Renewable Heat Incentive (RHI) Guide

The Renewable Heat Incentive (RHI) was the UK government’s flagship scheme for supporting low-carbon heat technologies, running from 2011 to 2022. If you’re still receiving RHI payments, or trying to understand what replaced it, this guide explains how the scheme worked, what it paid, and what UK homeowners and businesses can access today instead.

The domestic RHI closed to new applicants on 31 March 2022. Its successor, the Boiler Upgrade Scheme (BUS), launched the following day and offers a simpler one-off grant rather than quarterly payments over seven years. Understanding the difference matters if you’re considering solar thermal, heat pumps, or biomass heating in 2026.

Key Takeaways

• The Renewable Heat Incentive ran from 2011 (non-domestic) and 2014 (domestic) until 31 March 2022.
• It paid quarterly over 7 years (domestic) or 20 years (non-domestic) based on estimated or metered heat output.
• The Boiler Upgrade Scheme replaced the domestic RHI with a one-off grant of £7,500 for air source heat pumps and ground source heat pumps.
• Solar thermal panels are NOT eligible for the Boiler Upgrade Scheme, only heat pumps and biomass boilers qualify.
• Existing RHI recipients continue to receive payments until their 7 or 20-year term ends.
• For solar PV systems, the Smart Export Guarantee (SEG) at up to 15p/kWh is the current payment mechanism for exported electricity.

What Was the Renewable Heat Incentive?

The Renewable Heat Incentive was a government financial support scheme that paid owners of eligible renewable heating systems for the heat they generated. The principle was straightforward: install a qualifying technology, have it commissioned by an MCS-certified installer, and receive quarterly payments for a fixed number of years.

The non-domestic RHI launched in November 2011, covering businesses, public sector organisations, and community schemes. The domestic scheme followed in April 2014. Both schemes paid a tariff per kilowatt-hour of eligible heat generated or estimated, with the rate varying by technology and the quarter in which the system was registered.

Eligible technologies under the domestic RHI included solar thermal collectors, air source heat pumps, ground source heat pumps, and biomass boilers. Non-domestic eligibility was broader, covering deep geothermal, large-scale biomass and biogas, heat networks, and more.

How Did Domestic RHI Payments Work?

Domestic RHI payments were made quarterly by Ofgem, the energy regulator that administered the scheme. The amount paid was based on an estimate of how much heat the system would produce, calculated using standardised assumptions about your home and system. You didn’t need a heat meter, Ofgem used a deemed figure based on your Energy Performance Certificate and system size.

Payments ran for seven years from the date of accreditation. The tariff rate was locked in at the point of registration and index-linked to the Retail Price Index (RPI), so it increased slightly each year with inflation. This gave homeowners predictable, inflation-protected income for the duration of the seven-year term.

Rates varied significantly over the life of the scheme. Early registrants, particularly for solar thermal and ground source heat pumps, received higher tariffs than those who joined later as the government managed the scheme’s budget through quarterly tariff reviews and degression mechanisms.

Non-Domestic RHI

The non-domestic RHI was more complex and paid over 20 years rather than seven. Payments were based on metered heat output (a heat meter was required for most technologies), which created a genuine incentive to operate systems efficiently. Technologies included large-scale biomass, biogas, deep geothermal, solar thermal above a certain size threshold, and ground source heat pumps.

Non-domestic applicants also benefited from tariff guarantees, where the rate was confirmed before commissioning if certain conditions were met. This was particularly important for large commercial and industrial projects where the investment case depended on long-term income certainty.

The non-domestic scheme also closed to new applications in March 2022, though existing non-domestic recipients continue receiving payments until their individual 20-year terms end, meaning some businesses will receive RHI payments until the early 2040s.

What Replaced the Domestic RHI?

The Boiler Upgrade Scheme launched on 1 April 2022, administered by Ofgem on behalf of the Department for Energy Security and Net Zero. Unlike the RHI’s quarterly payments over seven years, the BUS offers a single upfront voucher that reduces the installation cost of a qualifying technology.

