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What the domestic Renewable Heat Incentive means for heat pumps

After nearly 4 years of waiting, the Government has finally confirmed the details of the Renewable Heat Incentive (RHI) for domestic properties.  Cathy has already summarised the key details in her blog.

This is great news for home owners looking to install renewable heating systems, especially those living off the gas grid who want to reduce or remove their dependency on fossil fuels. This is where the savings will be the highest.

For heat pumps there are some details you will need to take into consideration and also make sure your installer is aware of!

The tariff for air source heat pumps is 7.3p/kWh and for ground source heat pumps it is 18.8p/kWh. This is because ground source heat pumps are more expensive to install due to the additional ground collectors, etc.

Higher efficiency = more RHI!

What’s really important to understand though is that these rates are paid per kWh of renewable heat, not for the overall heat provided, which of course includes the electricity to run the heat pump.

It stands to reason then that the more efficient your heat pump system, then the higher the renewable heat content is and therefore the more RHI you will receive.

This is absolutely as it should be – we should be encouraged to invest in higher quality, higher efficiency systems, and by doing so – ie running a system more efficiently with a higher Seasonal Performance Factor (SPF) – not only receive more RHI but also benefit from larger savings in running costs.

Of course to do this, you will need to invest a little more in your system. This means making sure you consider a good quality heat pump from a reputable manufacturer, upgrade your radiators to allow the system to run at lower water temperatures and a reputable installer – not only one that is MCS accredited, but also one recommended by the manufacturer.

How it the RHI for heat pumps works

So how will the RHI be calculated to benefit more efficient systems?  Well the SPF (efficiency) will be based on the Star Rating for your system, using a document called the Heat Emitter Guide (blog to follow on this). Your MCS installer is required to talk you through this. The guide provides an indication of how efficient your system should be dependent on the intended water flow temperature (which we all know is the key factor in determining the efficiency of a heat pump system).

This is how it works for a typical air source system:

  Total kWh/yr Tariff Rate water flow temp. Star rating SPF Renewable kWh/yr RHI income/yr

Approx
fuel* savings/yr

Total Annual benefit
Option 1 23,000 7.3p 50C 3 2.7 14,481 £1,057 £559 £1,616
Option 2 23,000 7.3p 40C 5 3.4 16,235 £1,185 £769 £1,955

* savings compared to oil heating (those on mains gas will save significantly less)

So as you can see, getting a better Star Rating by reducing your system design flow temperature will improve your benefit under the RHI. You should note also that for heat pumps, the RHI has a minimum SPF requirement of 2.5 which, using the heat emitter guide, will mean your system will have to be designed to run at 50°C water temperature and your radiators sized accordingly.

A few other important facts

You will be able to claim the RHI from Spring 2014, however between now and then the Renewable Heat Premium Payment (RHPP) scheme is still available and you will be able to claim both the RHPP and be eligible for the full RHI.  Although the value of the RHPP will ultimately be deducted from your overall RHI payment, this still represents a great “interest free” contribution towards your investment costs, so now is a great time to make the leap. The rates have recently been increased to £1,300 for an air source heat pump and £2,300 for a ground source heat pump. 

NB: you can only get the RHPP if you live off the gas grid. However, you will be able to claim the RHI even if your home is currently heated by gas.

The details of the RHI have also confirmed that hybrid systems will be allowed, although these will have to be metered.

Pay to have your heat pump system monitored

It has also been confirmed that a further £230 per year will be offered to systems which have a monitoring system supplied with them.  The idea of this is that monitoring systems allow you to see how well your system is working and help you change your behaviour.  The additional payment is intended to cover the additional costs of having a monitoring system installed.

And finally, remember that you will also need a Green Deal Assessment to be performed as part of the application process, in addition to confirming that you have loft and cavity wall insulation fitted (where possible).

Photo: Dimplex

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