Historically the main grant available in the UK for people who have a biomass boiler installed is called the Renewable Heat Incentive (RHI). This was setup by the UK government as a way to encourage the uptake of renewable heat technologies such as biomass boilers. The scheme essentially pays consumers for the kWh that they generate and use for heating. There were two different types of RHI schemes which are the domestic and non-domestic. The domestic is now closed, with the Boiler Upgrade Scheme taking it's place in England and Wales.
Domestic RHI
The domestic RHI was for anyone looking to heat a single domestic dwelling. It lasted for a period of 7 years with payments typically calculated on a deemed basis using the EPC for the property. This is now closed to new applicants and whilst ownership can change it cannot be transferred to another property (unlike the non-domestic RHI where they can relocated). RHI account holders were essentially paid for the kWh shown on their EPC regardless of how much or little they actually use. The amount of kWh shown on the EPC is multiplied by the domestic RHI tariff to give the total payable amount over the year. As an example, if the tariff were 6.88p/kWh and an EPC stated 20,000kWh it would generate an annual payment of £1,376 (6.88 x 20,000) regardless of if they actually only used 10,000kWh for heating or 30,000kWh. This is capped at 25,000kWh, so any EPC's that are over this amount would only be paid for 25,000kWh.
Boiler Upgrade Scheme
The scheme is available in England and Wales where if the following criteria is met you can qualify for a £5,000 grant:
- Heating a single domestic property
- Off the gas grid
- in a rural location
- chosen boiler meets emission requirements.
- Boiler sold and installed by an MCS certified company
The boiler upgrade scheme is not available in Scotland, instead interest free loans are available to make homes more efficient.
Non-Domestic RHI
The non-domestic RHI is also known as the commercial RHI. This is open to anyone installing a biomass boiler to heat a commercial property. District heating schemes where more than one domestic property is heated by the same biomass boiler also qualify for the commercial RHI. The commercial RHI runs for a period of 20 years, with payments made every quarter. Whilst the scheme is now closed to new applicants, boilers and RHI tariffs can undergo a change of ownership as well as relocation to other sites, so a new owner can benefit from the RHI for the remaining term. As the capital expenditure on commercial projects is typically paid off in around 5 years, this means installations that are 10 years old could be relocated, with the capex of the second owner paid off in 5 years, who then have 5 years further of RHI payments that they can benefit from.
Unlike the domestic RHI, the payments are based on actual meter readings, where account holders are paid for the usage that is recorded on a heat meter. There are two tariffs that you can get paid against, initially payments are made based on the Tier 1 rate, then once a certain threshold is met a Tier 2 is paid against the remaining kWh generated that year. The threshold is based on the boiler being at peak capacity for either 15% or 35% of the year, this equates to either 1,314 or 3,066 hours (changes depending on when the boiler was initially installed). This multiplied by the capacity of the boiler gives the amount of kWh per annum which can be paid at the Tier 1 tariff. As an example, a 199kW boiler with an RHI start date of 01/04/2014 will have a Tier 1 threshold of 261,486kWh and has a current rate of 13.16p/kWh so if someone were to use that amount of kWh they would be paid for £34,411 (261,486kWh x 13.16p) for that year. As the boiler was initially installed 10.5 years ago, if this were relocated then the new owner could benefit from 9.5 years of RHI payments. The payments are index linked as well, so the rate per kWh increases each year in line with the consumer price index.
Treco were the earliest adopter and are the market leader when it comes to locating second hand RHI accredited boilers and relocating them to new sites, and have undertaken approaching 100 to date. If you would like to benefit from the RHI then contact us to discuss this further.
The RHI is not the only reason for switching to biomass from fossil fuels. There can be significant fuel savings that in some cases will provide a larger financial gain than the RHI. It also reduces your carbon emissions, something in this day and age is desperately required.
More information on the RHI can be found on our own website, as well as on Ofgems website where the official guidance documents are found. Alternatively you can contact us to talk through things. We have successfully completed hundreds of applications for our customers who are now benefiting from the quarterly payments.