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Home & garden.

5 July 2021

What is the Renewable Heat Incentive?

The Renewable Heat Incentive (RHI) is a scheme designed to financially reward people who use renewable energy to heat their homes.
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Which?Editorial team
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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's intended to help meet the UK’s legally binding target of reaching net zero emissions by 2050. It’s aimed at households both off and on the gas grid.

It runs in England, Scotland and Wales. There are two versions: one for residential homes and one for the non-domestic sector (industrial, commercial, public sector and community organisations).  The RHI scheme in Northern Ireland was closed to new applicants in 2016 but is still running for existing participants. 

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 Prices 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. 

Air Source Heat Pump Explained
  1. The air source heat pump absorbs heat from the outside air into a liquid refrigerant at a low temperature. 
  2. Using electricity, the pump compresses the liquid to increase its temperature. It then condenses back into a liquid to release its stored heat. 
  3. Heat is sent to your radiators or underfloor heating. The remainder can be stored in your hot water cylinder. 
  4. You can use your stored hot water for showers, baths and taps.

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) made cash payments to households in exchange for generating and exporting renewable electricity.

The FIT has been closed to new applicants since 2019. It has been replaced by the Smart Export Guarantee (SEG), which the big energy companies must take part in. It pays households for the excess electricity they export to the national grid, through solar, wind, hydro, micro combined heat and power and anaerobic digestion technologies. Unlike the FIT, the SEG doesn't reward you for generating energy that you don't export. 

RHI payments are meant to help offset the cost of installing and running a renewable heating system, rather than providing an income in return for the renewable electricity households put into the grid.

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

Find out more about the Smart Export Guarantee.

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's more potential to save on fuel bills.

You can still install renewable heating and apply for the 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. Previously, you had to apply within 12 months of the first commissioning date of your renewable technology (when your installer has tested and signed it off). This is shown on your Microgeneration Certification Scheme (MCS) certificate. However, as a result of the coronavirus pandemic, this has been relaxed for installations with a commissioning date on or after 1 March 2019. You now have until 31 March 2022 to apply.

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’s forecasts of uptake were ‘wildly over-optimistic’. 60,000 renewable systems were installed as part of the scheme (compared with 6.2 million 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 reduce air quality.
  • BEIS doesn't 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 the 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 - eg it measures the 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.
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What RHI changes should I know about?

2020

2 November – Due to challenges caused by the coronavirus pandemic, such as consumers being unable to find tradespeople or EPC assessors, the government announced that it plans to relax the requirement to apply for the RHI within 12 months of the first commissioning date of your installation. 

If this change is made to the rules, anyone with a commissioning date of 1 March 2019 or later would be able to apply until the scheme closes to new applications on 31 March 2022. If your application was rejected within this period because of the 12-month rule, you would be able to re-apply. The government hopes to confirm these changes in the first half of 2021.

1 May - The way RHI payments are made changed, which means you'll receive them slightly later than before – within 1-2 weeks of the due date shown on your account.

11 March – The domestic RHI was set to close to new applicants on 31 March 2021, but the government extended the deadline to sign up until 31 March 2022. 

2018

27 June – The government introduced ‘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. 

22 May – New rules around meters for heat pumps came into force. The Metering and Monitoring Service Package (MMSP) was also 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 of 50% of the total amount with your first RHI payment, plus up to seven years of quarterly MMSP payments as previously for the remaining 50%. Overall, you’ll receive the same amount as before but this gives you a greater amount upfront.

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