Policy

Increasing the use of low-carbon technologies

Supporting detail:

Renewable Heat Incentive (RHI)

The Renewable Heat Incentive (RHI) is the world’s first long-term financial support programme for renewable heat.

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
  • Non-domestic RHI – launched in November 2011 to provide payments to industry, businesses and public sector organisations

The RHI is the main scheme of our heat strategy.

Delivering the RHI

Domestic Non-domestic
Pre-application enquiries by ESAS in England & Wales: 0300 123 1234 Ofgem deliver the scheme
Or contact Home Energy Scotland in Scotland: 0808 808 2282 Guidance on www.ofgem.gov.uk
Ofgem to deliver the scheme RHI enquiry line: 0845 200 2122
Guidance on www.ofgem.gov.uk Email rhi.enquiry@ofgem.gov.uk

The domestic RHI scheme

The domestic RHI scheme opened on 9 April 2014.

It is a financial incentive scheme designed to encourage uptake of renewable heating among domestic consumers. The domestic RHI is targeted at, but not limited to, homes off the gas grid. Those without mains gas have the most potential to save on fuel bills and decrease carbon emissions.

The scheme will cover single domestic dwellings and will be open to homeowners, private landlords, social landlords and self-builders. It will not be open to new build properties other than self-build.

The domestic RHI will pay the following tariffs per unit of heat generated for seven years:

Technology Tariff
Air-source heat pumps 7.3p/kWh
Ground and water-source heat pumps 18.8p/kWh
Biomass-only boilers and biomass pellet stoves with integrated boilers 12.2p/kWh
Solar thermal panels (flat plate and evacuated tube for hot water only) 19.2 p/kWh

The tariffs have been set at a level that reflects the expected cost of renewable heat generation over 20 years. Payments will be made on a quarterly basis.

The launch of the scheme follows extensive consultation on how a financial incentive would work best for householders and landlords. We set out the policy framework for introducing longer term support for domestic renewable heating in ‘Renewable Heat Incentive: the first step to transforming the way we heat our homes’ in July 2013. Alongside this we published the government response to the consultation, RHI: proposals to launch a domestic scheme, and the associated impact assessment.

Other documents published alongside the domestic RHI policy framework and government response include two technical guidance documents which provide further information on metering ‘Metering for Payment Technical Supplement’ and the ‘Metering and Monitoring Service Packages Technical Supplement’. We have also published a guidance document which sets out the process by which technologies become eligible for the RHI, Renewable Heat Incentive New technologies: process towards eligibility.

At the time of the July announcement we still needed to finalise when legacy applicants would be able to apply for the scheme, the details of how we would manage the domestic RHI budget, treatment of some types of subsidy and confirmation of the solar thermal tariff. These details are now set out in ‘Further details of the domestic Renewable Heat Incentive’, which was published on 4 December. This document also provides an update on implementation of the biomass sustainability requirements.

If you have any questions about the domestic RHI scheme please contact the Energy Saving Advisory Service on 0300 123 1234 in England and Wales, and Home Energy Scotland on 0808 808 2282 in Scotland.

Factsheets and guidance on applying for RHI are available from Ofgem.

Training voucher scheme to help cross-skill heating engineers to renewable heating systems

This is a £650,000 fund aimed at expanding the skill set of domestic heating engineers to include the installation and maintenance of renewable heating systems. This is an important step to boost the installer base and supply chain.

Giving consumers and installers reliable information is an important part of helping them make decisions about their heating system. With the launch of the domestic Renewable Heat Incentive it is important to ensure that consumers have a range of installers to consult, and that these installers are trained to the very latest standards.

The non-domestic RHI scheme

The non-domestic RHI scheme has been open to commercial, industrial, public sector, not for profit and heat networks since November 2011. The scheme is designed to bridge the gap between the cost of fossil fuel heat installations and renewable heat alternatives through financial support for owners.

Proposed changes to the non-domestic RHI

The government response published on 4 December 2013 sets out a series of improvements and increased support under the non-domestic scheme. Response documents for the three consultations are available below:

Key features of the new policy are:

  • An increase in support for renewable CHP, large biomass boilers (over1MW), deep geothermal, ground source heat pumps, solar-thermal and biogas combustion;
  • New support introduced for air-water heat pumps and commercial and industrial energy from waste;
  • An evolved approach to budget management, using improved market intelligence to allow credible growth rates across the range of renewable heating technologies supported, whilst ensuring that the scheme remains affordable and achieves value for money

We estimate the policy changes set out here could incentivise around 5,000 non-domestic installations and an additional 6.4TWh of renewable heat by the end of 2015/16.

