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Tariff changes for Domestic Renewable Heat Incentive

The Renewable Heat Incentive (RHI) is a government scheme set up to encourage the uptake of renewable heat technologies through financial incentives. The domestic RHI was launched in April 2014 and provides payments to the owner of the renewable heating system on a quarterly basis for seven years. The amount received depends on a number of factors, including the tariff rate for the particular technology that you install.

The tariffs have been set by the UK Government at a level designed to compensate for the difference between the costs of installing and operating renewable heating systems and the costs of fossil fuel systems. These include non-financial costs such as disruption, and are based on 20 years of heat production. The fossil fuel costs used are those for off-gas households.

Normally the heat required to heat the property will be deemed (estimated) and payments will be based on this amount. However, this may vary slightly according to the technology. For example:

Biomass - renewable heat generated by biomass will be based on an estimated heat demand from an EPC

Heat pumps - renewable heat generated by heat pumps will be based on an estimate of the heat demand from an EPC combined with an estimate of the heat pump's efficiency

Solar thermal systems - renewable heat generated by solar thermal systems will be based on the estimate of system performance completed as part of a Microgeneration Certification Scheme (MCS) installation.

Tariff changes for new applicants

Tariffs are defined in pence per kilowatt hour (p/kW h) of renewable heat generated.

Once you start receiving Domestic RHI payments, the rate you receive changes annually in line with the Retail Price Index. The tariff for new applicants also changes during the duration of the scheme in order to manage the budget. Some new tariff levels came into effect on 1 April 2015: the tariff for air source heat pumps, ground source heat pumps and solar thermal technologies increased, while the tariff for biomass was reduced. The tariff for biomass was reduced again on 1 July 2015 because of high forecast expenditure on biomass. The tariffs will be reviewed again on 1 October.

A summary of the current tariffs (valid until 30 September) is shown below:

 Air source heat pump Biomass
 Ground source heat pump
 Solar thermal
Current tariff
(p/kW h)

Further details are available from the Energy Savings Trust