Blog Post 11 February 2020 Updated 30 October 2020

What’s happening with the Renewable Heat Initiative?

Environment and sustainability

by Tom Shearman

With the UK Government committed to making the country carbon neutral by 2050, schemes such as the Renewable Heat Incentive (RHI) are coming under the spotlight. The scheme launched in April 2014 but it will be closing its doors to new applications in March 2021.

The RHI is part of the drive to reduce UK emissions, which are currently 42% lower than 1990 levels. That sounds impressive but there’s still a long way to go to reach net zero targets, with only around 8-10% of UK homes heated using renewables.

What is the Renewable Heat Incentive?

The incentive provides a regular payment to householders or businesses investing in renewable heating sources to replace older and often more polluting systems; for example when air-source or ground-source heat pumps and biomass boilers replace traditional gas or oil burners. For seven years following registration, people receive a quarterly payment directly into their chosen bank account for the renewable heat they generate and use. The aim is to provide a staggered source of funds to offset the upfront costs of system installation.

The RHI was a world-first, aimed at helping householders and landlords revolutionise homes and heating with low-carbon solutions – but its time is running out.

From April 2021, those already signed up to the RHI will continue to receive their payments until the end of their seven years. For others interested in installing renewable heating sources after that date there is no replacement incentive lined up so far.

What technologies are eligible for RHI support?

biomass (wood fuelled) boilers or pellet stoves
ground to water heat pumps
air to water heat pumps
solar thermal panels

Payments via the RHI

RHI payments are paid quarterly. The UK Government Department for Business, Energy and Industrial Strategy (BEIS) sets the tariffs when you apply, and these remain the same throughout the seven years. There are different tariff levels for domestic and non-domestic properties and for different technology types.

This tariff may vary with inflation – before April 2016 it was linked to the Retail Price Index (RPI), and thereafter the Consumer Price Index (CPI).

For example, someone who applied for RHI with an air source heat pump in 2014 received a starting tariff just over 7p per kW/h compared to almost 11p per kW/h at 2020’s rates.

There are payment caps in place, relevant to properties with larger heat demands.

How has the RHI helped reduce emissions?

According to UK Government figures, people signed-up to the RHI have received payments of up to £2,800 a year. They’ve also saved up to 5.2 tonnes of carbon emissions annually, based on a typical three-bed, semi-detached property. Exact payments and savings depend on the system installed and it is replacing; the most popular installation option being heat pumps.

These figures are supported up by impressive statistics for RHI adopters when looking at energy production, or gigawatt hours. A gigawatt hour (GWh) equals one million kilowatt hours (kWh) of electricity – enough to power around one million homes for an hour.

New renewable heating targets

The UK Government aimed for 12% of UK homes to be renewably heated by 2020 and looks set to achieve 8-10%.

The Committee on Climate Change wants to radically up the ante and have 15 million UK homes with heat pumps or hybrid heat pumps by 2035 – a huge leap compared to the 95,000 RHI successes thus far.

This is a massive challenge for the UK, not just for the heating industry, but also in terms of building trust and awareness, making more customers interested in renewable heating options.

Felicity Tolley, programme manager, Scottish Home Renewables at Energy Saving Trust, said: “We need something to replace RHI, whether it’s another incentive, or regulation, or a mix of both. Without additional measures after April 2021 we expect to see the uptake of renewables heating options slow, making it so much harder to meet our emissions reduction targets.”

Providing a clear, long term roadmap for heat policy to support the uptake of renewable heating across the UK is a key next step in meeting our national carbon emissions reduction targets.

Felicity recommends that people should: “Take advantage of the RHI while it is available.”