What is the Renewable Heat Incentive?

If you’re looking to make your heating more green, then the Renewable Heat Incentive is a government scheme that could help make it a reality. Read on to discover how it enables you to help recoup the installation costs of your new system.

Share this guide
Woman using thermostat

What is the Renewable Heat Incentive (RHI) scheme?

The RHI is a government scheme that rolled out in 2014 to encourage more people to invest in renewable heat energy technologies as part of the UK’s pledge to meet renewable energy targets and reduce carbon emissions. 

The RHI basically offers a cash incentive to anyone who installs a qualifying source of renewable heat into their home. This comes in the form of quarterly cash payments for a period of seven years following the installation. The amount paid is based on several factors, based on a tariff rate according to the type of technology installed, plus the amount of energy generated (subject to an upper limit in most cases).

The Department for Business, Energy & Industrial Strategy (BEIS) makes policy decisions about the RHI, and industry regulator Ofgem takes care of the day-to-day admin. 

What recent changes have there been to the Renewable Heat Incentive?

The Ofgem RHI rules have undergone several changes since it was launched, as part of the BEIS’s regular policy reviews. These changes have included:

  • Updates to the MCS (Microgeneration Certification Scheme) that affected heat pump applications after 30 October 2017.

  • Heat demand limits were applied to biomass systems as well as both air source and ground source heat pumps from 20 September 2017.

  • Changes to payment dates (but not frequency) that meant payments were made slightly later than previously (from 1 May 2020).

Be sure to check the Ofgem website to keep up to date with any other changes in the scheme.

Which technologies qualify for the scheme?

The Domestic RHI covers the installation of various types of renewable heating technologies, but not all are covered. Here’s a quick rundown of supported and unsupported schemes:

Updated 25 March 2021
Supported by the RHI schemeNot supported by the RHI scheme
Ground source heat pumps Air-to-air heat source pump system
Air source heat pumps Log stoves
Biomass (wood-fuelled) boilers* Pellet stoves without back boilers
Biomass pellet stoves with integrated boilers* Hybrid Solar PVT panels
Solar thermal panels specifically to provide hot water

*Biomass fuel must be sourced from an approved sustainable biomass supplier.

This list is not exhaustive and is subject to change, so be sure to check the Ofgem site for the latest rules. How much you get paid depends on the type of technology, the available tariffs, and metering, so factor these in before making your choice (see below).

Are there additional eligibility requirements?

Yes. you must also meet the following additional eligibility requirements:

  • RHI applications must be within a year of the system’s date of commission.

  • Only single domestic dwellings are eligible.

  • The scheme is open to owner-occupiers, private landlords, and self-builders who have installed qualifying technology. 

  • Registered providers of Social Housing may apply. 

  • The building must have an Energy Performance Certificate (EPC). 

However, while self-build projects are eligible for RHI support, other new-build properties don’t qualify under the Domestic scheme. 

How do I apply for the Renewable Heat Incentive scheme?

It’s a multi-step process:

  • Find out which renewable technologies are suitable for your property.

  • Read the Essential Guide for Applicants to acquaint yourself with the scheme’s rules and to determine if you’ll need metering using the relevant factsheet.

  • Find and get quotes from local MCS-certified installers, and verify your chosen product is covered by the scheme using the Domestic RHI Product Eligibility List.

  • Install your renewable technology – including meters if required by the scheme.

  • Prepare your paperwork (see the application form helpsheet). Once done, you can apply for the scheme.

Top tip: get more help by calling the Domestic RHI Applicant Support Centre on 0300 003 0744. The phone line is open from Monday to Friday between the hours of 09:00 and 17:00. You can also email DomesticRHI@ofgem.gov.uk.

How are RHI payments allocated?

If your application is approved, you’ll receive quarterly payments from Ofgem for the next seven years. The specific amount will vary, with the idea being the tariffs will compensate for the cost of installing and operating your renewable heating system. 

Payment amounts are based on an estimate of the heat required to warm your property, which varies according to the type of heating system you’ve installed. For those systems that don’t require metering, the following table applies:

Updated 25 March 2021
Technology Heat demand Annual Heat Demand Limit (kWh)* Current Tariff Rate
Biomass As listed on your EPC 25,000 6.97 p/kWh
Air source heat pump As listed on your EPC, adjusted by your heat pump’s efficiency** 20,000 10.85 p/kWh
Ground source heat pump As listed on your EPC, adjusted by your heat pump’s efficiency** 30,000 21.16 p/kWh
Solar thermal system Estimated annual generation from your MCS certificateN/A 21.36 p/kWh

*Measured as a Seasonal Performance Factor (SPF) rating

**Applies to applications for systems after 20th September 2017

The annual payment can be calculated by multiplying the heat demand by the tariff rate.

Annual changes to payment rates

The Consumer Prices Index (CPI) is used to adjust the rates paid – this is done annually. A ‘degression’ system is in place to regulate payments, which may affect the tariffs paid to new applicants. This is reviewed annually (next review date is 1 June 2021), but has not been applied since 2017.

Other adjustments

If you’ve already received public funds or a government grant such as the Green Homes Grant [LINK] to help pay for the installation, then your payments amounts will be adjusted to reflect this. Make sure you make a note of the amount received on your application.

How does metering work?

According to Ofgem, “Most people will receive their Domestic RHI payments based on the annual heat demand figure listed on their EPC, up to the relevant heat demand limit – whichever is lower. For cases where we can’t easily estimate this, people need to install meters and submit readings regularly, which we use to work out how much to pay them. Heat meters are used to measure the amount of heat the renewable heating system produces.”

On 22 May 2018, anyone applying or receiving accreditation for their new air source or ground source heat pump system were required to have electricity metering arrangements installed alongside their heating system before they applied to the Domestic RHI.

It’s also a good idea to opt into the Metering and Monitoring Service Packages (MMSP) if you have a heat pump (ground source or air source) or biomass pellet boiler system. This ensures your new heating system remains in good working order. This is provided by your systems installer and is a smart system that alerts the installer should a problem occur. 

You can recoup the cost of this add-on by including details of your MMSP when applying for the main RHI payment. You’ll then receive an additional MMSP premium on top of your regular RHI payment.

Is the Renewable Heat Incentive right for me?

It’s potentially a great solution if you meet the eligibility requirements, but before diving in you should do a little additional research to ensure the renewable source you use is the best fit for your property. The condition of your soil may impact the effectiveness of a ground-source system (clay is better than soil for retaining heat), for example, while solar panels will be adversely affected by shade. Make sure your systems installer has factored all this in before agreeing to any installation.

If you find the right system for your home, you’ll note only benefit from heating your home with a greener energy source, you’ll also be eligible for quarterly payments to help recoup the installation cost and cut your energy bills too.