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The Renewable Heat Incentive is changing

On Wednesday 20 September 2017, there were some important changes to the domestic Renewable Heat Incentive (RHI).

The domestic RHI is the government scheme to get more people installing green heating technologies in their homes.

For those considering installing a ground-source heat pump (GSHP), air-source heat pump (ASHP) or a wood-burning central heating system (biomass), it may be time to consider it a little more seriously, as tariff payments for using those technologies are going up. 

Better rates for three technologies

Annual payments are rising. A typical house with a biomass system could see an increase from £700-£1,195 to £1,190-£1,635. For air-source heat pumps, it’s a rise from £870-£940 to £1,140-£1,235, while for ground-source heat pump models there’s a smaller increase, from £2,355-£2,555 to £2,380-£2,585.

These calculations are based on average-sized four bedroom houses with 250mm of loft insulation, cavity wall insulation, and solid wall insulation for properties with heat pumps. Cavity and loft insulation, of course, being essential for getting the best performance out of a green heating system. 

The changes have come about following a government consultation on domestic RHI, which aimed to give more certainty to the renewable heat market and improve value for money and consumer support.

Improving the investment

Renewable heating technologies are by no means cheap to install. Biomass heating typically costs from £8,000 to £15,000 to install. Typical air-source heat pumps are in the £6-8,000 range, but can cost significantly more for larger models. Ground-source models, which require the installation of a ground loop as well as the pump itself, cost around £10-18,000.  

With this in mind, the new tariffs offered through the Renewable Heat Incentive could make the paybacks more attractive. It’s also good news for anyone who applied to install a technology through the scheme since 14 December 2016, as the increase will automatically apply to them too.

Aled Stephens, Energy Saving TrustEnergy Saving Trust Analyst, Aled Stephens (pictured), said: “A tariff increase makes investing in renewable heating more lucrative. As we’ve seen in the past, such as with solar PV under the Feed-in Tariffs, when tariffs have been high there has been an increase in the number of installations. 

“It’s also likely that the cost of these renewable heating systems will come down in the longer term due to the increased demand.”

Getting warmer – but only so warm

But the changes aren’t just about tariff increases. Payments are calculated based on the annual heat demand of properties as stated on their Energy Performance Certificate (EPC), and there will also now be a limit placed on annual heat demand for these technologies.

For biomass, that will be 25,000 kWh, for air-source heat pumps 20,000, and ground source pumps 30,000. To put these figures into perspective, the typical household uses around 80 per cent of its energy on space heating and water heating, which would be around 13,000kWh.

Aled explained: “The heat demand caps are quite a bit higher than the typical domestic heat demand, so it’s unlikely that most typical households heat demands will reach the limit.

“However, the heat demand limits may affect some larger and less energy efficient households. You can check the heat demand on your EPC to know the amount that you will be paid under the RHI.”

Energy Performance Certificate (EPC)

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Sticking with solar

It’s notable that tariffs for solar thermal technology have stayed the same. Aled thinks this is logical. 

He said: “Tariff support is already high for solar thermal, at 20.06p per kilowatt hour. The government consulted on how to change the tariff, even considering whether to remove support for solar thermal altogether. 

“Following the consultation it was determined that they should continue to support the technology, as they realised it has the potential to incentivise more installations and drive the cost down further than was previously thought.”

More change coming

Later this year, or early next, further changes are on the way. There will a new requirement for electricity metering on heat pumps, so that consumers can better understand how their technology is performing. Changes to how tariffs decrease as technologies become cheaper over time will also be announced.

It’s not just about up-front cost

When considering how good an investment renewable heat technologies might be, it’s important to also consider the potential fuel bill savings. The savings vary considerably depending on what fuel you’re replacing.

For example, installing a biomass system will save you money if you replace a coal fired system, an old gas boiler or old electric heating system – the latter could see an annual £400 to 800 saving in heating bills. However, it’s unlikely to be a money-saving option if replacing a modern gas or oil boiler. Likewise, with heat pumps, replacing older and electric systems is usually the best route to considerable cuts in energy bills.

Aled added: “The changes reflect the Government’s recognition that heat pumps and biomass heating are important technologies in the transition to low carbon heat, particularly in areas that are not on the gas grid. 

“When you’re considering return on investment for renewable heating options, along with the cost of the technology, a lot depends on the household heat demand and current heating system.”

For more information on funding requests, contact your local energy advice centre on 0300 123 1234 or email energy-advice@est.org.ukIf you're based in Scotland, contact Home Energy Scotland on 0808 808 2282 or request a call back.

Share your thoughts with us in the comments below, or tweet us directly @EnergySvgTrust.

Gary Hartley is Energy Saving Trust's expert blogger. He has extensive experience researching and writing on a number of topics, with particular expertise in sustainable energy, policy, literature and sport. As well as providing regular blog content, Gary has also been published in numerous magazines and journals.

