The Renewable Heat Incentive (RHI) is a government scheme available to domestic and business properties, providing a financial incentive to those who use appropriate energy-efficient or renewable heat.
With the UK government committed to making the country carbon neutral by 2050, schemes such as the Renewable Heat Incentive (RHI) are coming under the spotlight. The scheme launched in November 2011 for business property and April 2014 for domestic. Originally set to close its doors to new applications in March 2021, the domestic RHI has had a 12 month extension when it will be replaced by the Clean Heat Grant. The deadline for non-domestic RHI is still unclear after some ambiguity in the March budget but there is likely be some support for clean heat technologies. The Heat Pump Association is lobbying hard to seek clarification on this.
The Renewable Heat Incentive is part of the drive to reduce UK emissions, which are currently 42% lower than 1990 levels. That sounds impressive but there’s still a long way to go to reach net-zero targets, with only around 8-10% of UK homes heated using renewables.
The incentive provides a regular payment to householders or businesses investing in renewable heating sources to replace older and often more polluting systems; for example, when air-source or ground-source heat pumps and biomass boilers replace traditional gas or oil burners. In domestic cases for seven years following registration, people receive a quarterly payment directly into their chosen bank account for the renewable heat they generate and use. The aim is to provide a staggered source of funds to offset the upfront costs of system installation.
The Renewable Heat Incentive (RHI) was a world-first, aimed at helping householders and landlords revolutionise homes and heating with low-carbon solutions – but its time is running out.
From April 2021, those already signed up to the RHI will continue to receive their payments until the end of the payment period. For others interested in installing renewable heating sources after that date there is no replacement incentive lined up so far. RHI payments are paid quarterly. The UK government Department for Business, Energy and Industrial Strategy (BEIS) sets the tariffs when you apply, and these remain the same throughout. There are different tariff levels for domestic and non-domestic properties and for different technology types.
This tariff may vary with inflation – before April 2016 it was linked to the Retail Price Index (RPI), and thereafter the Consumer Price Index (CPI).
For example, someone who applied for RHI with an air source heat pump in 2014 received a starting tariff just over 7p per kW/h compared to almost 11p per kW/h at 2020’s rates.
There are payment caps in place, relevant to properties with larger heat demands.
According to UK government figures, people signed-up to the RHI have received payments of up to £2,800 a year. They’ve also saved up to 5.2 tonnes of carbon emissions annually, based on a typical 3-bed, semi-detached property. Exact payments and savings depend on the system installed and it is replacing; the most popular installation option being heat pumps.
These figures are supported up by impressive statistics for RHI adopters when looking at energy production, or gigawatt-hours. A gigawatt-hour (GWh) equals one million kilowatt-hours (kWh) of electricity – enough to power around one million homes for an hour.
The UK government aimed for 12% of UK homes to be renewably heated by 2020 and looks set to achieve 8-10%.
The Committee on Climate Change wants to radically up the ante and have 15m UK homes with heat pumps or hybrid heat pumps by 2035 – a huge leap compared to the 95,000 RHI successes thus far.
This is a massive challenge for the UK, not just for the heating industry, but also in terms of building trust and awareness, making more customers interested in renewable energy options.
Here at Utility Team, we are able to assist not only with the application process but also the installation of the technology it can be claimed against. Our network of partners work alongside clients to install and implement technology ranging from biomass, CHP and solar thermal panels. Not only that, but working closely with our business energy consultants, we can also arrange for our clients to take advantage of our Revolving Green Fund (an interest-free fund for green initiatives), reducing concerns around upfront capital costs.