The Renewable Heat Incentive was a government scheme designed to financially reward people who used renewable energy, such as heat pumps to heat their homes. The scheme is now closed to new applicants as of 31st March 2022, but it is still running for existing members, whilst the Boiler Upgrade Scheme (BUS) launching in May 2022 is effectively taking its place.
There were two versions of the scheme, one for residential homes and one for the non-domestic sector like industrial, commercial, public sector, and community organisations. Meanwhile, the scheme in Northern Ireland was closed to new applicants in 2016 but is still running for existing participants.
How did the RHI scheme work?
The RHI scheme gave financial support to households who used heat pumps and other renewable technologies to heat their homes. It was government-funded by the Department for Business, Energy, and Industrial Strategy (BEIS), and intended to cut carbon emissions and help the UK meet its renewable energy targets by offsetting the cost of fitting and running a new heating system. Applications for RHI funding were made via the energy regulator Ofgem. The scheme will close completely in 2029 when the last payments are made to those who applied in March 2022.
What technologies were eligible for RHI?
Air source heat pumps, ground source heat pumps, biomass boilers, and solar water heating were all qualifying technologies that meant homeowners could access Renewable Heat Incentive payments.
How did RHI payments work?
Participants of RHI get a quarterly tariff payment for every kilowatt hour (kWh) of renewable heat they produce. These payments carry on for seven years. It was also possible to have more than one technology installed and get payments for each system they used when the scheme was running.
The amount recipients are paid per kWh of heat depends on the renewable technology installed when they applied to get RHI and their home’s Energy Performance Certificate (EPC) rating. If you are already involved in the scheme and you consistently meet your ongoing obligations, you will continue getting your payments until the end of your seven-year membership.
How is the Renewable Heat Incentive different from the Boiler Upgrade Scheme?
The RHI was a financial incentive to encourage the use of renewable heat with payments spanning seven years. The Boiler Upgrade Scheme (BUS) is a government-led initiative with the aim of decarbonising buildings by providing one-off grants to support the installation of heat pumps, and biomass boilers in some cases.
BUS was launched in May 2022. It gives applicants an upfront payment of up to £5,000 for air source heat pumps and £6,000 for ground source heat pumps in place of the £7,000 paid in quarterly instalments over seven years that the RHI offered. The new scheme is set to run for three years, and the government has assigned a budget of £450 million to roll it out.
To apply for BUS, your installation needs to have been commissioned on or after 1st April 2022. Make sure renewable heating is suitable for your home before you start the process of installing it and applying for BUS. Also, it is worth checking that your home is well insulated and energy efficient before you look to fit renewable heating.
Applications for the new scheme have to be submitted through the heating system installer you commission to carry out the works in your home. Installers can download a voucher application form on Ofgem’s website and submit it back to the energy regulator by email.
When the regulator has received the form from the system fitter, the homeowner will be emailed by Ofgem asking for their consent to take part in the scheme. Once this process is complete, installers will be informed of the outcome via email. After your renewable energy heating system has been fitted, your installer has to email Ofgem with the required evidence for your voucher to be redeemed, including the MCS certificate number.
What is the difference between the Feed-in Tariff, Smart Export Guarantee, and RHI?
The Feed-in Tariff (FIT) made cash payments to households that produced and exported renewable electricity. RHI payments are supposed to offset the cost of fitting and running a renewable heating system, instead of providing an income in return for the renewable electricity these homes put into the grid.
The schemes provided payments for different renewable technologies:
- The RHI is for renewable heating systems, like heat pumps, biomass boilers, and solar water heating.
- The FIT was for renewable electricity systems, including solar panels and wind turbines.
The FIT stopped taking new applications in 2019. The Smart Export Guarantee (SEG) was introduced to replace it. The SEG pays homeowners for the excess renewable electricity they produce and export to the national grid. However, unlike the FIT, the SEG won’t reward you for producing electricity that you don’t export.