Discover how to get paid to heat your business & home with the renewable heat incentive (RHI)
There are some great incentives available to heat your home business with renewable heating. Yes the Greenest Government ever actually wants to pay you to start using renewable Heating technologies, like Biomass, solar thermal and air source heat pumps. It’s called the Renewable Heat Incentive (RHI). If you do not already know about it then it’s really time to get informed as you could save yourself a fortune on your heating bill in the years ahead. With energy bills seemingly heading in one direction there has never been a better time to take advantage of the RHI. Read on to find out.
What is the Renewable Heat Incentive?
- RHI Phase I and 2
- Who pays for the RHI?
- Who oversees the scheme?
- Why should I bother?
- What’s the catch?
- Biomass for your business
- How much will they pay me: BUSINESS?
- Example of small business RHI calculations
- Why your business should act now?
- RHPP grant for home owners, do you qualify?
- How much will they pay me: DOMESTIC?
- What do I do next?
What is the renewable heat incentive?
On 10 March 2011, the Government announced the details of the Renewable Heat Incentive policy to revolutionise the way heat is generated and used “At a time when we can see many problems with relying on a rapidly changing world and continuous reliance on oil and gas, we are proposing to put in place a key foundation stone of our energy future where both carbon reduction and energy security are assured”.
This is the first financial support scheme for renewable heat of its kind in the world. The RHI has been designed to reduce the UK’s dependency on fossil fuels. Under the government-funded Renewable Heat Incentive Scheme, renewable heating technologies including Biomass boilers, Solar Thermal Panels and heat pumps will earn payments for every unit of heat generated. The RHI provides a financial incentive, with payments being made for each kWh of renewable heat produced. The RHI Tariff for using renewable energy sources will be paid for 20 years.
RHI phases one and two
Phase one of the RHI scheme for commercial premises began in November 2011. It is anticipated the second phase of the RHI for home owners will be launched in the summer of 2013. RHI tariff payments are paid for 20 years from the registration date and are tax free and index linked.
Who pays for the RHI?
Of course this money has to come from somewhere, yes you the tax payer. The money for the RHI payments comes from the treasury and is paid out by the scheme administrator OFGEM.
Who oversees the scheme?
OFGEM is responsible for overseeing the whole scheme and maintaining the register of eligible systems.
Why should I bother
Quite simply the RHI presents a fantastic opportunity where the government will pay you to for the renewable heat you generate with Biomass, solar heating,& heat pumps. In fact this is the first scheme like it in the world. Why would you not want to be paid to heat your home or business? Especially as the energy companies are taking it in turns to announce significant price hikes and with heating bills accounting for large chunk of our home and business energy costs.
The RHI and renewable is therefore well worth considering. By generating your own renewable heat you won’t be relying on gas, coal oil or LPG the latter of which has seen even greater price hikes. With the RHI and renewable energy such as Biomass, Solar Thermal and Heat Pumps you will basically be paid to heat your home or business for the next 20 years and you’ll generate an income. You will also be adopting a more sustainable way of living as renewable heating is environmentally friendly so you’ll be doing your bit to reduce your carbon foot print and help protect the planet for future generations.
What’s the catch?
This is one of these rare occasions where something that sounds too good to be true actually isn’t. Of course you have the initial outlay for the installation but you may be able to get help through the Green deal or it may even worth considering a remortgage as the RHI can give you such a good return on your money. For businesses the Carbon Trust may be able to offer you a low cost loan.
Biomass for business
So what is the incentive for your Business to Install Biomass Heating? Quite simply the Government will pay you to heat your business and you will generate an income.
With a payback that could be as low as 4 years, you could enjoy a further 16 years of tax free index linked RHI payments that will leave you in profit after heating your business premises (including process heat, heat used during production for example heating glass houses, cooking and steam etc) There is certainly a strong business case for going green, one of the most pervasive trends in business is the move to “Go Green.” To Go Green, a business must adopt more sustainable and eco-friendly business practices. The move to Go Green is popular with businesses of all sizes because it’s both progressive and smart business.
How much will they pay me? (Business)
That is dependent on the technology you install, the size of the system. Information on the RHI tariff rates for the different technologies can be found here. Once we have carried out a site survey and dependent on what technology you choose we will be able to tell you how much you are likely to receive in RHI payments over the 20 years.
Small Business Premises RHI Calculations
A business premises (industrial unit measuring 50m long x 10m wide & 6m high heated to 18°C) that has a 150kW heat load (usually the boiler size, when sized correctly), could generate an income of £16359.30p / annum.
The cost of fuel (Wood Pellets) for the income above to be generated would be £7686.90p / annum.
This means your business would generate £8672.40p / annum after heating the building.
100kW large nursing home or small industrial unit:
Generation of £10906.20p, cost of fuel £5124.60p, leaving a profit of £5781.60p after heating the building.
50kW Small/medium nursing home or public house:
Generation of £5453.10p, cost of fuel £2562.30p, leaving a profit of £2890.80p after heating the building.
Why your business should act now
Delaying could cost you dearly. Take action now whilst RHI rates are at their highest as overtime the Gov intends to reduce rates to avoid over stimulating the market which has happened with solar PV and the FIT’S payments. It might not happen for the immediate future but by installing a Biomass boiler now you’ll be sure to benefit from the maximum renewable heat incentive tariff rate for the full 20 years.
RHPP grant for home owners, do you qualify?
The Renewable Heat Premium Payment (RHPP) is a one-off grant designed to help towards meeting the costs of installing renewable technologies in your home, until the Renewable Heat Incentive (RHI) is introduced for domestic customers in 2013.
Basically this money has been made available to encourage the uptake of renewable heating technologies, quite probably as a result of the government dithering and stalling on the phase 2 of the RHI which has been delayed by a year. Details of the RHPP you can claim are outlined below. But bear in mind this may be deducted from the RHI payments you will receive. The Renewable Heat Premium Payment scheme - Phase 2 will run until March 2013, subject to available funding.
- Biomass £950
- Solar Thermal £300
- Air to water heat pump £850
- Ground source or water source heat pump £1250
How much will they pay me? (Domestic)
That is dependent on the technology you install, the size of the system. The UK Government published their consultation on domestic RHI in September 2012. The key proposals in the consultation are:
- Indicative tariff ranges for air source heat pumps (6.9-11.5p/kWh), biomass boilers (5.2-8.7p/kWh), ground source heat pumps (12.5-17.3p/kWh) and solar thermal technologies (17.3p/kWh) that are MCS certified and meet relevant required standards.
- Payments for householders over seven years for each kWh of heat produced for the expected lifetime (20 years) of the renewable technology and based on deemed heat usage.
- Tariff levels set to provide a better return for householders living off the gas grid.
- Minimum energy efficiency requirements based on Green Deal assessments.
So what do I do now?
Arranging a site survey with us your local MCS accredited installer is the first step to assess the suitability of your property or business and to find out how much you are likely to receive in RHI payments.