In the UK, 85% of households have boilers that burn natural gas. This is one of the key contributors to the UK’s national carbon footprint. It’s a statistic that needs to be addressed if the UK is to reach its Net Zero carbon emissions target by 2050. Millions of homes will need to be converted to renewable energy systems when it comes to heating. To encourage homeowners, landlords and property owners to switch to renewable energy the government has introduced an incentive scheme.
What is the Renewable Heat Incentive Scheme?
The Renewable Heat Incentive (RHI) is a government scheme that makes quarterly payments for seven years if you switch from fossil fuel to a renewable technology to heat your property. It’s aimed primarily at properties that are connected to the gas grid and those in areas not on the grid where homes are heated by oil, coal, or LPG.
It’s open to properties in England, Scotland and Wales, but the RHI scheme in Northern Ireland was closed to new applicants in 2016. There are two versions of the scheme, one for residential properties and another for non-domestic properties such as commercial buildings, industrial units, public sector and community buildings.
Is this the same as the Feed-In-Tariff scheme?
The Feed-In-Tariff (FIT) scheme was closed to new applicants in 2019. For those already on the scheme, cash payments are made to households in exchange for exporting renewable energy to the national grid. The scheme has been replaced by the Smart Export Guarantee (SEG). All of the large energy companies are required to take part in the scheme which makes payments for any excess electricity households fitted with a renewable energy generation system that are exported. It’s a less generous scheme than FIT which rewarded you for all the energy you generated whether or not it was exported.
These schemes are different to the RHI which is designed to offset some of the outlay of installing a renewable heating system, rather than providing an income for the electricity you generate. The RHI also covers different renewable technologies, such as heat pumps, air pumps and biomass boilers.
How does the RHI work?
The RHI gives financial support to help offset the cost of installing and running your new heating system. It’s run by the Department for Business, Energy and Industrial Strategy, and if your application is granted you will receive a quarterly payment from the scheme for seven years. It’s possible for households to install more than one renewable energy source and receive payments for each one.
The size of the quarterly payments you receive per kWh of heat depends on the type of technology you install. Your home’s EPC rating will also be a determining factor. Payment rates can also fluctuate year-on-year in line with prices.
The payments are administered by Ofgem, the energy regulator.
Which technologies are covered?
RHI payments are currently paid for air-source heat pumps, ground-source heat pumps, biomass boilers and solar water heating systems.
Who can apply?
To make an application to the scheme you have to be the owner of the property. An applicant, therefore, needs to be an owner-occupier, private or social landlord or a self-builder.
If you are a tenant of a property you are unable to apply for the scheme, should your claim be granted your need to comply with the rules of the scheme throughout the 7 years of eligibility.
Types of property
In the case of a new-build property, it must be custom-built and remain unoccupied until after the renewable heating system has been commissioned. They must also be owned by private individuals rather than companies. The domestic scheme is aimed at single properties only, meaning that a shared renewable heating system for an entire block of flats, would not be eligible. However, a landlord or residents may be able to apply through the non-domestic RHI scheme.
Systems that provide heat to more than one building, such as main property and a garden office or swimming pool, may be eligible for the scheme.
Is it worth applying for the Renewable Heat Incentive?
The domestic RHI scheme is most likely to be beneficial if your home is not on the gas grid and you’re looking to replace your current heating system with a renewable one. Off-gas-grids will usually be considerably more expensive to heat efficiently, so there is real potential to save on fuel bills over the medium term. You should also make sure that renewable heating is going to be suitable for your home.
Before you begin installing a renewable heat source into your home you should ensure that it’s properly insulated and as energy efficient as possible.
Although primarily designed to help owners of properties that are not connected to the gas grid who typically have much higher bills, homes connected to the grid are also eligible. The savings may not be as great if your home is part of the gas grid, but that doesn’t mean it’s not worthwhile making the change to a renewable heating system. They can add value to a home with buyers increasingly interested in energy efficiency and reducing their carbon footprint. Research has found that many buyers prioritise renewable aspects on a potential purchase ahead of other considerations such as a garden or an extra bedroom.
