the installation costs.

Registered technologies include photovoltaics, wind, solar, geothermal, hydropower, and biomass, biomethane, CHP, ground source heat pumps, water source heat pumps, air source heat pumps, deep geothermal, solar thermal, solar-heating photovoltaics, and regional heating.

Such heating systems will, on average, pay for themselves within three years of construction and provide an average of 1,000 kilowatt-hours of energy (kWh) per year.

Who can Apply for the RHI?

You can apply if you live in England, Scotland or Wales. You must also either:

  • be a social or private landlord; or
  • own your home.

RHI support is not usually available to new build properties (other than self-build projects).

Types of RHI

The Renewable Heat Incentive has two schemes – Non-domestic and Domestic. They have separate application processes, rules, conditions attached, and tariffs.

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Domestic Renewable Heat Incentive (RHI)

The Domestic Renewable Heat Incentive is a financial assistance programme set up by the government for renewable heating systems including air source heat pumps and ground source heat pumps. The programme was implemented in April 2014 and is regulated by the energy regulator, Ofgem. The Domestic RHI’s role is to encourage and reward every household that switches from traditional fossil fuels to heat their homes with renewable ones, helping to achieve the goals of carbon reduction and renewable energy by the government.

Over a seven-year period, eligible heat pump owners will be paid for the renewable heat generated annually by the property’s heat pump.

The renewable heat that is eligible is primarily the energy needed to heat the house and provide hot water for home use. Payments are typically based on the amount of heat generated by the heat pump and are expected to increase year after year.

How is the Domestic RHI Determined?

Domestic RHI Heat Pump Tariffs

Domestic RHI is a system based on tariffs. The table below lists the current Domestic RHI tariffs for air source heat pumps and ground source heat pumps. The tariffs show the amount you get for each renewable heat unit generated by your heat pump while heating your premises.

Technology RHI Tariff [p/kWh]
Air Source Heat Pump 10.85
Ground Source Heat Pump 21.17

For example, the total hot water demand and space heating for a standard 4-bedroom detached house is 20,000kWh a year while the ground source heat pump system’s capacity is 11kW and the seasonal performance coefficient for the ground source heat pump is 3.5.

That means the heat pump generates 3.5 units of heat for every unit of electricity consumed. The difference between electricity input and total heat production is renewable heat. So for this example, 2.5 units are counted as renewable heat for every 3.5 unit of heat generated.

Therefore,

Renewable Heat = 20,000kWh x (2.5 ÷ 3.5) = 20,000kWh x 71% = 14,286kWh @ 21.17p/kWh = £3,024 per annum

Overall Annual Domestic RHI Payment = £3,024 per annum

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Non-domestic Renewable Heat Incentive (RHI)

The Non-domestic Renewable Heat Incentive is aimed at non-profit organisations, the public sector, businesses, as well as buildings where a single heat pump system heats multiple residential facilities.

The Non-domestic RHI is a government programme that offers financial incentives for the use of sustainable and renewable heating devices such as air source heat pumps and ground source heat pumps over a period of 20 years.

The measured amount of heat generated by the heat pump is used to calculate payments. They are also index-linked, so payments are expected to increase year after year.

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How is the Non-domestic RHI Worked Out?

The Non-domestic RHI is a system based on tariffs. The following table represents the actual Non-domestic RHI tariffs for air source heat pumps and ground source heat pumps. The tariffs determine the amount you can earn through your heat pump or every unit of heat output produced.

Non-domestic RHI Payments Table

Technology RHI Tariff [p/kWh]
Air Source Heat Pump 2.79
Ground Source Heat Pump Tier 1 – 9.68
Tier 2 – 2.89

The tariff of Tier 1 applies to the initial heat which is the amount of heat produced by the heat pump installation in kWh if it runs at capacity for 15% of the year whereas the charge for Tier 2 is based on the rest of the year’s production.

For example

Complete demand for space heating and hot water = 50,000kWh per annum

Tier 2 kWh = 50,000-39,420kWh

Tier 1 kWh = 30 x 1,314 = 39,420kWh at 9,56p / kWh = £ 3,816 per annum

Tier 2 kWh = 50,000-39,420 = 10,580kWh at 2,85p / kWh = £ 306 per annum

Complete Non-domestic RHI Payment = £ 4122 per Annum

What Affects the Money I can get for my Home?

