Renewable Heat Incentive

If you are looking for a more eco-friendly way to power your home, the latest announcement from the Department of Energy and Climate Change will help you to reduce your carbon footprint.

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Heat pumps, Renewable Heat Incentive feature, Tim Pullen.

Now is the perfect time to think about how you heat your home in the colder months, how much money you could save on utility bills, and the energy efficiency of your systems. If you are looking for a more eco-friendly way to power your home, the latest announcement from the Department of Energy and Climate Change will help you to reduce your carbon footprint, earn money in grants for generating renewable energy supplies and provide a long-term solution for heating your home for many winters to come.

The domestic Renewable Heat Incentive (RHI) was announced on 9 April 2014 by Minister for Energy Greg Barker, who said that the new scheme shows that Britain is leading the way in the clean energy sector. ‘Not only will people have warmer homes and cheaper fuel bills, they will reduce their carbon emissions and will also get cash payments for installing these new technologies.’

Heralded as the world’s first long-term financial support programme for renewable heat, the RHI offers homeowners payments to offset the cost of installing low carbon systems in their properties. The scheme is open to everyone, including homeowners, social and private landlords, as well as people who build their own homes, who are both on and off the gas grid.

What does this mean for homeowners?

Ultimately, the RHI has been designed to reduce the non-green energy consumption of a property and to save you money on the cost of installing the system with quarterly paybacks on energy created over a seven-year period.

The government will pay an income tax-free fixed tariff for the technology installed, providing a property meets Green Deal Assessment criteria and is awarded an Energy Performance Certificate. Each homeowner applying for the scheme will be required to carry out a Green Deal Assessment, costing around £150, which will provide an estimated annual heat demand figure based on the energy efficiency of the house.

There are four eco-friendly technologies currently covered by the new scheme:

  • Biomass heating systems
  • Ground or water source heat pumps
  • Air to water heat pumps
  • Solar thermal panels

Is the RHI a good idea?

Response to the incentive since the announcement has been positive, with the Renewable Energy Association (REA) backing the scheme. Head of on-site renewables Mike Landy says that the introduction of the incentive in England, Scotland and Wales could make 2014 a breakthrough year for renewable heating.

‘Domestic RHI is set to be one of the highlights of the government’s green agenda in 2014. It will mean that renewable home heating is not just environmentally sensible, but also financially attractive.’

Meanwhile, Andy Deacon, director of delivery at the Energy Saving Trust, says that the domestic RHI makes renewable heat technologies more cost-effective in off-gas properties, which is around six per cent of all UK homes. This method of heating is more expensive than gas, meaning that the financial gain could be significant.

‘With rising energy bills and worries about energy security, there needs to be a major transformation in the way we heat our homes, with the domestic RHI helping to make this a reality through enabling households to receive an income for renewable energy generation, while also achieving financial and carbon savings,’ he explains.

The RHI is the long-awaited financial incentive that those wishing to invest in creating solar heating for space and hot water have been waiting for, says sustainable architectural designer Oliver Heath. ‘With the RHI, homeowners will benefit from both harvesting renewable resources and financial returns for doing so – reducing their home’s CO2 emissions and their return on investment,’ he says. ‘It’s a positive step towards creating better homes, fit for the future.’

How much money can you save?

While most properties will be able to take advantage of one or all of the renewable heating methods, the RHI will only provide payments for one type used. The guaranteed payments will be made quarterly over seven years once the systems have been fitted and are fully operational.

According to the experts at heating systems provider Dimplex, new and existing properties off the gas grid could see the biggest savings – particularly larger, detached homes that install renewable heating solutions in place of an oil boiler. Based on typical system costs and usage for air source heat pumps, the combination of fuel saving and RHI payments available from the latest models should result in a payback for householders of around five years.

Use this breakdown for an indication of how much money you could receive in RHI paybacks:*

*The above tariffs and payments apply to projects registered in the first months of the scheme. The figures are based on project payments on a heat demand of 16,500kWh/year.

What to do next

If you want to reap the benefits of the RHI paybacks and create a more eco-friendly home, follow these steps from Clyde MacVeigh from Dimplex Renewables to ensure that you make the most of the scheme:

  1. Use an accredited installer All renewables installers must be certified by the Microgeneration Certification Scheme. Look for installers with close ties to their manufacturer of choice so you can be sure they are up to date with the latest product developments, initiatives and energy-efficient technology.
  2. Choose high-quality systems RHI payments for heat pumps will be based only on renewable heat produced, which means higher efficiency systems will benefit from both a higher payback and better savings on running costs. Going for a more efficient heat pump may be a bigger initial investment, but will provide better rewards through the RHI.
  3. Upgrade your existing heating system Renewable energy systems will work more efficiently at lower output temperatures, so replacing conventional radiators with specially designed, fan-assisted radiators or underfloor heating will benefit from lower running costs.
  4. Choose the right size for your home To prevent the need for costly supplementary heaters, heat pump systems must be sized so that they can heat the house adequately even when the outside temperature drops. This often means installers have to ‘oversize’ the system to allow for reduced performance in severely cold weather. Look for a high quality, highly efficient heat pump that offers the same output at lower air temperatures so there is no need to oversize.

How to find out more:

To discover more about the RHI and how to take advantage of the scheme:

  • Call the Energy Saving Advice Service on 0300 123 1234 if you’re in England or Wales, or Home Energy Scotland on 0808 808 2282 if you’re in Scotland;
  • For information on whether you are eligible, visit ofgem.gov.uk;
  • For detailed information about each type of renewable heating, visit energysavingtrust.org.uk.