What is the Renewable Heat Incentive Scheme?

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Renewable Heat Incentive Scheme explained

The Renewable Heat Incentive Scheme is a government incentive scheme designed to encourage the use of renewable heat technologies. The RHI offers financial incentives for landlords and homeowners who install eligible systems, such as biomass boilers, solar thermal panels or ground source heat pumps. This blog post will answer some common questions about the Renewable Heat Incentive Scheme, including eligibility requirements and current rates.

 

Who is eligible for RHI?

The Renewable Heat Incentive Scheme is open to homeowners, landlords and businesses. However, there are some criteria that must be met by the property owner or business seeking an RHI grant. For example, heating systems installed under the scheme must be registered with Ofgem within three months of completion for both domestic and non-domestic properties in order to receive payment from the government incentive fund (an exception may apply if a heat pump is installed at least 300 metres away from any existing source of heat). Eligibility requirements can vary depending on whether you're installing equipment in a residential or commercial building; therefore it's important to consult your installer about specific eligibility guidelines before installation begins.

 

What is the current RHI rate? UK

RHI rates are different in England, Wales and Northern Ireland. The current RHI rate for biomass boilers is set at 15.38 pence per kilowatt hour (kWh). However, this will change on February 28th 2018 when the new RHI tariff of 12.21p/ kWh comes into effect - a decrease of nearly 20%. For solar thermal systems, the current estimated return on investment stands at around 11 years; however Ofgem has proposed increasing tariffs to 13.41p/ kWh which would bring returns down closer to nine or ten years.

What about commercial customers?

The Renewable Heat Incentive Scheme also applies to commercial properties: businesses can receive grants from an incentive fund equivalent to one-third of the installation cost. Depending on whether you're installing a biomass boiler, air heat pump or solar thermal system, tariffs range from 16.39p/kWh to 19.44p/kWh and will be reduced by 20% in February 2018 (the tariff reduction does not apply to ground source heat pumps).

 

What is the maximum RHI?

The maximum RHI available for new applicants is £13,500. This amount can be claimed over a 20 year period (depending on the technology chosen); however it cannot exceed the cost of installation and must not include VAT.

 

What are RHI payments based on?

The Renewable Heat Incentive Scheme pays participants for the heat they generate using renewable technologies. This means that RHI payments are not dependent upon fuel costs or equipment usage; rather, payment is based on the energy produced by your system over 20 years.

What happens if my installation breaks down?

If you install an eligible technology under this scheme and it fails within five years of completion, Ofgem will pay up to 50% of the total cost of replacement parts (and labour) as well as replacing any faulty insulation used in a Green Deal plan at no extra cost to yourself. If an installation has been specifically commissioned due to existing issues with central heating systems then Ofgem may also offer compensation for related problems caused during repairs - especially if the installation work was carried out poorly.

In addition to this, Ofgem may offer a grant of up to £500 for heat meters that have been left disconnected or removed during works under the Green Deal scheme.

 

Is the Renewable Heat Incentive taxable?

The Renewable Heat Incentive is not taxable. Any money you receive from Ofgem can be spent on future energy bills or other household expenses without being taxed in the UK. However, if your business participates in RHI then any grants are subject to corporation tax - this applies even when the grant covers up to 50% of installation costs for eligible technologies installed under a Green Deal plan.

 

What is a renewable heating system?

The definition of a renewable heating system varies depending on whether you're an individual or business. In the UK, if your installation is made up solely from biomass equipment then it can be considered a renewable heat source under domestic legislation - provided that less than 75% of the fuel burned in this way comes from recycled sources (such as waste wood). However, when commercial properties are involved the Renewable Heat Incentive Scheme does not specify which types of technology should be used; rather all technologies that generate heat without burning any fuels derived from fossil resources are eligible for funding.

In other words, individuals and businesses alike can use solar thermal systems to receive RHI payments because they do not rely on non-renewable energy sources such as coal or gas.

 

How does EPC affect RHI?

An Energy Performance Certificate (EPC) is a mandatory requirement for all properties in the UK. While it's true that having an EPC will not affect your eligibility for RHI, you cannot claim RHI funding if your installation fails to meet certain energy-efficiency standards set out within the scheme - including installing insulation with U Values of 0.25 or less and windows with ratings of either A+ or above.

The benchmark required varies depending on whether you're using biomass technology under domestic legislation, air source heat pumps under commercial regulations or solar thermal systems in both sectors; however homes are typically expected to have at least three stars when they receive their first certificate while businesses should aim for four stars or more before applying for this scheme.

 

What is the best renewable energy source for your home?

Every renewable system installed in the UK has a unique set of pros and cons. For example, air-source heat pumps are an affordable way to lower your carbon footprint - but because they can only work when there is sufficient wind or air movement at ground level, you may experience issues during periods of heavy rainfall or humidity. Solar thermal systems on the other hand typically require more initial investment; however these panels can offer free hot water all year round if positioned correctly within your roof space (or garden).

Of course biomass equipment such as wood burners tend to be less expensive than solar thermal arrays; although it's worth noting that not everyone has access to waste materials suitable for burning so this technology might not suit every householder or business owner.

 

Conclusion

The renewable heat incentive scheme is a government initiative that provides financial support for homeowners who want to install a renewable heating system. If you are eligible, it might be worth your while to explore this opportunity and see if the RHI could work out in your favour!

For more info and tips check out our guide to central heating systems

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