A summary of revised tariff levels and other policy changes are included in the fact sheet below. Full details can be found in the Government Response.

Summary of changes to the non-domestic RHI (PDF, 219KB, 1 page)

The regulations which will bring these changes into force were laid before Parliament on 9 April 2014 and, subject to Parliamentary approval, we expect them to come into force later in spring 2014.

Biomethane injection tariff review

The biomethane injection tariff is to be reviewed following representations from industry that there is a risk of overcompensation for large biomethane to grid plants under the current Renewable Heat Incentive (RHI) biomethane injection tariff.

Larger plants benefit from economies of scale which can make them efficient generators of renewable energy, but their costs may not justify support at current levels.

DECC has undertaken initial analysis of the evidence underpinning the tariff and has concluded that there may be a risk of overcompensation for large plants or sites with existing assets. This represents a value for money risk for the taxpayer.

It is vital that we get the level of support right so that the market can invest with confidence, RHI support is spent efficiently and the market can grow sustainably. On 28 February 2014 DECC confirmed that it has initiated a review of the biomethane injection tariff.

As part of the review, DECC will be updating the cost and performance data underpinning the tariff to determine whether any changes are required. If it is concluded that changes are needed, DECC plans to consult on these in the summer.

Air quality emissions limits for biomass boilers and CHP

In March 2011 the Government published its policy for the non-domestic RHI, including the intention to introduce air quality emission limits for biomass boilers (including CHP) that participate in the scheme. Proposed limits were first published for consultation in 2010. These limits were confirmed earlier this year, with the maximum permitted emissions being 30 grams per gigajoule (g/GJ) net heat input for PM and 150g/GJ for NOx.

As of 24 September 2013, if you are planning to apply for the non-domestic RHI with a biomass boiler (including CHP) your installation will need to have emissions levels no higher than 30 grams per gigajoule (g/GJ) net heat input for PM and 150g/GJ for NOx. Proof that your system does not exceed these limits will need to be provided to Ofgem on application and be in the form of either an RHI emissions certificate or an environmental permit. Ofgem will contact you if this certificate is incomplete, which could delay your accreditation process. Ofgem will also retain the information on the certificate to support their auditing process in the future.

Our air quality factsheet answers a number of frequently asked questions and an example of an emissions certificate so you can ensure that the certificate you plan to submit meets the scheme requirements. If you submit an incomplete certificate it will delay your accreditation, therefore it may be advisable to check with your installer or boiler manufacturer to confirm your boiler’s RHI emissions certificate meets the requirements of the scheme.

Air quality factsheet (PDF, 297KB, 5 pages)

When these regulations first came into force on 24th September, there was a minor discrepancy that meant that it was not possible for every type of boiler to meet the standards as originally drafted.

The regulations have now been rectified so that they deliver the full policy intent. The amending regulations have completed their passage through Parliament and came into force on 13th December 2013.

Metering and minor regulatory changes

As of 24 September 2013, there are new regulations in place that modify the eligibility requirements regarding metering in the non-domestic scheme, which also provide flexibility in the way in which heat loss in a heating system can be calculated.

This includes the use of heat loss calculations where it is not appropriate to install meters, and participants will also be able to disregard heat loss from external pipes that are less than 10 meters in combined length providing they are insulated to the specified standards. Equivalent pipes over 10m in length will be able to use heat loss calculations in place of metering.

In addition, the regulations make a number of small amendments which include:

*allowing accredited installations to be moved to different locations; * clarifying that water in the ground may be used as an energy source by a ground source heat pump; * making outdoor commercial cleaning and drying processes eligible for the scheme; and * allowing RHI installations to be used as the assessment installation when installers join the Microgeneration Certification Scheme (MCS).

Consultations on the non-domestic RHI

It is vital that we get the level of support right so that the market can invest with confidence, cost reductions can be achieved and the market can grow sustainably. Since the start of the scheme we have been able to collect more data and gather additional evidence from industry on heat usage assumptions, appropriate tariff levels and the practical application of the scheme. We have held a number of public consultations to gather feedback on improvements to scheme design, inclusion of more technologies and an increase in some tariff levels. These are summarised in the table below:

