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 will rise to encourage uptake of such systems.
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 set to rise when the reforms come into effect, sometime in the Spring of 2017. However, payments 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 tariff rates for biomass, air source heat pumps and ground source heat pumps are set to rise when the reformed scheme is introduced. This is 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 proposed higher rates are:
- Biomass (p/k/wh): 6.44 (cf. 4.28 at present)
- Air source heat pumps: 10.02 (cf. 7.63)
- Ground source heat pumps: 19.55 (cf 19.33)
The tariff for solar thermal systems will not change.
Heat demand limits
This new regulation will cap payments 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
All new entrants into the scheme after Spring 2017 will be required 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. Currently It attracts extra payments, to the tune of £230 per year for heat pumps, and £200 for a biomass boiler. New entrants opting for the MMSP will continue to receive these additional payments, with the added incentive of receiving half the total with the first payment, currently worth about £800. The remainder is paid over the course of the tariff lifetime.
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.
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.