Domestic RHI Terms Confirmed

After 4 years of delays, the government have finally confirmed the terms of the Domestic Renewable Heat Incentive (RHI). This will provide a 7 year quarterly payment to owners of Ground and Air Source Heat Pump Systems, Solar Thermal arrays and also biomass boilers. All installations which have been installed under the terms of the Micro Generation Certification Scheme (MCS) since 15th July 2009 will qualify for this payment, as well as MCS qualifying systems installed from now. This is a fantastic opportunity for people to be paid by the government to reduce their heating costs and to help the environment. It will allow the installation of the heat pump to be paid for in less than 5 years in most cases.

The principal terms of the scheme are as follows:-

• * Ground (including water) and Air Source Heat Pumps that are MCS accredited qualify
• * The amount payable will be
  • – 7.3p per kWh of renewable heat from an Air Source Heat Pump and
  • – 18.8p per kWh of renewable heat from a Ground Source Heat Pump
• * Payments will be made quarterly in arrears over 7 years
• * They will be index linked over the 7 years according to changes in the Retail Price Index (RPI)
• * The amount of renewable heat will be determined by a) the assessed loss of the house and b) the energy efficiency of the heat pump.
  • – So, for a typical 4 bedroom house measuring 160m2, the annual heat loss might be assessed as 24,000kWh.
  • – An installed ground source heat pump might have an efficiency ratio (described as the Seasonal Performance Factor or SPF) of 3.2
  • – This would result in a payment of 24,000 x (1-1/3.2) x 0.188 = £3,102 (or £1,204 for an air source heat pump).
• * The exception to this calculation will be where either the heating system is designed as a tandem between a heat pump and a conventional boiler and/or owners of holiday homes. In either of these circumstances the RHI will be based upon the metered output of the heat pump.
• * Applying the benefits of using a heat pump from reduced heating costs (usually about half the price of oil fired heating) and the RHI, this will typically result in a payback on either a ground or air source heat pump system in less than 5 years.
• * The RHI will apply to all houses irrespective of the previous heating system i.e. those that are both on and off the mains gas network
• * The RHI will apply to
  • – Owner occupiers
  • – Private landords that install and retain ownership of a heat pump for their tenants
  • – Social housing providers that install and retain ownership of a heat pump for their tenants
  • – Self build house owners
  • – Owners of holiday homes – provided the output of the heat pump is metered
  • – Third party owners of heat pumps installed in domestic houses (e.g. a leasing company)
• * The RHI will not apply to
  • – Those that installed a heat pump prior to 15th July 2009
  • – Non MCS accredited installations
  • – New build houses with heat pumps where the builder installed the heat pump prior to sale
• * Heat pump systems that serve more than one building will continue to qualify for the Commercial RHI and not the Domestic RHI
• * In addition to the above conditions, applicants for the Domestic RHI will need to have a Green Deal Assessment (GDA) carried out on their home. Finn Geotherm are able to do this for you as part of our overall heat loss survey. The intention of the GDA will be to highlight things that householders could do to reduce their heating requirements. The only compulsory measures however are that you should have a minimum of 250mm loft insulation and, where practical, should have cavity wall insulation.
• * Applications for the RHI will be accepted by Ofgem from Spring 2014. Applications will be dealt with in the order of
  • – systems installed between July 2013 and Spring 2014
  • – systems installed since 15th July 2009 that did not receive an up front payment (RHPP)
  • – existing (legacy) installations that have already received the RHPP
• * Where the RHPP has already been received by a householder, its value will be deducted from the RHI payable over the RHI period i.e. 1/28th of the value of the RHPP will be deducted from the RHI payment each quarter.
• * Householders that include heat meters as part of the installation will qualify for an additional annual payment of £230 for the 7 year RHI term
• * The government will require each qualifying householder to provide an annual declaration that their heat pump system is still being used and is being appropriately maintained according to the manufacturers recommendations.
• * The total funds available for the RHI are limited (although the scheme is expected to continue for new entrants until 2021). It is therefore expected that the RHI tariff will be reduced for new applicants over time as threshold numbers of installed systems are met i.e. it is likely that those installing a heat pump system in 2013-2014 will receive a higher tariff than those installing in 2014-2015.

Finn Geotherm already has hundreds of people that have had surveys carried out for them for a heat pump, but have decided to wait for the RHI to be confirmed. We are aware therefore that there will be a huge rush of households now wishing to proceed with the installation of heat pump systems. In order to manage this extra demand we are applying additional surveying, quotations and engineering resource – always ensuring that we maintain the same high quality that has become a Finn Geotherm trade mark for the past 7 years. We are nevertheless aware that slightly longer delays than normal may be necessary in the short term. We would ask all of our potential customers to be patient whilst we ensure that our resources are extended to provide you with the quality of service that you would expect.

Call us to arrange for a survey to identify how much money we could save you by installing a heat pump system and to allow you to gain access to this superb government incentive. Remember that the total funds available for new RHI applicants will be limited. As with the Feed In Tariff, payments under the RHI will be reduced for later entrants over time. We would therefore strongly encourage you to take advantage of this great opportunity as soon as possible.

Finn Geotherm are one of the longest established MCS accredited installers of heat pump systems in the UK. We use only the best quality ground and air source systems and have a team of engineers and system designers whose skill and experience is second to none. We are able to undertake any project, from a 2 bedroom bungalow to a large senior school, office or housing complex. Finn Geotherm were given the top award for providing the “Energy Efficient Initiative of the Year” within the 2013 heat pump awards.