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“Historically the main grant available in the UK for people who have a biomass boiler installed is called the Renewable Heat Incentive (RHI). This was setup by the UK government as a way to encourage the uptake of renewable heat technologies such as biomass boilers. “
Historically, the primary grant available in the UK for biomass boiler installations was the Renewable Heat Incentive (RHI). Established by the UK government to promote renewable heat technologies, the scheme compensated consumers for the kWh they generated and used for heating. There were two types of RHI schemes: domestic and non-domestic. The domestic scheme is now closed, replaced by the Boiler Upgrade Scheme in England and Wales.
Domestic RHI
The domestic RHI was designed for heating single domestic dwellings and lasted for 7 years, with payments typically calculated based on the property’s EPC. This scheme is now closed to new applicants and, while ownership can change, it cannot be transferred to another property (unlike the non-domestic RHI). RHI account holders were paid for the kWh shown on their EPC, regardless of actual usage. The kWh amount on the EPC was multiplied by the domestic RHI tariff to determine the total annual payment. For example, with a tariff of 6.88p/kWh and an EPC stating 20,000kWh, the annual payment would be £1,376 (6.88 x 20,000), regardless of actual usage. Payments were capped at 25,000kWh, so any EPCs over this amount would only be paid for 25,000kWh.
Boiler Upgrade Scheme
The scheme is available in England and Wales where if the following criteria is met you can qualify for a £5,000 grant:
1. Heating a single domestic property
2. Off the gas grid
3. in a rural location
4. chosen boiler meets emission requirements.
5. Boiler sold and installed by an MCS certified company
The boiler upgrade scheme is not available in Scotland, instead interest free loans are available to make homes more efficient.
Non-Domestic RHI
The non-domestic RHI, also known as the commercial RHI, is open to anyone installing a biomass boiler to heat a commercial property. District heating schemes, where more than one domestic property is heated by the same biomass boiler, also qualify. The commercial RHI runs for 20 years, with quarterly payments. Although the scheme is now closed to new applicants, boilers and RHI tariffs can change ownership and be relocated to other sites, allowing new owners to benefit from the remaining term. Typically, capital expenditure on commercial projects is paid off in around 5 years, meaning installations that are 10 years old could be relocated, with the second owner’s capex paid off in 5 years, followed by 5 years of RHI payments.
Unlike the domestic RHI, payments are based on actual meter readings, with account holders paid for recorded usage on a heat meter. There are two tariffs: Tier 1 and Tier 2. Initially, payments are made at the Tier 1 rate, and once a certain threshold is met, Tier 2 is applied to the remaining kWh generated that year. The threshold is based on the boiler’s peak capacity for either 15% or 35% of the year, equating to 1,314 or 3,066 hours, depending on the installation date. This is multiplied by the boiler’s capacity to determine the annual kWh eligible for the Tier 1 tariff. For example, a 199kW boiler with an RHI start date of 01/04/2014 has a Tier 1 threshold of 261,486kWh and a current rate of 13.16p/kWh, resulting in an annual payment of £34,411 (261,486kWh x 13.16p). If relocated, the new owner could benefit from 9.5 years of RHI payments. Payments are index-linked, increasing annually with the consumer price index.
Treco, an early adopter and market leader, specializes in locating second-hand RHI-accredited boilers and relocating them to new sites, having completed nearly 100 relocations to date. Contact us to discuss how you can benefit from the RHI.
Switching to biomass from fossil fuels offers significant fuel savings, often providing a larger financial gain than the RHI. It also reduces carbon emissions, which is crucial in today’s world.
For more information on the RHI, visit our website or Ofgem’s website for official guidance documents. Alternatively, contact us to discuss further. We have successfully completed hundreds of applications for customers now benefiting from quarterly payments.