Renewable Heat Incentive
Domestic Renewable Heat Incentive Scheme
The domestic renewable heat incentive for biomass boilers is aimed at covering the additional cost that a biomass system will cost you to replace an oil or LPG boiler. Biomass boilers and biomass pellet stoves with back boilers are eligible to receive RHI however log-fired boiler stoves are not eligible. The RHI has a tariff rate per kWh that is index linked and is paid quarterly in arrears for seven years. The tariff is reviewed by BEIS (Department for Business, Energy and Industrial Strategy), on the latest review there were no degression triggers but you can find the latest tariffs here.
For domestic installations that want to apply for the RHI you are required to use an MCS accredited installer and product. The product must be listed with Ofgem as an eligible product.
RHI is paid quarterly and is paid on each kWh of heat that is generated by your biomass system. To calculate your expected payment you can use the following formula:
Find out your heat demand. This can be calculated by your installer or taken from the figure that will be on your EPC (Energy Performance Certificate). In this example, we will use a figure of 15,000kWh.
The current tariff is 4.28p but can be checked on the Ofgem website.
To calculate your expected payment it would be 15,000 x 0.0428 = £642 RHI payment per year that will then be paid for 7 years total (£4,494).
In addition to this figure of £4,494 you can then include any savings you will make on fuel costs.
Non-domestic Renewable Heat Incentive Scheme
The non-domestic renewable heat incentive works in the same way as the domestic scheme however instead of being paid over a period of 7 years it is extended to a 20 year period. Although Ofgem also govern the non-domestic tariff and can make changes, to view the current tariff rates please press here.
Unlike the domestic tariff, the non-domestic tariff is tiered. This is done to avoid any incentive to generators to generate excessive or wasted heat to maximise the RHI payments. For Tier 1 you get paid for 1,314 hours and the remainder then gets paid by the Tier 2 rate.