RHI costs and earnings

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? 

We've collated all the information you need about RHI, to give you a rough idea of how much renewable heating will cost and how much money you could receive from RHI payments. 

The upfront costs to install renewable heating technology can range from around £4,000 to £5,000 for solar water heating, up to around £14,000 to £19,000 for a ground-source heat pump. But, after seven years of receiving RHI payments, a combination of these plus savings on your heating bills should see you making back a good chunk – or in some cases all – of the initial investment.

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

RHI payments – how much will I get?

The cost of installing a renewable heating system in your home and how much you could earn will depend 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. 

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

Look at the property that most closely represents your home to get an idea of how much you could earn. The actual amount you will make depend on your own specific property and heat usage, plus the efficiency of your renewable heating system. 

Installation costs vs RHI payments

Table notes: Estimated RHI payments over the seven-year period are based on annual estimated payments, calculated by multiplying the average annual heat demand by the relative RHI rate for the different technologies. Installation costs (including technology costs) from the Energy Saving Trust.

(a) Based on example heat demands in kWh supplied by Ofgem, correct at April 2020. 1-bed semi-detached: 8,000kWh; 2-bed semi-detached: 12,000kWh; 3+ bed detached: 17,000kWh

(b) 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).

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.

Energy bill savings from installing RHI technology

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. Not all technologies can completely replace traditional heating systems;  for example, solar thermal panels will only heat your water and not your whole home. 

Because of this, it's very difficult to give precise figures for how much you could save on your heating bills, but to give you an indication, the table below shows the average costs of running a fossil-fuel heating system for each of the three property types above (based on Ofgem's example heat demands for each property type, correct at April 2020). 

Over the past two and a half years, gas and oil prices have gone down significantly, while electricity prices have increased slightly, so the differences between these costs have widened. 

Estimated annual cost of traditional heating systems

RHI rates

The rates for domestic RHI tariffs for applications submitted between 1 April 2020 and 30 September 2020 are:

The government has a cap on how much it will spend on each RHI technology in a given time period, which could see these rates go down if a certain technology proves very popular. To help it keep RHI payments within budget, if a cap is reached, then that particular technology's rate decreases by 10% from the start of the next quarter. If spending far exceeds the budget, the rate will decrease by 20%. 

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 Price Index (CPI). 

All domestic RHI payments are tax-free.

RHI payments and meters

Most homes receive estimated RHI payments based on their 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) to monitor the performance of your system. The MMSP is available for biomass boilers that burn wood pellets, air-source heat pumps and ground-source heat pumps. 

The details of this were updated in May 2018; those who successfully registered for MMSP before 22 May 2018 have payments structured differently to those registering after this date, as the table below outlines. 

RHI Meter and Monitoring Support Package payments compared

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 not exceed the amount payable for that limit.