DECC Releases Proposed Increase to Commercial RHI

On Friday 31st May, DECC announced that the Commercial RHI for Ground Source Heat Pumps is to be increased significantly for all installations registered with Ofgem after 21st January 2013. DECC have recognised that the current incentive levels are not encouraging people to adopt GSHP technology as quickly as they would like. The government have a target of 12% of all heating to be provided by renewable sources by 2020. This figure is currently only 2%.

DECC are therefore proposing to increase the RHI tariff rate to between 7.2p and 8.2p per kWh/yr for all GSHP installations. This compares to the current rates of 4.8p per kWh/yr for installations of less than 100kW and 3.5p per kWh/yr above 100kW. The final rate will be decided following the consultation which will close at the end of June. The annoucement of this final tariff is expected to be made in the autumn. Organisations qualifying for the commercial RHI do not need to wait for this annoucement however, as a firm qualifying date of 21st January 2013 for the new rates has been given. The higher rate will be paid to all qualifying GSHP installations, which were registered with Ofgem after 21st January 2013, from spring 2014. Until then payments will continue to be made at the current rates.

DECC are planning to base the actual amounts paid on the total amount of heat generated. They are proposing a two tiered payment system with a higher amount going to the first 1,314 operating hours of the system and a lower rate being applied for the remainder. These rates have been calculated so that, if a building were heated for 20% of the potential hours in the year (1,752), the total payment would equate to 7.2p per kWh/yr or 8.2p per kWh per year (according to the final consultation result). This mechanism is intended to prevent people from wasting heat in order to generate a higher payment under the RHI.

In the same document, DECC announced that they are considering the provision of a 2.5p per kWh/yr commercial RHI rate for air to water heat pump systems. This will also provide a very positive incentive as, although the proposed amount is much lower than for GSHP, the installation cost is also much less (due to the absence of ground work costs).

We consider this to be a very positive step which will go a long way towards enabling large scale GSHP installations to be adopted more widely. All schools, village halls, hospitals, churches, district housing schemes and of course companies can benefit from this. We would welcome enquiries from any organisation that would like to discuss how they may be able to benefit from this exciting development by installing a Ground Source Heat Pump.