The Renewable Heat Incentive (RHI) is a government financial incentive to promote the use of renewable heat. By switching to heating systems that use renewable energy, we can help the UK reduce its carbon emissions.
There are two schemes:
The Domestic RHI scheme is for heating systems for single homes. The scheme covers single domestic dwellings and is open to owner-occupiers, private landlords, social landlords, third party owners of heating systems and self-builders.https://www.ofgem.gov.uk/environmental-programmes/domestic-renewable-heat-incentive/about-domestic-rhi
Generally, if the renewable heating system is in commercial, public or industrial premises, or if it is for several domestic properties (each with their own EPC) then you would apply to the Non-Domestic RHI. This can include small and large businesses, hospitals, schools, and organisations with district heating schemes where one heating system serves multiple homes. The rates are calculated in a different way and the payments last for twenty years rather than seven.https://www.ofgem.gov.uk/publications-and-updates/non-domestic-rhi-main-guidance)
To be eligible for the Domestic RHI your property will need an Energy Performance Certificate (EPC). The EPC is the proof that your property is assessed as a domestic ‘dwelling’, and it gives information about a property’s energy use, plus recommendations on how to reduce energy and save money.
An EPC is required every time you buy, sell or rent a property. Your EPC must be less than 24 months old at the date of your application.
Your property needs to meet requirements of loft insulation if you have a loft, and cavity wall insulation if your walls are not solid. This is because heat pumps perform better in insulated buildings, so there will be a lower heat demand and as a result the system will be more efficient. Some buildings, for example listed buildings, can be exempt from this requirement.
People who join the Domestic RHI receive quarterly payments over seven years. The more renewable heat your home needs, the higher the payment. There is currently a cap on the total paid out on a property for the domestic RHI, For Ground Source Heat Pumps the cap is at 30,000 kWHr/yr, for Air Source Heat Pumps the cap is at 20,000 kWHr/yr, These figures include the combined total kWHr/yr for heating and hot water.
There is currently no cap on the non-domestic RHI. Payments are calculated based on Heat pump outputs and are paid quarterly payments over twenty years. The rates are lower but payments are for a longer period.
Your payments are based on the estimated annual heat demand stated on your Energy Performance Certificate (EPC)
The annual heat demand is multiplied by a figure based of the heat pump’s efficiency, to determine the renewable proportion of the heat.
The renewable proportion is multiplied by the rate per kWh for the technology, giving you an annual figure. This is paid for seven years.
Heat pumps provide running cost savings over fossil fuelled heating systems and future proof the system against future energy increases.
Unlike gas and oil based systems, heat pumps require no costly regular maintenance or annual safety inspections.
Heat pumps have a reasonable life expectancy of 20-25 years, typically twice that of a boiler, the investment costs can be recovered over a longer period meaning the ownership costs over the working life of the system are demonstrably lower.