There are restrictions on the amount of space heating for which a house can get payments. The thermal demand limitations for air source heat pumps are set at 20,000kWh, for stoves and biomass boilers at 25,000kWh, and for ground source heat pumps at 30,000kWh. Solar water-heating systems are without limit.

Can I get a Water Source Heat Pump on the Renewable Heat Incentive (RHI)?

The RHI law is not well defined in this regard and has caused confusion among many who want to have a water source heat pump system. The list of liable facilities goes into painful detail about what is acceptable and what is not, but never addresses the water source heat pump.

That’s why people get confused about whether or not water source heat pumps come under the scheme’s remit. Water source heat pump systems are eligible for RHI but they are listed as ground source heat pump systems. This means that any installation of a water source heat pump, so long as it meets the majority of the requirements for the ground source heat pump, is qualified for the same payments.

Other Heat Pump Grants in the UK

Home Energy Scotland Loan

Scotland is one of the leaders championing sustainable and renewable energy systems. In their campaign to encourage homeowners to switch to renewable heating, the Scottish government created this grant programme to provide up to £ 10,000 for heat pumps. The great thing is that there is no interest on the loan, and qualified lenders only have to pay a relatively modest charge.

The Assignment of Rights (AoR)

This funding plan provides a useful solution for homeowners who are put off by the initial cost of installing a renewable heating system. How it works is, a designated investor would fund the procurement and installation of a renewable heating system through the AoR program. The investor will then claim the payment of the RHI from the company to recover the initial investment.

The Green Deal

The Green Deal is a private enterprise which was originally run by the government but was acquired by private investors in January 2017. It offers loans to UK property owners through its network of suppliers. These loans aim to support renewable energy projects and improvements to energy efficiency.

Can you get a Grant to Replace your Boiler?

Private tenants and qualified homeowners can replace their boilers with a more effective and efficient model than their unreliable and existing boilers by making use of the boiler grant. A boiler grant is a type of subsidy that allows families and low-income homeowners to replace their old boiler system with a brand new one free of charge or at low cost.

The system was developed not only to help vulnerable families access the hot water and heating they need but also to support government initiatives to increase energy efficiency. The following energy suppliers subsidise the boiler grants: SSE, Scottish Power, Npower, EDF Energy, and British Gas. These are non-repayable so in the future, you will not need to make any repayments on your new boiler.

To be eligible:

  •       You will automatically qualify if you earn child tax credits (households with an annual income of less than £ 16,010) or pension credits
  •       Your existing boiler must be over five years old.
  •       Your premises must be linked to a supply of mains gas.
  •       You must be the property’s owner.

Home Insulation Grants

For most of the UK, there are many forms of insulation grants available that come under various schemes, such as the national Energy Companies Obligation (ECO) scheme and the Affordable Warmth programme, along with numerous local reward systems.

The qualification process constantly changes and if you failed before, you can try again every 6 months as the requirements change. The simplest way to know if your household is eligible for any of these grants is to fill in the form and your inspector will decide on the grants that are suitable for your situation.

Before applying it is necessary to evaluate which measure is appropriate for your house, especially whether or not your walls have a cavity, as the grant method varies for different types of insulation.

The ACE Heat Pumps UK: A Reliable Partner for Renewable Energy Technologies and Heat Pump Installations

At The ACE Heat Pumps UK, we are dedicated to providing renewable energy solutions and installing land heat pumps, heat pumps from air sources and heat pumps from hybrids. We will oversee the design of the heat pump from start to finish, and provide unparalleled aftercare and repair services. Our services are available throughout the UK, and to ensure a quick response our heating engineers are available 24/7.

Our engineers have extensive expertise and can work on a variety of projects, from homes and big corporate buildings to small businesses, industrial sites and schools. If you would like to install heat pumps for your home, office or commercial premises, or have any questions about how heat pumps operate, please contact us today on 01273 257407.

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