A Renewable Heat Incentive is a scheme that was established by the Department of Energy and Climate Change (DECC). It promotes the use of renewable energy sources by offering quarterly payments to those involved in the scheme, so long as they abide by the guidelines in place.
There are two types of incentives, commercial and domestic, depending on the property in which the energy source is installed. But, with new rates coming into play on 1st January 2016, what does this mean for those looking at entering into the scheme in the near future?
Thankfully, those looking at solar thermal, ground source heat pumps and air source heat pumps as their renewable energy source will not be affected. It is those considering biomass boilers that are going to receive lesser rates from the RHI scheme.
RHI Tariff Degression for Biomass Boilers
On 30th November DECC announced that the degression trigger for biomass boilers had been approved and would affect all those applying for this type of energy source from 1st January 2016. They announced that the previous tariff of 6.43p kWh would be cut by 20% to 5.14p kWh.
Why? Because the uptake of those installing biomass boilers had been far ahead of the predictions that DECC forecast. All of the tariffs are subject to this budget management, which means that if the number of applications is higher than a threshold they have put in place, the tariffs are lowered in order to account for this.
Every quarter, tariffs are reviewed and new applicants will receive the new tariff suggested by the DECC. This doesn’t affect those who have already signed up to the RHI scheme, but there can be adjustments made to the quarterly payments so they are in-line with the Retail Price Index. This is also calculated quarterly and is the measure of inflation that is produced by the Office of National Statistics.
Due to a larger uptake than predicted, biomass boilers in the scheme have suffered many degressions, with a 5% degression on 1st July 2015, a further 10% on 1st October 2015 and now a further 20% from 1st January 2016. The next quarter’s findings are expected to be released by the end of February 2016, and if the trend that has been seen over the last three years continues, there could be further cuts come 1st April 2016.
Domestic Renewable Heat Incentive Tariffs & How They’ve Changed
| Applications Submitted | Biomass Boilers & Stoves | Air Source Heat Pumps | Ground Source Heat Pumps | Solar Thermal |
| 09.04.14 – 31.12.14 | 12.20p | 7.30p | 18.80p | 19.20p |
| 01.01.15 – 31.03.15 | 10.98p | 7.30p | 18.80p | 19.20p |
| 01.04.15 – 30.06.15 | 8.93p | 7.42p | 19.10p | 19.51p |
| 01.07.15 – 30.09.15 | 7.14p | 7.42p | 19.10p | 19.51p |
| 01.10.15 – 31.12.15 | 6.43p | 7.42p | 19.10p | 19.51p |
| 01.01.16 – 31.03.16 | 5.14p | 7.42p | 19.10p | 19.51p |
As you can see, it is only biomass boilers that have been affected by this degression, with all other forms of energy seeing an increased tariff in the April to June period last year. This increase was due to the adjustment made to make sure they were in-line with the RPI.
The Future’s Bright for Ground Source Heat Pumps
This provides an even stronger case for those looking to install Ground Source Heat Pumps (GSHPs) as the financial attraction has increased dramatically over the last few years. It was initially the lesser chosen source of energy as the tariffs offered for PV (solar panels) and biomass were incredibly attractive for those considering renewable energy. However, as this has fallen sharply recently, the key strengths of the GSHP have been seen.
What’s more, it isn’t just the financial gain of the GSHP that is increasing interest in it as time has provided more evidence as to just what fantastic advantages are to be had with this energy source.
- They require far less work than a biomass boiler as they don’t require as much servicing, they don’t require fuel deliveries and they don’t produce ash.
- As well as warmth in the winter, these systems can also provide cooling during the warmer summer months.
- They emit no carbon dioxide on-site, and with the improvement of electric sources (which are also needed for the GSHP to function) there is less CO2 produced here too.
- They have a far great lifespan than biomass boilers, with the expected life of a ground loop being over 50 years.
- The installation of a Ground Source Heat Pump is invisible and doesn’t require any planning permission.
