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Important changes to the Renewable Heat Incentive scheme coming on September 20th

The Renewable Heat Incentive (RHI) scheme, introduced in 2011, was designed to pay households for heat generation from renewable energy sources. In encouraging news, Ofgem have confirmed that RHI is set to see a significant increase in payments from the 20th September 2017 onward. Subject to final parliamentary approval, the RHI payments for air source heat pumps and biomass boilers has been increased significantly, with Ground Source Heat Pump tariffs also rising slightly. The new rates are as follows:

New ground source heat pump tariff: 19.86 p/kWh (previously 19.64 p/kWh)

New air source heat pump tariff: 10.18 p/kWh (previously 7.63 p/kWh)

New biomass plant tariff: 6.54 p/kWh (previously 3.85 p/kWh)

As you can see, the new tariff rates offer a considerable increase for biomass and air source heat pump tariffs. This will make the latter two much more financially lucrative on domestic properties. There will, unfortunately, be no increases to tariff rates for solar thermal systems.

Interested in learning more about RHI? Take a look at our extensive guide (note: pre-September 20th figures are used)

Those who have applied for the scheme on the 14th December 2016 or after are set to enjoy the increased tariff rate from 20th September 2017 onwards. This will happen automatically so owners of heat pump and biomass systems do not have to do anything to upgrade to the new rate.

Alongside the new tariff rates, there will be new demand limits that are set to also come into place on September 20th. The following demand limits will be applied (the limits are measured annually).

New ground source heat pump demand limit: 30,000 kWh/year

New air source heat pump demand limit: 20,000 kWh/year

New biomass plant demand limit: 25,000 kWh/year

This shouldn’t impact most small domestic systems, but may have consequences for larger installations, and it may be worth recalculating the financial prospects of such systems. However, for the majority of homeowners these rates will provide an increase in income from sources of renewable heat. Solar thermal power will remain similarly unaffected by the new demand limits.

The government plans to follow this up with legislation on metering performance in the coming months, to allow customers to monitor their heating system’s performance more accurately.

Ofgem has warned that ‘degression’ may take place on the scheme. Degression means that the tariffs may lower on new applications if uptake of the scheme is higher than anticipated. Thus, now may be the best time to take advantage of higher paying tariffs and install a new renewable heat system!

Looking to install a renewable heating system? Use our Find an Installer page to find a reliable installer near you!

For more information on the scheme, you can contacting the Energy Saving Advice Service on 0300 123 1234 or Home Energy Scotland on 0808 808 2282 if you are based in Scotland, or leave a comment below.


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