What is the Domestic RHI?
The Domestic Renewable Heat Incentive (RHI) is a government fund that pays heat pump owners a tax-free quarterly income. Spanning over seven years, the generous RHI income is based on the amount of renewable energy a ground source heat pump produces.
This incentive, which applies to Kensa’s MCS-accredited ground source heat pumps, is designed to encourage people in the UK to use renewable heating systems. It aims to help reduce the UK’s carbon emissions, achieve net-zero targets and consequentially improve air quality.
When does the Domestic RHI end?
The application deadline for the Domestic RHI is 31st March 2022.¹ Commencing from April 2022 will be its proposed successor, the Clean Heat Grant, which could provide up to £4,000 upfront for a ground source heat pump installation. However, with the Domestic RHI offering much more lucrative returns, it’s important to capitalise on the RHI income while you still can.
Who is the Domestic RHI for?
The Domestic RHI is ideal for anyone who wishes to install a ground source heat pump into a single domestic property. It is particularly suited to homeowners, self-builders and property renovators.
So long as the ground source heat pump installation is accredited by the Microgeneration Certification Scheme (MCS), all self-build, renovation and domestic heating replacement projects are eligible for seven years of guaranteed Domestic RHI payments.
What if the Domestic RHI isn’t right for me?
If your project features two or more buildings in close proximity, you may wish to look into the Non-Domestic RHI instead. This stream of RHI pays a quarterly income for up to 20 years for district heating schemes in as few as two dwellings.
Use the Domestic RHI calculator
How does the Domestic RHI work?
The Domestic RHI pays the owner of a ground source heat pump for the renewable portion of heat it’s predicted to produce. This prediction is based on figures taken for the property’s Energy Performance Certificate (EPC).
Installations must be compliant with the MCS to be eligible for the RHI. Kensa’s ground source heat pumps are MCS certified and Kensa Heat Pumps is an accredited MCS installer – so you are in safe hands.
Non-MCS installers can even make use of Kensa’s MCS Umbrella Service for support with design, installation and commissioning. This ensures that the end user’s heat pump system will be eligible for the Domestic RHI.
What are the current Domestic RHI tariffs for ground source heat pumps?
As you can see below, ground source heat pumps have one of the highest Domestic RHI payments amongst other renewable technologies. They offer the most efficient and lowest carbon form of heating.
Use the Domestic RHI calculator
|Date of accreditation ||Biomass (p/kWh)||Air source heat pumps (p/kWh)||Ground source heat pumps (p/kWh)||Solar thermal (p/kWh)
|01/04/2020 - now||6.97||10.85||21.16||21.36
|01/04/2019 - 31/03/2020 ||6.97||10.85||21.16||21.36
How long do Domestic RHI payments last?
The Domestic RHI provides guaranteed tax-free payments over seven years. Based on the renewable energy produced by the ground source heat pump, these payments are made every three months for those seven years, and they adjust with inflation.
How much money could I earn with the Domestic RHI?
Domestic RHI payments will depend on your property’s heat demand and efficiency, as well as the efficiency of your chosen heat pump and heating system. Kensa will provide you with anticipated Domestic RHI payments for your project as part of our quoting process. For a quick guide, use Kensa’s RHI Calculator here.
The following examples demonstrate the attractive rates of return different property types can expect from a Kensa ground source heat pump:
Five-bed detached house built 2002-2009
Domestic RHI over seven years = £24,415
Three-bed new build semi-detached house
Domestic RHI over seven years = £11,415
Two-bed detached bungalow built 1982-2002
Domestic RHI over seven years = £11,752
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Use the Domestic RHI calculator
Try our RHI calculator to find out how much you could receive when you install a Kensa ground source heat pump. Plus, see the rough project costs for your property.
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Domestic RHI Key Points
The Domestic RHI offers excellent levels of guaranteed income for ground source heat pump owners. Before applying for the RHI, Kensa has outlined the key points to remember for all ground source heat pump RHI applications:
- Your property must be able to obtain a domestic Energy Performance Certificate (EPC).
- Payment is made on the renewable part of your property’s heating demand based on your property’s EPC.
- A 30,000kWh heating demand limit applies.
- The ground source heat pump installation needs to be MCS compliant (if below 45kW).
- If the property is unoccupied for more than 183 days, then heat metering is mandatory.
- If the system has a backup boiler (i.e. is bivalent) then heat metering is mandatory.
- Heat metered systems will be paid based upon their meter readings up to a maximum of the renewable part of the heating demand as detailed on the EPC.
- Electrical metering is mandatory in all cases.
Can my outbuildings receive RHI payments?
Whether or not your outbuilding is eligible for the RHI will depend on the following criteria:
- If the outbuilding has its own EPC, the system is classed as a centralised plant. This means that the Non-Domestic RHI applies and metering is required (heating and electrical).
- If not, the outbuilding is not included in the property’s EPC, so deeming will be based on the main property, not including the outbuilding. Therefore payment will be the same, regardless of whether the outbuilding is heated or not.
