Renewable Heat Incentive (RHI) Guide

The Renewable Heat Incentive (RHI) is an initiative by the UK Government. Under this scheme, beneficiaries receive quarterly cash payments for seven years on installing or using an eligible renewable heating technology.

The residents of the UK have been benefitting from this scheme for the past seven years. It covers England, Scotland and Wales. As of August 2021, over 90,000 heating systems have been approved under this scheme.

If you’re unfamiliar with the scheme but wish to enrol, this guide will break down everything you need about the domestic Renewable Heat Incentive.

Key Takeaways

• The UK’s Renewable Heat Incentive (RHI) is a government initiative that provides financial incentives for installing eligible renewable heating technologies, benefitting residents in England, Scotland, and Wales.
• Domestic RHI is for private households, while non-domestic RHI is for public, commercial, or industrial purposes, with eligibility criteria and a step-by-step application process outlined in the article.
• The scheme offers quarterly cash payments for seven years, with payment calculations based on heating demand, heating system efficiency, and government tariffs. This makes it a cost-effective way to transition to renewable energy and reduce heating bills.

Renewable Heat Incentive (RHI)?

Launched by the Government of the UK in 2014, RHI is a scheme to encourage households, businesses and communities to install heating technology that harnesses renewable energy. According to this scheme, the beneficiaries would receive financial aid to switch to renewable energy options from the UK Government.

It aimed to achieve the target of 12% heating coming from renewable energy by 2020 to help minimise the effects of climate change directly. All documents relating to the policy are available on the official UK Government website.

There are two types of RHI- domestic and non-domestic.

• Domestic RHI is for private households catering to a single home.
• Non-domestic RHI is for public, commercial or industrial purposes.

In this article, we will talk about the Domestic RHI in detail.

Types of heating systems that are eligible for the domestic RHI scheme include:

• Ground source heat pumps
• Air source heat pumps
• Biomass boilers
• Solar thermal

The Working of the Scheme

Renewable Heat Energy (RHI) is a financial aid program for households with renewable energy heating systems. Residents with suitable heating pumps installed in their homes can save a lot of money in the long run.

Most people find the application process to be tedious. So, you must know about the application process details beforehand to ensure timely approval. Every applicant must note a few requirements regarding the home where the system is installed and the installation process. Considerable research about the right renewable heating solution and installer increases your approval chances.

Below are some crucial stages of the application process that will minimise your application’s chances of rejection.

• Step 1: Choose the right renewable energy heating system for your home.
• Step 2: Read the application form, guides and relevant policy documents carefully.
• Step 3: Find the right MCS-certified installer.
• Step 4: Install the heating system and additional equipment as necessary.
• Step 5: Apply after filling out the application form.

Factors that influence domestic RHI payments

There are three main factors based on which the domestic RHI payments are calculated.

• Annual heating and hot water demand of your property
• Seasonal Coefficient of Performance (SCOP) of the heating system
• Latest RHI Tariffs

From the scheme’s inception until 2020, the government used a ‘degressive’ approach to manage the budget and provide for RHI payments, which led to yearly changes in costs.

However, the government of the UK brought a new regulation into effect in 2019. Under this, the Department for Business, Energy and Industrial Strategy (BEIS) stated that there would be no degression starting January 2020.

Installing an RHI Heating System

Before investing in a heating system, you must research the different types of heating pumps and installers available in the market. Furthermore, you can weigh the pros and cons of each option and narrow down the system that works best for your home. You can even set up consultations with experts in the field to help smoothen the process.

Whatever heating system you decide on must be efficient and conducive to saving costs on your bills.

Alongside the installation of the heating system, you might also need metering. There are two types of metering- metering for performance and payment. Metering for performance is necessary for all new heating pumps, while metering for payment is done for heat pumps, biomass boilers, and stoves. The type of metering suitable for your home depends on the heating system you install.

Further, if you choose to install a solar thermal system, you will not require any metering.

Lastly, spend a good time finalising an installer. The only prerequisite must be Microgeneration Certification Scheme (MCS) Certified.

Once all of this is done, you can complete your installation process.

Installing loft and cavity wall

For your heating system to be effective, you must install a loft and a wall cavity if your EPC recommends it. After the cavity wall is installed, you will get a new EPC issued and only then can you apply for the RHI scheme.

