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Renewable Heat Incentive

Renewable Energy

What is the Renewable Heat Incentive?

The Renewable Heat Incentive (RHI) is a government supported financial scheme for renewable heating. It supports air source heat pumps (ASHP), biomass systems, ground source heat pumps (GSHP) and solar thermal technologies with tariffs varying depending on the technology. The scheme was launched in April 2014 by the Energy Minister, Greg Barker. The RHI is now open to applications and will be administered by Ofgem with the purpose of supporting households who install renewable forms of heating in their homes. Owners of renewable heating systems will receive payments based on each kilowatt hour (kWh) of renewable heat that their installation generates. This payment is tax free and is made over a period of 7 years.

Am I eligible to receive the Renewable Heat Incentive?

The domestic RHI will give financial support for an eligible renewable heating installation that has been installed in accordance with the Microgeneration Certification Scheme (MCS) guidelines. The renewable heating system and also the installer must be MCS registered to meet the RHI Schemes criteria. The domestic RHI will only be available to single domestic dwellings. These dwellings can be either on or off the gas grid.

The following groups will be eligible for the RHI payments:-

The RHI is available for second homes, however these systems require metering equipment which will measure the amount of heat used. All systems installed between the 15th July 2009 and the launch of the Renewable Heat Incentive will qualify for the RHI provided that they meet all the criteria.

How are the payments calculated?

Below are some examples of how payment calculations work by heating system type. These apply to those who are not metered but receive payments based on an estimate of their property’s annual heat use.

Example 1: Biomass Heating Systems

All of the heat produced is counted as renewable. We multiply the tariff rate by the estimated annual heat load figure (in kWh) taken from the Energy Performance Certificate (EPC). Divide by four for a quarterly figure.

Estimated annual heat load (from EPC) 15,000kWh

Biomass tariff rate at start of scheme 12.2p/kWh

Total annual Domestic RHI payment (tariff x estimated annual heat load) £1830

Quarterly Domestic RHI payment (total annual Domestic RHI payment ÷ 4) £457.5

*Example figures are not representative.

Example 2: Air Source Heat Pump Systems

Because heat pumps run on electricity, not all of the heat output is counted as renewable. We deduct the portion that isn't by using the Seasonal Performance Factor (SPF) as part of the calculation. We multiply the tariff rate by the SPF by the estimated annual heat load (in kWh) taken from the EPC. Divide by four for a quarterly figure.

Although the example is for an air source heat pump, the calculation is the same for ground source heat pump.

Estimated annual heat load (from EPC) 15,000kWh

SPF (from MCS Heat Emitter Guide) 2.7

ASHP tariff rate at start of scheme 7.3p/kWh

Estimated annual heat load (total heat demand x (1 – 1/SPF) 15,000kWh x (1 – 1/2.7) = 9,444kWh

*Example figures are not representative.

Example 3: Solar Thermal Systems

We multiply the tariff rate by the estimated annual generation figure on the MCS certificate. Divide by four for a quarterly figure.

Estimated annual generation figure (from MCS) 2,000kWh

Solar collector tariff rate at start of scheme 19.2p/kWh

Total annual Domestic RHI payment (tariff x estimated annual generation figure) £384.00

Quarterly Domestic RHI payment (total annual Domestic RHI payment ÷ 4) £96.00

*Example figures are not representative.

What do I do next?

For more information on the renewable heat incentive contact us on 01707 800 361 or enquiries@tsgplc.co.uk

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