RHI (Renewable Heat Incentive)
The Renewable Heat Incentive (RHI) is the world’s first long-term financial support programme for renewable heat. First launched in November 2011, rates have recently been revised under the Non-Domestic Renewable Heat Incentive Policy document of December 2013.
The RHI pays participants of the scheme that generate and use renewable energy to heat their buildings. By increasing the generation of heat from renewable energy sources (instead of fossil fuels), the RHI helps the UK reduce greenhouse gas emissions and meet targets for reducing the effects of climate change.
There are two parts to the RHI:
- Domestic RHI – launched 9 April 2014 and open to homeowners, private landlords, social landlords and self-builders (Not applicable to this project)
- Non-domestic RHI – launched in November 2011 to provide payments to industry, businesses and public sector organisations
- Any applications with a date of accreditation of 21 January 2013 or later will benefit from the tariff increases brought forward as a result of the Early Tariff Review consultation.
- The increase will be applied once the new tariffs come into effect May 2014, but not be backdated, and will apply to ground source heat pumps (GSHP) and solar thermal.
Ground Source Heat Pump Tariffs
GSHPs are expected to contribute significantly to the Government’s long term aim of increasing energy efficiency and low carbon energy use. DECC (Department of Energy & Climate Change) will be replacing the current banded GSHP tariffs with a single tariff of 7.2p/kWh, which will be tiered.
The tier 1 tariff of 8.7p/kWh will be paid on the initial heat generated for an eligible purpose and the tier 2 tariff of 2.6p/kWh will be paid on the remaining eligible heat generated. This is equivalent to a tariff of 10.0p/kWh renewable heat assuming an SPF of 3.6. The budget management quarterly tariff triggers for GSHPs will be set at £15.6m in January 2015 and £35.0m in January 2016.
Example – A 1MW system running at a typical 20% utilisation (1,752 hours) will earn 1,314 x 1000 x 8.7p = £114,318 plus 438 x 1000 x 2.6p = £11,388 (£125,706 pa)
Air Source Heat Pumps
The non-domestic Renewable Heat Incentive (RHI) scheme will now include air to water source heat pumps, and will offer a tariff of 2.5p/kWh for 20 years for installations from 2nd December 2013.
Solar thermal collectors are an important technology for enhancing the efficiency of systems when used in combination with other renewable heating technologies. DECC have raised the solar thermal tariff to 10.0p/kWh, in line with the updated approach to the value for money cap. We will be retaining the current 20 year tariff period. The budget management quarterly tariff triggers for solar thermal will £5.5m in January 2015 and £9.8m in April 2016.