In 2026, the BUS grant values are:

• Air source heat pump: £7,500
• Ground source heat pump: £7,500
• Biomass boiler: £5,000 (limited eligibility, rural properties off the gas grid only)

The installer applies for the voucher on the homeowner’s behalf, and it’s deducted from the installation cost. You never see the money directly, the grant simply reduces your invoice. Properties must have a valid Energy Performance Certificate with no outstanding recommendations for loft or cavity wall insulation (with some exceptions).

Critically, solar thermal is NOT eligible for the Boiler Upgrade Scheme. This was a significant change from the RHI, where solar thermal was one of the better-paying technologies at 21.16p/kWh. The government’s view is that heat pumps deliver better carbon savings per pound of subsidy, which is why the BUS focuses exclusively on heat pump deployment.

What About Solar Thermal in 2026?

Solar thermal panels, which heat water using sunlight rather than generating electricity, are still a viable technology for reducing hot water bills. A typical domestic solar thermal system covers 50 to 65% of annual hot water demand and costs £3,000 to £5,000 installed, including an MCS-certified installer and any required cylinder upgrades.

Without the RHI, the financial case for solar thermal has weakened compared to competing technologies. Heat pumps benefit from £7,500 BUS grant support and also qualify for 0% VAT. Solar thermal gets 0% VAT but no grant. Most financial advisers and installers now recommend solar PV (electricity generation) paired with a hot water diverter (such as an iBoost or Eddi) as a more versatile alternative, the PV generates income via the SEG, and surplus electricity can heat a hot water cylinder for free.

Smart Export Guarantee: The Solar PV Equivalent

For solar PV systems, the equivalent to the old Feed-in Tariff (FiT) export payment is now the Smart Export Guarantee. The SEG requires licensed electricity suppliers with 150,000 or more customers to offer a tariff for exported solar electricity. In 2026, the best SEG rates are around 15p/kWh (Octopus Energy), making it a meaningful income stream for homeowners who export a significant proportion of their generation.

Unlike the FiT, which also paid a generation tariff regardless of whether electricity was exported, the SEG pays only for electricity that is exported to the grid. Smart meters with half-hourly export readings are required for most SEG tariffs. The combination of self-consumption savings at 27p/kWh avoided and SEG export income at 15p/kWh delivers the financial case for solar PV in 2026.

Case Study: Switching From RHI Solar Thermal to Solar PV

Background

A retired couple in rural Worcestershire had a solar thermal system installed in 2015 under the domestic RHI. Their seven-year RHI term ended in 2022, at which point their quarterly payments stopped. The system was still functioning but ageing, and they were considering their options.

Decision

Rather than replacing or upgrading the solar thermal system, they consulted an MCS-certified installer who recommended a 4kWp solar PV system. The solar thermal was retained to continue providing hot water, and the PV was added to generate electricity for the home. With 0% VAT and no grant available for solar thermal, the PV investment, which attracted 0% VAT and SEG income, offered better overall returns.

Results

The 4kWp PV system cost £6,800 after 0% VAT. In its first year it generated approximately 3,700 kWh, saving around £580 in avoided electricity costs and earning £220 from SEG exports. Total annual benefit of £800 gives a payback of around 8.5 years, with the SEG providing ongoing income thereafter.

Expert Insights From Our Solar Panel Installers

One of our senior solar panel installers with over 18 years of experience across both solar thermal and PV installations commented: “A lot of homeowners who benefited from the RHI are now asking what’s next when their term ends. The honest answer for solar thermal is that without subsidy support, the technology is harder to justify purely on financial grounds unless you already have the cylinder and pipework in place. For new installations, most of our clients are better served by solar PV with an immersion diverter, it’s more flexible, generates income, and future-proofs the system for EV charging and battery storage.”

Frequently Asked Questions

Summing Up

The Renewable Heat Incentive was an important stepping stone in the UK’s low-carbon heating transition, supporting hundreds of thousands of installations across solar thermal, heat pumps, and biomass over its eleven-year life. Its closure in March 2022 marked a shift in government strategy, with the Boiler Upgrade Scheme offering simpler, larger upfront grants focused on heat pump deployment. Solar thermal lost its grant support in the transition, making solar PV with a hot water diverter the more financially attractive option for most homeowners in 2026. If you’re considering solar energy for your home or business, getting a free quote from an MCS-certified installer is the best first step.

Updated April 2026