If you already have the loft and cavity wall installed, you can apply for the RHI scheme immediately after installing and assessing the heating system.

If installing a loft/wall cavity isn’t feasible, you can still apply for RHI, given that you’re eligible for exemptions.

Eligibility

You are, in all probability, eligible to apply if a renewable source generates heat for your house. There are, however, certain other factors that you must keep in mind. These are:

• Homeowners who have an eligible technology installed can apply for RHI support. This list may include private landlords, builders, and registered social housing providers (given they meet all criteria).
• Single-domestic dwellings are also covered under the scheme.
• RHI aid is unavailable to newly built properties unless they are self-build projects.

You can also find detailed eligibility criteria and relevant details at the Ofgem website.

Application Process

The one key prerequisite for applying for the RHI scheme is that you must live in England, Wales or Scotland. Additionally, as mentioned earlier, you must own any private or social property and meet all requirements.

The scheme is open for applications till 31 March 2022. You can apply online at Ofgem’s website. If you cannot apply online, you can contact Ofgem’s Domestic RHI Applicant Support Centre.

Documents Required

• MCS Installation Certificate (MCS) number
• Energy Performance Certificate (EPC) number
• Occupancy assessment documents
• Personal information and bank details

Property Requirements

• The property must have a domestic Energy Performance Certificate (EPC).
• It should be domestic property.
• Check if your property is eligible and note if the heating technology heats only a single domestic property, a single property in multiple or multiple buildings.
• Previous domestic RHI accreditation.

Ongoing RHI Obligations

After applying, you automatically consent to some ongoing obligations. You must comply with all these obligations regarding your house and the heating system installed.

An annual declaration has to be signed and renewed every year. The declaration states that you comply with all the rules of the scheme so that the correct amount is paid for the heat generated by you. Further, there are some mandatory declarations you need to submit; these are:

• That you still own a heating system on your property.
• The system is in good working condition and has not been changed.
• The meter installed is in good working condition.
• Other details of the occupants of your property and your heating system.

Lastly, Ofgem conducts audit checks to ensure applicants follow all scheme rules. The government can randomly choose any applicant in the database for audit.

FAQs

This section will be conducive to your understanding of the domestic RHI scheme. It is aimed at answering any lingering queries that you may have.

How do I get RHI payments?

After getting approved by the government, you’ll receive quarterly payments (every three months). The amount will be transferred to your bank account by a BACS transfer. It is important to note that transfers are only made to UK bank accounts that accept payments in Pound Sterling.

Who is eligible for RHI payments?

Payments are granted to owners of domestic properties who have at least one eligible heating system and have applied for financial aid. The exact amounts of these payments are determined by the type of heating system installed, the RHI tariffs and metering costs.

For how long will I receive RHI payments?

Once you have applied for RHI and your application has been approved, you will receive RHI payments quarterly for seven years. However, you must comply with ongoing obligations to complete the process smoothly. If you fail to comply, you risk not receiving payments at all. The same has been discussed in detail in the section above.

How much do I save with the Renewable Heating Incentive?

The amount of money you can save by opting for the RHI depends on the kind of your heating system, the heat you generate, and the current tariffs. You can save somewhere between £200 to £400.

Is there any VAT on RHI payments?

Generally, tax is not dependent on the scheme you opt for, domestic or non-domestic. Tax is affected by the way you utilise renewable heat. You wouldn’t be liable for income tax if you were a private landowner. However, you might have to pay tax if you’re a business owner or a trader. This is because RHI payments are a business receipt, and regular income and corporate rules apply.

How much does it cost to install a heat pump system?

Installation costs depend on the heat pump’s cost, based on heating capacity and installation type.

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Final Thoughts

As an in-depth analysis and memoir, this guide covers everything you need to know about the RHI scheme.

Renewable Heating Incentive (RHI) is a well-thought-out and carefully implemented policy by the government of the United Kingdom. It is one of the best ways to minimise climate change’s effects while saving energy bills.

Thousands of homeowners have benefitted from this scheme, which you can do too! Before applying, research the heating system best suits your needs and install it. After that, you’re just a few steps away from providing long-term benefits.