Can my swimming pool building receive RHI payments?
A swimming pool could qualify for the RHI if it conforms to this criteria:
- The heat pump is located in the domestic property.
- If the swimming pool building is integrated with the domestic property and included on the EPC, the swimming pool building will be included in the Domestic RHI payments.
- If the swimming pool is located in a separate building and is not included on the domestic dwelling’s EPC, it will not be eligible for RHI payments.
- The heating of the swimming pool water itself is not eligible for RHI payments.
What are Domestic RHI payments based on?
RHI payments are based on the deemed proportion of renewable heat produced by the ground source heat pump. The amount of renewable heat generated by a heat pump depends on its efficiency – that is, how much electricity it uses to operate per unit of heat it generates.
The technical term for heat pump efficiency averaged over a whole year is Seasonal Coefficient of Performance (SCoP), which is normally between around 2.5 and 4 depending on the heat pump flow temperature.
The SCoP relates to how much heat the system generates per unit of electricity it uses, and it is product specific. For example, a heat pump with a SCoP of 3 generates 3 kWh of heat for every kWh of electricity it uses.
Calculating your Domestic RHI payment
To work out how much heat is generated, Ofgem, the scheme administrator, use a ‘deeming’ calculation that estimates the property’s expected annual heat usage. This can be determined by the property’s Energy Performance Certificate (EPC), heat demands and the efficiency of the heat pump – or the SCoP.
An estimation of the SCoP should be calculated by an MCS installer, who can use Kensa’s SCoP calculator to help. This estimate can be provided to Ofgem in the application.
The eligible heat will be worked out using the following method:
- From your EPC, establish the annual heating and hot water demand (kWh/yr). For example, 25,000kWh/yr.
- To calculate the ‘renewable’ content, first divide this by the heat pump SCoP, for example, 3.4*, to find the amount of electrical energy the heat pump will consume: 25,000 / 3.4 = 7353kWh/yr.
- Deduct this figure from the EPC total to calculate the ‘renewable’ content: 25,000 – 7353 = 17,647kWh/yr.
- Multiply this figure by the RHI tariff (for example, if it were 20.46p/kWh) to calculate the annual RHI payment: 17,647 x £0.193 = £3,599 per year, each year for 7 years.
Rest assured, we will provide an approximate figure as part of a quote. Submit your plans to find out how much you could make from the RHI.
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Do I need a heat meter for the Domestic RHI?
Metering the performance of a system is a requirement for all new ground source heat pumps. And although the Domestic RHI is usually based on the predicted performance of the heat pump, the following scenarios must be metered for payment:
- If the renewable heating system is installed alongside another fossil fuel or renewable space heating system (this includes hybrid systems)
- For second homes.
To minimise the burden on applicants, it’s good practice for all new systems installed in the Domestic RHI to be ‘meter ready’ where possible. Making an installation meter ready will include:
- Leaving sufficient space for heat meters to be fitted in defined locations
- Installing isolation valves to avoid the need to drain systems when fitting heat meters
- Leaving the pipework accessible (i.e. not boxed in) to enable meters to be fitted
- Providing information about the installation. This will help the Department for
Business, Energy & Industrial Strategy (BEIS) to select appropriate sites for RHI metering.
Are there any limits to my Domestic RHI payment?
Heat demand limits
Yes. There are limits to the annual level of heat use for which Domestic RHI scheme participants can obtain payments. These are referred to as heat demand limits. For comparison, the annual heat demand limits for eligible Domestic RHI renewable heating systems are:
- 30,000kWh – ground source heat pumps
- 20,000kWh – air source heat pumps
- 25,000kWh – biomass plants.
Any property with heat demands in excess of the relevant heat demand limit will be paid the same as if their property’s heat demand was equal to the limit.
The future of Domestic RHI tariffs
Domestic RHI tariffs will change annually in line with the Retail Price Index (RPI).
The government Department for Business, Energy & Industrial Strategy (BEIS) intends to introduce a system of degression to control the costs of the scheme as uptake increases. This is where tariffs are reduced over time for new applications to the scheme. Those who have already secured their tariff will not have their tariff reduced.
We realised that we could get the whole thing paid for with the Domestic RHI, including the installation work."
Keith Clarke, Homeowner
Small print for the Domestic RHI calculator
† Estimated, for guidance purposes only.
†† Deemed, based on estimated EPC figure and assumed heating system Star Rating. For indicative purposes only. Consult an MCS installer for a confirmed figure. Figures shown reflect the 30,000kWh cap.
*Assumes 5% annual fuel price inflation.
**Assumes 2.5% CPI inflation. Energy costs are based on figures provided by Nottingham Energy Partnership (NEP). Electricity costs are not provided by NEP but are based on an average of the Big Six electricity companies for a property based in Sheffield. Off peak electric heating are derived from SSE Off Peak tariff data.
1. Correct as of July 2020.
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