Renewable Heat Incentive (RHI)
Ice Energy have been lobbying Government for a number of years to get more support for renewable energy products such as ground source heat pumps and air source heat pumps because of the value we believe these products offer consumers and the overall positive impact they can have on the environment.
We are therefore delighted that on April 9th 2014, government confirmed the launch of the domestic Renewable Heat Incentive which will provide exactly the support for heat pumps and renewable energy we have fought so hard for.
If you are an existing Ice Energy customer with an RHI query, please click here.
STOP PRESS: The Consumer Spending Review has revealed funding for the Renewable Heat Incentive will increase to £1.15bn in 2020-21. Read more...
What is the Renewable Heat Incentive (RHI)?
The Renewable Heat Incentive (RHI) is a financial support scheme for renewable heat. The scheme is now open for applications and is administered by the energy regulator Ofgem with the purpose of supporting and rewarding households who move away from fossil fuels for heating their homes.
Working in a similar way to the Feed-in-Tariff for solar photovoltaic (solar PV) systems, owners of heat pumps will be paid according to the total heat load of the property in kilowatt hours, for seven years tax-free.
What are the payment levels under the Renewable Heat Incentive (RHI)?
The amount of money you can receive under the Renewable Heat Incentive will be dependent on a number of factors including:
- Renewable technology installed (ground source heat pumps, air source heat pumps, solar thermal)
- Deemed heat load (the amount of heat likely to be generated by the renewable energy heating system)
The government assumes a 20 year lifetime for renewable heat technologies and has factored in the lifetime (i.e. 20 year) costs of operating the renewable heat system into the tariff values which are paid over 7 years. So, in effect, you are paid for 20 years of operation within a 7 year period.
An indication of the payments you could potentially receive can be viewed on our RHI Payments Table.
Participants will receive RHI payments quarterly in arrears for seven years. Tariffs will change annually in line with the Retail Price Index (RPI).
If you have previously received public funding for your heat pump system, such as the Renewable Heat Premium Payment, this must be declared as part of the application process. This will then be deducted from RHI payments under the scheme. Initially, a deduction equal to one twenty-eighth of the value of the prior public funding received will be made from each quarterly payment.
Who is eligible to receive the Renewable Heat Incentive (RHI)?
The domestic RHI scheme will give financial support for an eligible renewable heating system that heats a single domestic property in Great Britain. The property can be on or off the gas grid. Payments will go to the owner of the system.
The following groups will be eligible to apply for the domestic RHI (and all receive the same tariff):
- Owner occupiers
- Private landlords
- Registered social landlords
- Third party owners of a heating system
Self-builders are defined as those who have built or commissioned a home for their own use, either by buildingthe home on their own or working with builders. Second homes are also eligible for the RHI. These are homes that are not a person's main residence. Applicants for second homes will have to install metering equipment which will measure the amount of heat used.
New Build Properties – 183 Day Occupancy
The domestic RHI requires that if a property is occupied for less than 183 days, in a 12 month period, a heat meter must be installed to measure renewable heat use and determine payments, instead of payments being based on the annual heat demand specified on the property’s EPC.
This occupancy requirement ensures that the Domestic RHI delivers value for money for the taxpayer by not overpaying for renewable heat systems installed in properties that are not continuously occupied (for example, second homes).
This has resulted in the unintended consequence of eligible new self-builder properties having to wait 183 days prior to scheme application or installing heat meters as they are unable to provide evidence that they have lived in their homes for at least 183 days in the previous 12 months.
To overcome this, we are amending the regulations to make eligible new build properties exempt from the 183 day occupancy requirement in the 12 months prior to application to the scheme. Thereafter, these participants will be subject to the standard ongoing obligations which include the annual declaration that the property has been occupied for 183 days or more in the last 12 months.
New build systems will not be eligible for the scheme. This means properties in which the renewable heating system was installed before it was inhabited for the first time. This includes applications from house builders and housing developers, as well as anyone who owns a new build property, including legacy applicants. The only exception is self-build homes (see above definition).
The renewable heat installation must be certified under the Microgeneration Certification Scheme (MCS). The installation will need to meet the MCS standards that applied at the time of installation, rather than the current standards.
All systems installed between 15th July 2009 and the launch of the RHI will be eligible provided they meet all the other criteria (referred to as "legacy applications").
Other eligibility requirements of the Renewable Heat Incentive (RHI)
Before applying for RHI support, all applicants including legacy applicants will need to ensure that:
- A Green Deal Assessment (GDA) has been carried out to find out which energy efficiency measures are cost-effective for the property;
- Loft insulation (to 250mm) and cavity wall insulation have been installed where the measures are recommended by the GDA; and
- Where the GDA shows the required loft and cavity wall insulation is yet to be installed, an updated Energy Performance Certificate (EPC) is obtained following installation, as proof of installation (or valid evidence is provided proving why installation was not feasible)
The only exception is for self-builders who have built their property to current building regulations who will simply need to submit an EPC.
All applicants must agree that they are willing to take part in a metering scheme if their property is chosen by DECC as a property to be metered. There will be an extra incentive for applicants who install metering and monitoring service packages of £230 per year for heat pumps.
Legacy applications and the Renewable Heat Incentive (RHI)
Installations of heat pumps since 15th July 2009 are eligible for the RHI, subject to meeting all of the other RHI criteria. To manage the potentially large volume of legacy applications and avoid a backlog we are working with Ofgem to develop an approach to phasing legacy applications over a period of time after the launch of the scheme: that is, staggering the dates when legacy applicants can first apply for the scheme. The last date for submitting a legacy application is Wednesday 8th April 2015.
To find out what this could mean for you and your home call us free on 0808 145 2340.