Renewable Heat Incentive – Domestic RHI – paid over 7 years
Owners of ground source heat pumps systems (and other eligible renewable heat technologies) installed in domestic properties can apply for RHI – a financial incentive receivable over seven years. The domestic RHI applies for all ground source heat pumps installed since 15 July 2009.
DECC published its Domestic RHI Policy on 12 July 2013. RHI for domestic buildings applies from 9 April 2014. Renewable heat installations can receive a cashback subsidy of 19.1 pence per kilowatt hour used – for the first seven years of the equipment used.
The RHI tariff table below shows the technologies that are eligible for domestic RHI and the tariffs for each technology, (including the degressions that apply only to biomass installations). The RHI provides a major incentive for owners to invest in ground source heat pumps and solar thermal renewable heat technologies from now until the RHI ends in March 2021. The tariffs are based on pence/kWh of renewable heat delivered. The rates vary with the technology used as follows:
over 7 years
To receive RHI for a domestic building, each system must be installed by an MCS certified installer.
Each domestic building must show an Energy Performance Certificate to evidence its deemed energy use.
The rate for biomass fell from 12.2p to 10.98p in Jan 15, and by further steps to 6.54p from April 17.
Deeming of heat used for Domestic RHI
Although metering of heat used is required for RHI payments for Non-Domestic buildings, for the Domestic RHI metering is seen as uneconomic and inappropriate: there is a danger that additional heat generated and wasted would increase RHI payments. Ofgem pays RHI on the basis of the deemed heat used by a property, as evidenced by an Energy Performance Certificate.
However, second properties and those with fossil fuel heating alternatives will have to install meters and be paid on heat generated (up to the limit for deemed heating).
BEIS plans to introduce limits for RHI payments on Domestic installations
BEIS proposes to introduce limits to the level of RHI payments on domestic installations, despite strong opposition expressed to the DECC consultation of February 2016: the largest installations are the ones that save the most carbon.
However, the Government plans to introduce limits on the amount of renewable heating above which Domestic RHI will not be paid:
- the limit for ASHP installations will be 20kWh – up to £1,357 a year for 7 years = £9,498
- the limit for biomass boilers will be 25kWh – up to £1,620 a year for 7 years = £11,340
- and the limit for GSHP installations will be 30kWh – up to £4,206 a year for 7 years = £29,442
Shared Ground Loops
Where separate domestic properties have ground source heat pumps linked to a common ground array then it is possible to apply for Commercial RHI (at a lower rate, but over 20 years) instead of the Domestic RHI (over seven years).
However, the "heat demand limits" of 30 kWh that will apply to domestic gshp RHI installations from the time legislation is passed (expected in autumn 2017) will also apply to domestic properties applying for Commercial RHI using a shared ground loop.
RHI Tax free index linked income for 7 years
RHI tariffs are exempt from income tax. This means that domestic users and other income tax payers will not be taxed on any income received from the Feed-In Tariffs or the Renewable Heat Incentive. RHI payments are also index linked – they are adjusted for inflation on 1 April each year.
A ground source heat pump provides an excellent method for providing emission free heating and avoiding further rises in energy bills, as well as attracting RHI, but they must be installed by an experienced contractor for the full potential to be realised.
Please verify if your contractor is a member of the GSHP Association.