The RHI is a UK Government scheme set up to encourage uptake of renewable heat technologies amongst homeowners, communities and businesses by offering financial incentives for adopting renewable heat.
The Renewable Heat Incentive has two schemes - Domestic and Non-Domestic. They have separate tariffs, joining conditions, rules and application processes. To decide which is for you, have a look at the Ofgem factsheet 'The Renewable Heat Incentive – Domestic or Non-Domestic?'
Domestic Renewable Heat Incentive
Funding from the Domestic Renewable Heat Incentive
The Domestic Renewable Heat Incentive (RHI) is a UK Government financial incentive set up to encourage the use of renewable heat. Its aim is to cut carbon emissions and help the UK meet its renewable energy targets.
The Domestic RHI offers quarterly payments over seven years, according to a set of tariffs based on the type of system installed. This helps to offset the higher upfront cost of installing a renewable heating system, compared with a typical boiler.
For information, please visit the Ofgem website.
The Domestic Renewable Heat Incentive (RHI) is available to people living in England, Scotland or Wales – but not in Northern Ireland or the Channel Islands – and is available for homes which are on or off the gas grid.
The person applying for the RHI must own or occupy the property that the renewable heating system is in. This includes:
- A homeowner
- A private or social landlord
- A self-builder
- Anyone who has installed a renewable heat technology since 15 July 2009 and meets the scheme eligibility criteria
For a full list of eligibility requirements please visit the Ofgem website.
When will I get paid the Domestic Renewable Heat Incentive?
Your first payment will be made three months after the date you applied and will be set at the tariff rate applicable on that date.
Payments are made by Ofgem every three months for seven years, provided you continue to meet the scheme rules.
To see how much your RHI payments could be, visit www.gov.uk/renewable-heat-incentive-calculator
Payments over seven years
The Domestic Renewable Heat Incentive offers quarterly payments over seven years, based on a set of tariffs according to the type of system installed, which help to offset the cost of installing renewable heating systems.
For air-to-water heat pumps, the Domestic Renewable Heat Incentive payments are based on a tariff of 10.85p per kWh*. This figure is then multiplied by the Annual Heat Demand figure listed on your Energy Performance Certificate (EPC). Tariffs are adjusted in line with the Consumer Prices Index (CPI), and subject to a cap of 20,000 kWh per year.
RHI Payment example
In a typical four bedroom home, RHI payments could amount to around £7,000 - £10,000 over seven years.
This mean that over the lifetime of your system (assuming 15 years), running an efficiently designed heat pump system could save you around £11,000 compared with a typical oil boiler, when you compare the installation / running costs and offset the RHI payments.
*Correct as of June 2020
Systems eligible for the domestic Renewable Heat Incentive include:
- Air source heat pumps
- Solar thermal panels (for hot water provision only)
- Ground source heat pumps
- Biomass boilers
Visit the Ofgem website to learn more about eligible heating systems.
Discover our range of RHI ready Daikin Altherma heat pumps for every kind of property.
- To be eligible, a heat pump can only be used to heat rooms via a ‘liquid medium’ (e.g. through a radiator, underfloor heating or heat pump convector). This means air-to-air heat pumps are not eligible for the RHI.
- The renewable heating system must be certified under the Microgeneration Certification Scheme (MCS). All Daikin Altherma systems are MCS accredited and RHI ready
- To apply, you need an MCS Certificate for your installation and a domestic Energy Performance Certificate (EPC) that’s no more than 24 months old for your property
- A heat pump also needs a ‘seasonal performance factor’ of at least 2.5 - all Daikin Altherma heat pumps exceed this significantly
Metering for Performance
All Domestic RHI applications need to be metered for performance to measure the electricity it consumes in order to generate heat. Your heat pump installation needs either a standalone or on-board electricity meter, or you’ll need to be provided with a Metering and Monitoring Service Package.
For more information, visit the Ofgem website.
Metering for Payment
Your heat pump will also need to be metered for payment to receive your quarterly RHI payments based on the amount of renewable heat it produces, if:
- You have a Hybrid system (e.g. heat pump and gas boiler combined)
- You have a renewable heating system installed alongside a fossil fuel heating system
- You’ve lived in your home for less than 6 months before applying to the Domestic RHI
Assignment of Rights
To completely avoid the upfront cost of a renewable heating system, there’s an option to choose an assignment of rights (AoR).
This option allows an investor to help fund the purchase, installation and maintenance of a renewable heating system.
In return, the rights to any RHI payments are assigned to them. Find out more on the Ofgem website.
Non-domestic Renewable Heating Incentive
The ndRHI is a Government environmental programme that provides financial incentives to increase the uptake of renewable heat for the non-domestic sector. It provides a subsidy, payable for 20 years, to eligible, non-domestic renewable heat generators and producers.
The purpose of the scheme is to provide a long-term financial incentive in order to significantly increase the proportion of heat generated from renewable sources. By driving change in a heat sector currently dominated by fossil fuel technologies, the ndRHI can help the UK meet EU targets to reduce carbon emissions and improve energy security.
The Non-Domestic Renewable Heat Incentive (RHI) is open to industrial, commercial, public sector and non-profit organisations with eligible installations in Great Britain.
This includes small businesses, hospitals and schools as well as district heating schemes where one installation serves multiple homes.
The Non-Domestic RHI provides financial support for renewable heat technologies for 20 years. Payments are made on a quarterly basis.
Please visit the Ofgem website to find out more about payments and tariffs.