Renewable Heat Incentive – Non-Domestic – 20 years
The RHI Phase 1 applies to Non-Domestic buildings from 28 November 2011. Renewable heat installations commissioned since 15 July 2009 can receive a cashback subsidy, based on the metered heat used in a building, of around 10 pence per kilowatt hour used – for the first twenty years of the equipment used.
The RHI tariff table below shows the technologies eligible for RHI Phase 1 and the subsidy received for each technology. The RHI provides a major incentive for owners to invest in ground source heat pumps and solar thermal renewable heat technologies. The tariffs are based on pence/kWh of renewable heat delivered. The grants vary with the technology and scale used as follows:
| Renewable Heat Incentive Non-Domestic |
Scale | RHI tariffs pence/kWh old rates |
RHI tariffs pence/kWh revised rates |
Tariff lifetime in years |
| Ground source heat pumps | up to 100 kW | 4.8 | 8.7 | 20 |
| Ground source heat pumps | over 100 kW | 3.5 | 8.7 | 20 |
| Solar thermal | up to 200 kW | 9.2 | 10 | 20 |
| Solid biomass | up to 200 kW | 8.6 | 7.6 | 20 |
| Solid biomass | 200-1,000 kW | 5.3 | 5.0 | 20 |
| Solid biomass | over 1,000 kW | 1.0 | 2.0 | 20 |
| Biomethane | All scales | 7.3 | 7.3 | 20 |
RHI rates published by Ofgem for year from 1 April 2014 – rates change with inflation each year.
RHI rates for ground source heat pumps fall to 2.6p for use over 15% of the full rated annual capacity.
RHI rates for small biomass fall to 2.3p for use over 15% of the full rated annual capacity.
Revised rates apply to accreditations from 21 January 2013.
DECC Consultation – RHI: Expanding the Non-Domestic Scheme
On 20 September 2012 DECC published a Consultation on expanding the Non-Domestic RHI to include the following potential additional tariffs from April 2014:
| Renewable Heat Incentive Non-Domestic |
Scale | RHI tariffs in Sept 2012 Consultation pence/kWh |
RHI tariffs in May 2013 Consultation pence/kWh |
Tariff lifetime in years |
| Air to water heat pumps | All scales | 1.7 | 2.5 | 20 |
| Biomass direct air heating | "Small" | 2.1 | 2.5 | 20 |
| Biomass direct air heating | "Large" | 1.0 | 2.0 | 20 |
| CHP:Biomass | All scales | 4.1 | 4.1 | 20 |
| CHP:Bioliquids | All scales | 4.1 | 4.1 | 20 |
| Deep Geothermal | All scales | 5.0 | 5.0 | 20 |
RHI Background
Renewable Heat is a subset of the wider category of renewable energy, which includes the generation of electricity from wind turbines and photovoltaic cells.
Greg Barker, the minister at DECC, introduced the RHI by saying: The heat used in our homes, public buildings, businesses and factories is responsible for around half of all the energy consumed in the UK, and accounts for roughly half of all UK carbon emissions. Taking action now to switch from fossil fuels to cleaner and more sustainable green sources of heat will reduce the impact that our heat requirements have on the environment and help ensure the UK has an energy supply that is safe, secure and reliable.
It is for this reason that we are introducing the Renewable Heat Incentive, making renewable heat not just an environmentally sound decision, but also a financially attractive one. This support can help drive take-up of renewables now, stimulate the renewables industry, encourage further innovation and ultimately, bring down the cost of renewable heating.
Almost half of the final energy consumed in the UK is in the form of heat. Its generation accounts for 47% of UK CO2 emissions. Renewable Heat currently satisfies only 1% of heat demand.
DECC is encouraging Renewable Heat as part of the UK's commitment to aim for the rather ambitious target of generating 15% renewables by 2020 and is introducing the Renewable Heat Incentive.
For the Renewable Heat technologies included, the energy ultimately comes from the sun. The sun provides planet earth with more energy each hour than human civilization uses over a whole year. The challenge is how to make use of this vast supply of incoming radiation to provide solar space heating and hot water.
RHI Administration by Ofgem
The RHI is administered by Ofgem. Owners of renewable heat technologies included apply to Ofgem who pay tariffs, on a quarterly basis, over 20 years. Owners need to provide information on the metered heat generated and satisfy Ofgem that the equipment is used to provide space heating or hot water and that the equipment is maintained according to the manufacturer's instructions. For installations rated up to 45 kW capacity the equipment and the installers need to be MCS certified, or equivalent.
Comment on the Renewable Heat Incentive
An investment in renewable energy usually means payment of a higher capital cost to achieve lower annual running costs (and also a lower carbon emission for the benefit for the community at large). The RHI will reduce the annual running cost of Interseasonal Heat Transfer to a very low level and allow owners to reduce the payback period from their investment to a few years.
Owners of IHT installations will benefit from the RHI for using ground source heat pumps and the RHI for using Solar Thermal when IHT is used to provide domestic hot water.
The RHI is calculated to offer a good return on initial investment
The introduction of the RHI offers a financial reward for lower carbon emissions over twenty years for the renewable heating technology installed. The tariffs proposed for the Renewable Heat Incentive have been calculated to offer a rate of return of 12% on the initial investment across the tariff bands.
The introduction of the RHI coincides with a time of increasing wealth and demand for fossil fuels from an increasing world population: many pundits expect the price of oil and gas to increase much more sharply than general inflation over the next three years.
While there are a number of renewable energy options to be considered, ICAX believes the most practical and affordable answer to generating Renewable Heat is to use Interseasonal Heat Transfer.
The RHI provides a positive step change in the business case for delivering on-site renewable heat, not only to reduce energy bills and carbon emissions, but also to deliver a energy related cash flow into your building.
Tony Grayling, head of Climate Change and Sustainable Development at the Environment Agency said: Ground source heating is a rapidly growing technology that has the potential to produce at least 30 per cent of the country’s renewable heat needs, but it needs financial support in order to grow. We would like to see this technology given adequate financial support through the new renewable heat incentive to meet its full potential in the UK.
RHI Tax free income
RHI grants are exempt from income tax. This means that domestic users and other income tax payers will not be taxed on any income received from the Feed-In Tariffs or the Renewable Heat Incentive.
For those using IHT, the annual clean energy cashback for heating will normally be larger than the annual running cost.
See also: Banking on IHT The Merton Rule Ground Source Energy Economic Renewable Energy
Recent ICAX projects benefiting from the Renewable Heat Incentive:
Merton IGC | Suffolk One College | Tesco Greenfield Supermarket | Wellington Civic Centre
