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Renewable Heat Incentive (RHI)

RHI costs and earnings

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RHI costs and earnings

Find out how much you could earn with the Renewable Heat Incentive (RHI) and whether it's worth installing a renewable heating system in your home.

Want to know whether the Renewable Heat Incentive (RHI) will pay out enough money to make it worth your while to switch from a fossil-fuel heating system to renewable heating? 

To make it easy for you, we've collated all the information you need about RHI to provide you with a rough idea of how much renewable heating will cost. 

We'll also show you how much money you could receive from RHI payments. 

The upfront costs to install renewable heating technology can range from around £4,000 for solar water heating, up to around £18,000 for a ground source heat pump. But, after a few years, most people should see a substantial decrease in their heating bills.

Combine this decrease with the RHI payments that you will receive each quarter for seven years, and you shouldn't be left out of pocket. 

Looking to install solar PV instead? Find out which solar panels you should buy in our solar panel reviews.

RHI - how much will I get?

How much you could earn depends on your personal circumstances - such as the size of your home, how much heating you need and which renewable heat technology you choose to install. On top of RHI payments, you can also make a saving on your heating bills. This will vary depending on which fuel you are replacing and what you are replacing it with.

The table below outlines the estimated annual RHI payments for various property types and renewable heat technologies. It also shows you the average costs of running a fossil-fuel heating system for the houses. 

Look at the property that most closely represents your home to get an idea of how much you're currently spending versus how much you're likely to earn. 

RHI earnings and comparison
  1-bed semi-detached 2-bed semi-detached 3+ bed detached
Example annual heat demand (kWh)(a) 8,000 12,000 17,000
Estimated annual cost of current heating system(b)
Gas £366 £548 £777
Electricity £1,500 £2,250 £3,188
Oil £368 £552 £782
LPG £529 £793 £1,124
Coal £347 £521 £738
Estimated annual RHI payment(c)
Air source heat pump £610 £916 £1,297
Ground source heat pump £1,571 £2,357 £3,339
Biomass boiler £308 £462 £655
Solar thermal panels(d) £174 £277 £400

Table Notes:
(a) Example heat demands taken from an Ofgem letter to all retail energy-market participants, price-comparison websites, consumer groups and other interested parties in Aug 2017.
(b) The estimated cost of your current heating system is calculated using the average annual heat demand for the property size and the price per kWh for the relevant fossil fuel (price for gas and electricity calculated by Which? in Oct 2017; prices for oil, LPG and coal from Sutherland Tables for Jul 2017. Electricity prices are assumed for standard rate tariffs - those on Time Of Use tariffs will pay less). Last updated: Mar 2018.
(c) The estimated annual RHI payment is calculated by multiplying the average annual heat demand by the relative RHI rate for the different technologies.
(d) The heat energy output for solar thermal panels is deemed. The estimated annual RHI payments for solar thermal panels are therefore based on the estimated annual deemed renewable heat for different property sizes (details from YouGen and the Solar Trade Association).

Installation costs vs RHI payments

The cost of installing a renewable heating system in your home will depend on which technology you choose, and which size you opt for. The actual savings you will make depend entirely on your own specific property and heat usage, plus the efficiency of your renewable heating system. 

The table below shows the typical cost of installing the various renewable heating systems, as well as the total RHI payments you would receive over the seven-year period they are paid, at current levels. 

Use this alongside the table above, which shows how much you'll save compared with fossi- fuel heating. This should help you decide whether it's worth changing your current heating system for renewable heat.

Estimated RHI payments over seven years
  Installation cost 1-bed
semi-detached
2-bed
semi-detached
3+ bed detached
Air source heat pump £6,000-£8,000 £4,273 £6,409 £9,080
Ground source heat pump £10,000-£18,000 £10,998 £16,498 £23,372
Biomass boiler £9,000-£21,000 £2,156 £3,234 £4,582
Solar thermal panels £3,000-£5,000 £1,217 £1,942 £2,800

Table Notes: Calculations for estimated RHI payments over the seven-year period are based on the annual estimated payments in the potential earnings table above. Installation costs (including technology costs) from the Energy Saving Trust.

The Department for Business, Energy and Industrial Strategy (BEIS) also has its own domestic RHI calculator. You can enter specific details about your property to find out a rough idea of what you could earn by installing one of the four types of eligible RHI technologies.

RHI rates

The rates for domestic RHI tariffs for applications submitted between 1 April 2018 and 30 June 2018 are:

These rates may go down as the government keeps the RHI payments within budget. If spending on one of the RHI technologies reaches a cap, then that particular technology's tariff decreases by 10% from the start of the next quarter, or 20% if spending far exceeds the budget. This is called degression.

If you already receive RHI payments, and applied before April 2016, your tariff will be adjusted in line with the Retail Price Index (RPI) on 1 April each year. If you applied after April 2016, your tariff will be adjusted in line with the Consumer Prices Index (CPI). 

All domestic RHI payments are tax-free.

RHI payments and meters

Most homes receive estimated RHI payments based on the annual heat demand. But some households may have to install a meter and submit meter readings so Ofgem knows how much to pay you. 

All heat pump owners applying to receive RHI payments after September 2017 must have an electricity meter installed with them. Find out more in our guide to how to apply for RHI.

Increasing your RHI payments

Ofgem offers an extra annual payment if you register for a Metering and Monitoring Service Package (MMSP). The details of this are set to be updated from spring 2018 – find out more in our guide to applying for the RHI.

The MMSP is available for biomass boilers that burn wood pellets, air source heat pumps and ground source heat pumps. You can get extra payments for allowing Ofgem to monitor the performance of your system.

You'll get paid quarterly into the same bank account where you'll receive your RHI payments. You are eligible regardless of whether your system needs to be metered for RHI payments.

Heat demand limits for heat pumps and biomass

Heat demand limits were introduced for heat pumps and biomass boilers from September 2017. These limit the financial support that owners get for their renewable heat use. 

If your home’s heat demand (on your EPC) is above the limit (below), your payments will be capped.

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