What is it?
Following the success of the Non-domestic RHI, the government launched the Domestic RHI in April 2014. The Renewable Heat Incentive was the world’s first financial incentive of its kind, determined to revolutionise the way that heat is generated and used in buildings. Although the conditions of the Domestic and Non-Domestic schemes vary, both were established as part of the UK’s commitment to reduce Carbon Emissions by 35% by 2020 and 80% by 2050.
The Domestic RHI scheme pays participants over seven years (per kWh) who install and use a renewable energy system to heat their home. It’s expected that heat pump technology, in particular, will play a significant role in the UK hitting their renewable energy targets.
Who is it for?
The Domestic RHI is suitable for homes on and off the gas grid in England, Wales and Scotland. Eligibility includes homeowners, private landlords and social landlords.
There can often be a grey area for large country estate owners who reside in their premise, yet also have means of income from the estate, to determine if the Domestic or Non-domestic RHI is the most suitable. The Renewable Design Company’s experts can help advise on this matter; please contact us today for a chat.
How does it work?
If a Domestic RHI application is successful the applicant will receive a payment every quarter for seven years. Under the Domestic RHI scheme, Ofgem pay for all eligible renewable heating based on their calculation::
- The EPC for your property will contain the information required to calculate your RHI income. The important figures are the annual heating and hot water demand (kWh/pa).
- To calculate the eligible renewable heat, first divide the annual heating and hot water energy by the heat pump SCOP. For example, if your annual energy demand for heating and hot water is 20,000kWh and your SCOP is 3.6, the electrical energy used by the heat pump will be 20,000/3.5 = 5,714kWh.
- The electricity used by the heat pump is then deducted from the annual heating and hot water kWh 20,000 – 5,714kWh = 14,286kWh/yr.
- Multiply this figure by the RHI tariff (20.89p/kWh) to calculate the annual RHI payment: 14,286 x £0.2089 = £2,984.35 per year, each year for 7 years.
The tariffs increase annually based on the CPI rate for December of the previous year. You can find more details on the scheme at here.
What are the benefits to joining the Domestic RHI scheme with a heat pump?
- Highest tariff - heat pumps have the ability to generate the most energy due to the size and capacity of the systems compared to biomass and solar PV. The UK government expects heat pumps to significantly contribute to the renewable energy targets and have given the highest tariffs to the technology, as shown in the table above.
- Income generation - On average, the system is expected to have paid for itself within the first five years, providing pure income generation from the remainder of the seven year RHI payment period. Please note, the timeframe depends on the unique system specifications and will be clearer during the consultation and design phases.
- Reduction of CO2 and encouragement of further incentives - Joining a governmental scheme will not only reduce your (and therefore the UK’s) carbon footprint, but it will also show support of renewables, encouraging further budget investment.
- Ongoing benefits of a heat pump - heat pump systems provide reduced energy bills, reduction of a CO2 emissions and a safe, reliable heating system. Learn more about ground source, air source and water source heat pumps.
How can The Renewable Design Company help?
- Advise - determine if the Domestic RHI is the best application for the biggest return, as well as provide advice on what you need and can expect from the RHI application process
- Complete and submit RHI applications
- Ongoing support - Support post-project to ensure your system remains compliant based on Ofgems participant obligations and requirements. This includes ensuring your system is in suitable working order and that all warranties are valid
All details of the Domestic RHI can be found on Ofgem’s website. This includes a checklist of key information required before starting your application, and what you can expect from a qualified heat pump installer such as The Renewable Design Company.
Considering the RHI for a heat pump project?
Contact us today for our help and expertise