Title Consultation launch Aim Government response Link to policy
Providing certainty, improving performance July 2012 Providing greater certainty to participants and improving the application process February 2013 Government response
Expanding the non-domestic RHI September 2012 Expanding the scheme to include additional technologies December 2013 Consultation
Air-water heat pumps and energy from waste September 2012 Collect views on including AWHP in RHI and broadening eligibility criteria for EfW December 2013 Consultation
Calls for evidence - biopropane, ground source heat pumps and landfill gas and large biomass September 2012 Collecting evidence and information to confirm or inform assumptions for support in the RHI December 2013 Consultation
Revising certification criteria for renewable Combined Heat and Power schemes December 2012 Revising certification criteria for biomass, bioliquid, biogas and waste fuelled Combined Heat and Power (CHP) schemes July 2013 Government response
Early Tariff Review May 2013 Reassessing tariff levels through new evidence and intelligence on cost data and heat usage assumptions December 2013 Consultation

Further details on how the non-domestic RHI scheme has developed over time is available in Key milestones in the history of the non-domestic RHI (PDF, 61.6KB, 2 pages)

Biomass Sustainability

New sustainability criteria for the Renewable Heat Incentive (RHI) will be introduced in Autumn 2014 to ensure installations using biomass fuels meet the government’s environmental objectives. This will affect domestic and non-domestic RHI participants as well as producers and traders of biomass fuels.

For more information on the new RHI biomass sustainability requirements and how to meet them please read our information leaflets.

Budget management

Funding the RHI

After consulting in summer 2012, in April 2013 we implemented a transparent budget management mechanism in the non-domestic scheme, called degression. This ensures that budgets are sustainable over the period April 2013 to March 2015.

We publish monthly data on scheme uptake and reduce tariffs, where necessary, on a quarterly basis.

Following further consultations in 2013 and agreement of DECC’s budget for the RHI in 2015/16, we have made adjustments to our approach to budget management.

This recognises decisions to increase tariffs (proposed in the 2013 Tariff review consultation) and the expansion of the current non-domestic scheme (proposed in September 2012 consultation).

Budget management of domestic RHI

The budget for the domestic RHI will also be managed using degression. This is a gradual reduction of tariffs for new applicants once certain trigger levels of spend are reached.

Details on how the domestic scheme degression triggers will operate are available in the policy document Further details of the domestic Renewable Heat Incentive , published in December 2013.

DECC will publish monthly and quarterly forecasts for the domestic RHI. The first of these is set to be published at the end of June 2014.

Budget management of non-domestic RHI

Through degression we will reduce the tariffs paid to new RHI recipients if uptake of the scheme is higher than expected, and more than is affordable.

The expenditure thresholds (or triggers) which can lead to reductions to tariffs are set out in Regulations. New degression triggers will take effect from 31 July 2014.

The Expenditure Schedules are available here: Amended Regulations and Expenditure Schedules.

Quarterly forecasts, including previous publications, and monthly updates are available on the RHI mechanism for budget management: estimated commitments’ page. You can also find the methodology which DECC will use to determine whether any tariff reductions are needed.

The Department of Energy & Climate Change (DECC) produces monthly and quarterly statistical updates on uptake of the RHI and Renewable Heat Premium Payment schemes.

See our statistics on RHI and RHPP uptake.

The Office of the Gas and Electricity Markets (Ofgem) also provides information on actual payments to date and numbers of accredited installations.

Further information and how to apply

The RHI scheme is delivered by Ofgem, who have a range of information and guidance available on their website, including how to apply and eligibility.

For pre-application enquiries regarding the domestic RHI please contact ESAS in England & Wales (0300 123 1234) or Home Energy Scotland: (0808 808 2282).

Domestic RHI Non-domestic RHI
Ofgem Domestic RHI website Ofgem Non-domestic RHI website
Once you’ve started the application process and afterwards, contact the Ofgem Domestic RHI Applicant Support Centre with any queries: Contact Ofgem’s Non-Domestic RHI team if you would like to apply for the scheme, if you require support with the application process, or if you have queries regarding the progress of your application, the eligibility requirements or Ofgem’s published guidance
Tel: 0300 003 0744 (Mon to Fri 8am to 7pm, Sat 9am to 2pm) Tel: 0845 200 2122, Monday to Thursday 8.30am to 5pm and Friday 8.30am to 4:30pm. (call charges apply)
DomesticRHI@ofgem.gov.uk rhi.enquiry@ofgem.gov.uk

Contact

Telephone: Ofgem E-Serve RHI Enquiries: 0845 200 2122, Monday to Thursday 8.30am to 5pm and Friday 8.30am to 4:30pm.

Email: rhi.enquiry@ofgem.gov.uk

You can also sign up for RHI email alerts.

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