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Changes to the Domestic RHI scheme in 2017 and 2018

The Domestic Renewable Heat Incentive (RHI) is the government's scheme to encourage householders and landlords to install heating systems based on renewable technologies, such as biomass boilers, air source and ground source heat pumps, and solar thermal collectors. In December 2016 the Department for Business, Energy and Industrial Strategy (BEIS) published proposals to reform the scheme, following a consultation earlier in the year.

Hot water storage for an air source heat pump: RHI tariffs are designed to encourage uptake of such systems.Hot water tanks

Renewed commitment gets green light!

The reforms are intended primarily to keep closer control of the payments budget while, on the face of it, offering a renewed commitment to the scheme, at least in the short to medium term. Indeed, for certain technologies the tariffs are increased.

The changes were originally planned for the Spring of 2017, but were put on hold due to the snap General Election in June. They finally came into force on 20 September 2017. Although tariffs for biomass, air source heat pumps and ground source heat pumps have been increased, payments for newly registered systems will be capped according to an annual heat demand limit, and the way in which tariff rates are periodically reduced, i.e. 'degression', will more closely reflect the level of take-up.

Tariff changes for 2017

The increased tariff rates are intended to "support growth in the deployment of heat pumps, which has been lower than expected to date", according to the government's response document. The higher rates, applicable from 20 September 2017, are:

  • Biomass (p/k/wh): 6.54 (cf. 3.85 before)
  • Air source heat pumps: 10.18 (cf. 7.63)
  • Ground source heat pumps: 19.86 (cf 19.64)

All applicants for the RHI since 14 December 2016 will automatically receive the increased tariffs. The tariff for solar thermal systems will not change.

Heat demand limits

This new regulation will cap payments for new entrants to a particular level of annual renewable heat demand, depending on the technology installed in the property:

  • Biomass: 25,000 kWh
  • Air source heat pumps: 20,000 kWh
  • Ground source heat pumps: 30,000 kWh

So, properties whose heat demand is greater than these values will not receive RHI payments for heat output over these limits. The heat demand is calculated according to the Energy Performance Certificate for the property. Solar thermal systems will not have a heat demand limit; the output of these is calculated based on the Microgeneration Certification Scheme (MCS) certificate for the particular system.

Metering and monitoring of heat pumps

A second phase of implementation of the amended RHI scheme came into force on 22 May 2018. This requires new entrants into the scheme to have some form of metering to monitor electrical input to their heat pumps, so that users can readily see how efficiently (or not) their system performs. Input can be measured simply by a meter built into the heat pump (an 'on-board' meter) or one connected in the external circuit feeding the heat pump.

However, the 'premium' option is a metering and monitoring service package (MMSP). This requires an MCS accredited installer to fit a set of meters and sensors that record the data and transmit it to a dedicated online viewing platform, and attracts financial support. Entrants who registered for a MMSP before 22 May 2018 will receive £230 per year for heat pumps, and £200 per year for a biomass boiler. Those registered on or after 22 May receive a single lump sum of £805 + £115/year for heat pumps, or for biomass boilers a lump sum of £700 + £100/year.

Degression

A more complex set of rules will determine if and when future tariff rates are reduced for newcomers to the RHI scheme. Any tariff cuts will be announced by BEIS three months in advance, based on whether or not certain thresholds for technology deployment and/or expenditure on RHI payments have been exceeded.

Assignment of rights

This change, which came into effect in June 2018, enables householders to assign their RHI payments to a third party, such as an installer. This could help towards financing the installation, while allowing the householder to benefit from the reduced heating costs. For more information see the Essential Guide to Assignment of Rights on the Ofgem website.

More information

A factsheet summarizing the change to the Domestic RHI scheme is available from the Ofgem website, which also has full details of both domestic and non-domestic RHI.