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Renewable Heat Incentive (RHI)

What is the Renewable Heat Incentive?

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What is the Renewable Heat Incentive?

The Renewable Heat Incentive (RHI) is a scheme designed to financially reward those who use renewable energy to heat their homes. 

The Renewable Heat Incentive (RHI) scheme could give you quarterly payments for seven years if you install, or have already installed, renewable technology to heat your home.

The RHI is a government scheme that aims to help the UK achieve its target of producing 12% of its heat from renewable sources by 2020. It’s aimed at (but not limited to) households who are off the gas grid.

It runs in England, Scotland and Wales. There are two Renewable Heat Incentives (RHI): one for residential homes and one for the non-domestic sector (industrial, commercial, public sector and community organisations).

Read on to find out more about the domestic RHI, including how it works, which technologies are included and the future of the RHI. Click on a question to jump straight to the answer.

Know enough about the RHI? Find out how much you could potentially earn with our guide to RHI costs and earnings

How does the RHI work? 

The Renewable Heat Incentive gives financial support to people who use certain renewable technologies to heat their homes.

The payments are meant to help offset the cost of installing and running your new heating system. The domestic part of the RHI launched in April 2014.

It’s government-funded, by the Department for Business, Energy and Industrial Strategy, and aims to cut carbon emissions and help the UK meet its renewable energy targets.

You apply to energy regulator Ofgem to join the scheme and it makes payments to you.

Find out more about how to apply for RHI

How do Renewable Heat Incentive (RHI) payments work? 

After joining the RHI scheme, you receive a quarterly tariff payment for every kilowatt hour (kWh) of renewable heat you produce. You get these payments for seven years. It's possible for households to install more than one technology and receive payments for each system they use.

The amount you’ll be paid per kWh of heat depends on the renewable technology you install, when you apply to receive RHI, and your home's EPC. Your payment amount will be estimated, based on your home's Energy Performance Certificate (EPC) rating.

The rates you get can also change annually, in line with the Retail Price Index or Consumer Prices Index (depending on when you applied).

Read more about RHI payments, costs and savings, including how much you could earn with RHI.

Who pays the Renewable Heat Incentive? 

Energy regulator Ofgem is responsible for RHI payments and applications. Find out how much you could earn with RHI or how to apply for RHI.

Which technologies are eligible for RHI? 

Air source heat pumps, ground source heat pumps, biomass boilers and solar water heating are all eligible to receive Renewable Heat Incentive payments. The diagram below explains how they work. 

Find out more about the renewable heat technologies – including how to determine whether your home will be suitable to install any of them – in our dedicated guides:

Find out what other criteria you’ll need to meet in our guide on how to apply for RHI.

What's the difference between the Feed-In Tariff and Renewable Heat Incentive? 

The feed-in tariff, (FIT) is designed to provide income for households. It pays households based on the renewable electricity they generate and export.

RHI payments are meant to help offset the cost of installing and running a renewable heating system.

Different renewable technologies are eligible for the schemes. The RHI is for renewable heating systems, such as heat pumps, biomass boilers and solar water heating. The FIT applies to home systems that generate renewable electricity.

Find out more about the feed-in tariff.

Is the Renewable Heat Incentive worth it? 

You're most likely to benefit from the domestic RHI scheme if your home is off the gas grid and you replace your current heating system with a renewable one. This is because off-gas-grid homes are usually more expensive to heat, so there is more potential to save on fuel bills.

You can still install renewable heating and apply for RHI if your home is connected to the gas grid, though.

You should also make sure that renewable heating is suitable for your home before you start. Read our guides to air source heat pumps, ground source heat pumps, biomass boilers and stoves, and solar water heating.

Also make sure your home is well insulated and energy efficient before you look to install renewable heating and to help cut your energy bills.

Then take a look at our RHI costs and savings calculations to see how much you might be able to receive in payments.

Is the RHI still available? 

Yes, you can still apply to join the RHI scheme. You must apply within 12 months of the first commissioning date of your renewable technology. This is shown on your MCS certificate.

Find out more about how to apply for RHI, including other criteria that your home and renewable heating system will need to meet.

Several changes have been made to the RHI scheme since it launched. Find out more about these below.

Results of investigations into the RHI 

Both the National Audit Office (NAO) and Public Accounts Committee (PAC) investigated the RHI in 2018.

The PAC said the RHI ‘does not work for households and businesses unable to pay the high upfront costs of renewable and low-carbon heating equipment’. Its May 2018 report found:

  • BEIS’ forecasts of uptake were ‘widly over-optimistic’. 60,000 renewable systems were installed as part of the scheme (compared with 6.2m gas boilers)
  • BEIS cut its expectations of renewable heat produced by the scheme by two thirds, and carbon emissions reductions by half
  • The ‘hassle factor’ of installing renewable heating means consumers are likely to keep favouring gas and oil boilers
  • Around 28,000 biomass boilers funded by the RHI produce smoke which could damage air quality
  • BEIS does not have an estimate of how much money it overpaid to those who manipulated RHI rules

The NAO published its report on the RHI in February 2018. It included examining the RHI’s progress against objectives, cost-effectiveness, monitoring and how it manages fraud. Its findings include:

  • Take-up of RHI was lower than anticipated. The NAO estimates the RHI will achieve 22% of the number of installations it originally expected
  • BEIS reduced the amount of renewable energy it expects RHI-funded installations to produce and the amount of carbon emissions saved
  • It’s uncertain whether the RHI produces renewable heat cost-effectively
  • There are gaps in how the scheme’s success is monitored e.g. it measures number of applications and how fast they’re dealt with, but not their quality
  • BEIS can’t reliably estimate how much it has overpaid to those who broke the RHI’s rules
  • The impact of ‘gaming’ the system is unknown

What RHI changes should I know about? 

2018

27 June – The government is introducing ‘assignment of rights’ so that householders can access new ways to finance renewable heating systems.  This means you can give your right to receive RHI payments to an investor in exchange for their financial support to install your heating system. This is subject to approval from parliament in spring 2018.

Spring – New rules around meters for heat pumps will come into force. The Metering and Monitoring Service Package (MMSP) will also be updated.

  • Heat pumps need to have electricity meters fitted. These will help consumers make most efficient use of them.
  • If you register for the MMSP, you’ll be able to get a lump sum payment with your first RHI payment, plus up to seven years of quarterly MMSP payments as previously. Overall, you’ll receive the same amount as previously but this gives you a greater amount upfront.

These changes were laid before Parliament in February 2018 and will come into effect subject to Parliamentary approval, which is expected to take six to eight weeks.

RHI applicants used to have to get a Green Deal Assessment, but you've not needed one since April 2016. You now only require a valid EPC.

2017

20 September - ‘Heat demand limits’ were introduced for heat pumps and biomass boilers. These cap the amount of renewable heat for which households can receive RHI payments. Find out more about heat demand limits when you read about RHI costs and earnings.

Tariffs were increased for biomass, air source heat pumps and ground source heat pumps. Solar water heating is still eligible for RHI but the tariff didn’t change.

2016

April - RHI payments for applications from April 2016 are adjusted annually in line with the Consumer Price Index (CPI). If you were a member of the RHI scheme before this, your tariff adjustments will continue to be linked to the Retail Price Index (RPI).

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