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Renewable Heat Incentive - Important Changes for 20 September 2017


On 30 August, amendments were made by the Department for Business, Energy and Industrial Strategy (BEIS) to the Renewable Heat Incentive (RHI), including increased tariffs and the introduction of heat demand limits for domestic heat pumps and biomass installations.

These amendments are part of the Domestic Renewable Heat Incentive Scheme (Amendment) (No.2) Regulations 2017.

Please click here for a factsheet detailing the important changes to the Domestic RHI scheme published by Ofgem.

Please click here for an overview of the Domestic RHI tariffs and payments published by Ofgem.

To view the full Statutory Instrument please click here

Renewable Heat Incentive: Now Available For Domestic Properties

The Domestic Renewable Heat Incentive (RHI) is what the Department of Energy & Climate Change (DECC) call the first step to transforming the way we heat our homes.

The government scheme provides financial support for renewable heat which targets primarily, but is not limited to, off gas grid households. The scheme supports the installation of air source heat pumps, biomass systems, ground source heat pumps and solar thermal technologies, and support is paid at a set rate per unit of renewable heat produced for seven years to the owner of the technology.

The tariffs available vary depending on the technology installed, and are paid in pence per kilowatt hour (p/kWh). The current tariffs available are 7.3p/kWh for air source heat pumps, 12.2p/kWh for biomass systems, 18.8p/kWh for ground source heat pumps, and 19.2p/kWh for solar thermal technologies.

All installations must be certified under the Microgeneration Certification Scheme (MCS) and the scheme will cover single domestic dwellings with eligible technology installed since 15th July 2009. New build properties other than self-build will not qualify for RHI.

Greg Barker, Minister of State (DECC), said in the government’s namesake publication “We have sought to develop a scheme that is sustainable and delivers renewable heat in the most cost-effective way, learning from past experience.”

An additional incentive is also available for applicants who install metering and monitoring service packages. This incentive currently stands at £230 per year for heat pumps and £200 per year for biomass boilers, and is similar to a service contract where the installer will be able to view measured data from their system over the internet. The intention is to encourage peace of mind in the customer that the technology is working as expected, and to enable the installer to improve performance and diagnose common problems.

Mr Barker continued: “Renewable energy and energy efficiency go hand in hand, which is why it is so important that the RHI works alongside the Green Deal. Renewable heating technologies work best in an energy efficient home, and reducing the size of the heating demand in each house means we can support more households through the RHI.”

Over time as threshold figures are reached, a system of degression will be introduced to control costs. This, put simply, is a reduction in tariffs, and further details will be announced in Autumn including whether an overall cap will be introduced

How The Renewable Heat Incentive (RHI) Can Benefit Your Business!

The Renewable Heat Incentive (RHI) was launched in November 2011 to reward the non-domestic sector for generating and using renewable energy to heat their premises. The scheme provides long-term financial support to industry, business and public sector organisations.

RHI is the main scheme of the governments heat strategy and will help the UK to reduce greenhouse gas emissions and will also contribute to the UK targets for reducing climate change.

There are many types of heating covered by the RHI, including biomass and heat pumps (ground and water source) and payments are made every three months and spread over 20 years. The amount you receive depends on the type of technology you install, the capacity of the equipment, and how much energy you use.

Renewable Heat Incentive (RHI) Examples:

  • Biomass

The tariff associated with small and medium biomass heaters is split over two tiers and based on the amount of energy used, similar to regular energy bills. Tier 1 offers payments for energy used up to a certain limit, and if you go over this limit the rest of the energy is paid at tier 2.

Small biomass with a capacity of less than 200 kWth will get you 8.3 pence per kWth at tier 1 or 2.1 pence per kWth at tier 2., whilst medium biomass that produce between 200 and 999 kWth will get you between 5.1 pence per kWth at tier 1 or 2.1 pence per kWth at tier 2.

Large biomass heaters have only one tier, and with a capacity in excess of 1000 kWth will get you 1.0 pence per kWth.

  • Heat Pumps (ground and water source)

A small heat pump with a capacity to produce less than 100 kWth will get you 1.0 pence per kWth, whilst a large heat pump that can provide in excess of 100 kWth will get you 3.4 pence per kWth.

Renewable Heat Incentive Eligibility

To benefit from the Renewable Heat Incentive (RHI) you must meet the eligibility criteria to receive payments. To name a few criteria, the business/industry must have installed the technology after 15th July 2009, the technology must have a certain capacity, and the equipment must use liquid or steam to deliver the heat. The installer employed and the equipment itself must also have MCS certification (or equivalent) if applicable to the type of installation.

For full details on RHI and the eligibility criteria contact Ofgem or read the government guide to the Renewable Heat Incentive.


Biomass Systems are available as stoves and boilers and are designed to generate heat by burning wood. Stoves can be used to warm a single room, whilst boilers can be connected to a properties central heating and hot water system.

How Do Biomass Boilers Work?

Biomass boilers are the most common form of renewable energy and if installed correctly can provide heating and hot water for an entire property. A biomass boiler generates heat by burning logs, wood pellets or chips and can cost less than conventional heating fuels. A typical automatic boiler for an average home can cost around 11,500 pounds (including installation, flue and fuel store) whilst manually fed boilers can be slightly cheaper.

What Are The Benefits Of Installing Biomass Boilers?

One of the benefits of installing a biomass boiler is the savings in carbon dioxide emissions. When a wood-fuelled boiler replaces a coal system the saving in emissions can be around 7.5 tonnes per year. Financial savings depend mainly upon the system being replaced. Replacing a gas system might save you 100 pound per year, whilst upgrading from an electric heating system could save as much as 580 pounds per year.

Government Incentives For Biomass Boilers

Homeowners installing biomass boilers may receive payments for the heat produced through the governments Renewable Heat Incentive (RHI) which launches in summer 2013, whilst installation costs could be helped by a one of grant available from the Renewable Heat Premium Payment Scheme.


Air Source Heat Pumps (ASHPs) can be used to provide heating and hot water and can absorb heat from the air in temperatures as low as -15o C. Unlike conventional boilers, ASHPs deliver heat at lower temperatures over longer periods of time and are available in two systems; air-to-water and air-to-air.

How Air Source Heat Pumps Work?

ASHPs transport the heat from the air outside into a fluid that moves through a compressor which increases its temperature. The high temperature generated is then used to heat the property.

Air-to-water systems generate heat via a wet central heating system, whilst air-to-air systems circulate warm air through fans. Air-to-air systems are more suited to heat a property and are unlikely to provide hot water as well.

What Are The Benefits Of Air Source Heat Pumps?

ASHPs contribute to making a property more energy efficient, which in turn could lower energy bills and the properties carbon emissions. Typical installation costs are between 6,000 and 10,000 pounds, and running costs depend on the size of the property and how well insulated it is. ASHPs are powered by electricity so wont negate the need for fuel bills, however you will save on the fuel you are replacing.

Government Incentives For Air Source Heat Pumps

After installing an ASHP you may be able to receive payments for the heat you generate through the governments Renewable Heat Incentive (RHI) launching in summer 2013. Installation costs for any systems installed after 1st August 2011 may also receive a one off grant through the Renewable Heat Premium Payment Scheme (available until the RHI is introduced to domestic customers).