A valid Energy Performance Certificate
Before you can install any renewable heat technology and apply for RHI you will need to have a valid Energy Performance Certificate (EPC). This can’t be more than two years old and will need to accurately reflect the current condition of your home. If you’ve made any change to the insulation levels at your home such as fitting double glazing or having cavity wall insulation applied, then the EPC should take account of this. Likewise, if you’ve had any building work such as the addition of a conservatory or utility room, you will need a new EPC. If your EPC makes any recommendations such as loft insulation, you will need to have the work done and then get a new EPC before you can apply for RHI payments.
An Energy Performance Certificate is required when you sell or let a property therefore it’s important to ensure that yours is up to date. By carrying out any recommendations on the EPC you are likely to save yourself money going forward.
Find an MCS Installer
To qualify for RHI payments you need to find an MCS installer to complete the installation of your renewable heating system. MCS stands for the Microgeneration Certification Scheme. It’s an independent scheme that provides certification to both microgeneration products and qualified installers, all of whom meet a particular set of quality standards. It provides a basic level of consumer protection and assurance. The MCS ensures that both the system you choose and your installer complies with industry standards.
When you make your application for the RHI you will need to provide evidence that both your renewable heat system and the installer are MCS accredited. This is crucial to your application and without proof of both you won’t be eligible to receive RHI payments. Make sure you check with your installer that they have MCS credentials and that the system meets all of the criteria for inclusion in the scheme.
What if you want to keep a back-up heating system?
If you still wish to keep an oil-boiler or LPG as a back-up heating system alongside your renewable energy heating system then the latter may need to be metered. The same applies if your property is only occupied part of the year. Your installer will be able to fit a meter to your system at installation.
How do you make an application?
Once you have the necessary documentation in place it’s easy to make an application to receive the RHI. You application is free to submit if you do it directly via the energy regulator, Ofgem. You can find the application form here. If you’re unable to apply online then you can apply over the phone with an adviser on 0300 003 0744.
Some application management companies offer to submit the application for you but for this they will usually charge, so they are best avoided. If you have any questions about the process your MCS installer will be able to advise, as too will Ofgem.
Previously, there was a time limit of 12 months from the installation date for you to make your application. This was relaxed as a result of the Covid-19 pandemic and the challenges it has presented. Your installer will be able to advise you about any time limits as they currently stand but as a general rule it’s wise to make your application sooner rather than later.
The Consumer Price Index (CPI) and tariffs
During the 7 years your scheme membership will run, your tariff rate will change in line with the Consumer Prices Index (CPI). This is calculated in April each year and is the only factor that can impact on the tariff rate you will receive. These updates take place automatically and will be available to view online along with your payment schedule.
Are there any ongoing requirements?
As part of your application to join the domestic RHI you will automatically consent to a range of ongoing obligations that are part of the scheme. One of these responsibilities is to comply with any ongoing obligations related to your specific renewable energy heating system and your household.
Every year you’re required to fill out an annual declaration. This declaration includes a range of commitments that ensure you’re complying with all of the scheme rules. It’s designed to ensure that you are paid the correct amount of money for the heat you generate. The declarations you’re required to make are:
- That you still own a heating system in your property.
- That the system is in good working order and hasn’t been substituted.
- That any meter you were required to install is in good operating condition.
- Any other requirements that you need to fulfill regarding both the occupants of your property and your heating system.
Ofgem also carries audit checks to ensure that participants in both the domestic and non-domestic RHI schemes are complying with the regulations for their respective schemes. Anyone who is a part of the scheme can be selected for an audit. These are selected for a number of reasons as well as random sampling.
Therefore, it’s important to keep your renewable heating system well maintained. Not only will this ensure that it’s working as efficiently as possible but will reduce the chances of costly breakdowns and falling foul of an Ofgem audit. Your MCS installer will usually be able to offer a regular maintenance service.
Air-source heat pumps are a practical solution for a wide range of properties
Air-source heat pumps offer renewable heating solutions for a wide range of different domestic and commercial properties. At Enviro Chill, we fit and supply air-source heating systems from some of the world’s leading manufacturers. These can lower your carbon footprint, reduce your heating bills and enable you to access the RHI scheme. We’re also MCS accredited installers and can advise on the application process.
If you’d like to learn more about air-source heat pumps and how to apply for the RHI scheme then we’d love to hear from you.