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“It’s also likely that the cost of these renewable heating systems will come down in the longer term due to the increased demand.” That didn’t work with the Solar PV. The only thing that made the costs drop was the dramatic reduction in the FIT

Does the revision mean that solar thermal with a thermal store (and other heat source inputs including biomass) now qualified for the RHI?

Commissioning a Domestic Energy Assessor, or even better a Green Deal Adviser, to carry out a thorough top to bottom energy assessment of your home, accessing every room and loft spaces, resulting in an Energy Performance Certificate (EPC) is a wise first step if you are wondering if renewable heating could be right for your property, and what this might mean in terms of investment cost for your particular home, and the financial return on your investment from the Domestic Renewable Heat Incentive. Some Advisers, especially those who do much work with renewables, will be able to explain what this means for you - tailored to your occupancy of your home, and your use of energy. The heat demand figures in an EPC are relevant - for space and water heating - the new higher tariffs will be more lucrative for smaller homes, but generally the new limits will limit the RHI for larger homes - and note that it is only the renewable proportion of energy used to run the new heating systems that are used to calculate the RHI (not what you will read on the EPC heat demand section!) nextGenergy can explain this further when working on your home survey and will re-cap when issuing your Advice Report.

If your property already generates electricity, having an additional meter fitted to measure the quantity in kWhs of your own unused renewable electricity that your property is exporting to the grid currently. Is data that is easy to get - also very relevant when reviewing how much of your own on-site energy is available to assist with linking into helping power an efficient inverter-driven heat pump system for example, and if you already have a hot water tank fitted with an immersion, then surplus energy at any time of the solar generating daylight hours, could be diverting unused on-site generated energy to the hot water tank, giving the new heat pump system less work to do. It usually works out best to consider the whole picture of technology integration for compounded benefits - and to form a plan - again an experienced Adviser's input from the outset, is well worth it.

This Adviser has learned much herself, having a meter installed in her home to measure unused on-site energy generated by solar panels generating electricity. We have chosen to divert that energy into storage for our own use - not a battery for the house, one of those is not needed - we use the hot water tank, and this family's electric cars - and we still have 6% of our own energy unused, and exporting to the grid when then hot water tank is full. If you would like to read more about this case study, then please look up the Energy Saving Trust's Green Homes Network for the home in Glenrothes with ref SE 583, or there's a bit more written about it on the National Energy Foundation's SuperHomes website. Happy to answer any queries about getting renewables working optimally for your household.

Shirley Paterson
Domestic Energy Assessor & Green Deal Adviser
nextGenergy

Hi there V Glover-Ward,

Thanks for getting in touch. We've spoken with Aled (pictured above) who has advised the following:

“The eligibility requirements have not changed. Solar thermal continues to be eligible for the RHI only if it is producing domestic hot water for a domestic property. Biomass and heat pumps continue to be eligible if they provide space heating, or space and domestic hot water heating. Space heating must be delivered using a liquid medium, such as through a radiator.”

We hope this helps.

-

EST Team

Disappointed that our March 2015 ASHP will not see the increase.

Is it still a good idea and profitable to install solar panels?

Is all of this solar heating being installed in council houses,we use electric and hot water too,could you please find out if and when soled power is going to be installed in the ng177np area,like the council houses in Nottingham.

I have a solar pv installation and it’s registered for FIT payments. I have solar thermal but it is not registered. I have a logwood burning biomass 25kw boiler with 1000 litre accumulator that heats a 5+ bed house but it’s not registered. And of course a wood burning stove in the lounge.

Can I register my biomass and my solar thermal for payments. If they needed a component upgrade to conform fine. Anyone any thoughts please.

Just for info I buy a small tank of heating oil every year and have an elec bill per month of £45, until I switch that is. I probably get £1000 in FIT payments each year.

I am about to install a Gasification Wood burning stove with back boiler to replace my existing Clearview stove, to run the central heating and heat the hot water. I decided to try to be greener with my energy use, as I already have Solar panels. I did some research and found that the Walltherm Gasification boiler, with 93% efficiency ,was the best option. The cost is around £10,000, a big investment, especially as I am retired. I understand from the manufacturer that this boiler stove is classed as a Biomass boiler, as It only burns wood. So please tell me, is this boiler stove, part of the RHI payment scheme. If not, why is this so! Please explain to me, for what reason or reasons this is not entitled to RHI, if you cannot answer this question please refer me to some one who can. Regards Geoff Fordyce.

I have a dry source heat pump system it’s a total waste of money
Sitting here in my living room with this so called state of the art system with a wool jumper on and my wife with a shawl round her neck just to keep warm a bloody lot of money for nothing