Our Commercial Director Chris Davis gives top tips on how self-builders can make the most of the Renewable Heat Incentive (RHI).
Read the Q&A below in full to get some top tips on how self-builders can use this Government financial support scheme to their advantage.
How self-builders can benefit from the RHI*
Are many self-builders aware of the RHI?
Whilst the message about the RHI has taken a little time to filter through to the self-build sector, over the last six months Kensa has seen a marked increase in enquiries from self-builders driven largely by the opportunity to recover installation costs through the RHI. Self-build has always been receptive to renewable technologies, especially ground source heat pumps, as homeowners take a long term view on their property and are conscious of ever-increasing energy prices and sustainability issues.
What does the application process for the RHI encompass – is it relatively easy?
The application process itself is very straight forward, all the home owner needs to do is provide details from their MCS certificate (Microgeneration Certification Scheme) – which is provided by the installer on completion of the renewable heating system installation; details from an Energy Performance Certificate; and their bank details.
Because the Domestic RHI payments are “deemed” i.e. calculated in advance based on the information provided from the MCS Certificate and EPC, once the installation is registered home owners are guaranteed a consistent quarterly payment for seven years. There’s no need to take meter readings or be concerned with any further admin other than to provide an annual declaration that the system is still running.
Applications themselves are completed online. The scheme administrator Ofgem has provided a number of very useful and easy to understand Factsheets, while the registration website itself is easy to use, taking no more than a few minutes.
Larger installations, for example those over 45kW; those involving multiple technologies (for example a ground source heat pump and solar thermal); or those looking to heat a property and a swimming pool, for example, need a little more thought, but Kensa is able to provide specific advice to self-builders on the issues surrounding this during the early project stages.
How do you know if your system is eligible for a ground-source heat pumps?
Eligibility for ground source heat pumps is arguably easier than for any other technology. For example, there are no issues to be concerned with around planning/permitted development rights (as is the case for air source heat pumps) or the emissions issues that have to be considered for biomass systems.
In essence, as long as the product and installer are both MCS accredited and the installation meets the requirements of the MCS Installation Standard (MIS3005) then the system will be eligible for the Domestic RHI.
MIS3005 requires a number of issues to be dealt with at the design stage, for example, to ensure that the heat pump is sized correctly for the heat requirement of the property; that the radiator/underfloor heating system is also correctly sized; and in the case of ground source heat pumps, that the ground collector has also been adequately designed to provide the required amount of heat during the lifetime of the installation. These of course are all good practice issues and are there to provide a high degree of consumer protection to the self-builder, to ensure systems are correctly designed and installed.
Are there any pitfalls that self-builders could avoid?
Firstly, the RHI tariff is “deemed” based on the kWh/yr figure produced by the Energy Performance Certificate. As part of the MCS heat load calculation, the installer is also required to provide an “estimate” of the annual heating and hot water needs of the property, but experience has shown the method installers use to do this is normally 20-30% higher than what the resulting EPC will say. So self-builders should be mindful of this when calculating the likely benefit from the RHI. Most good installers will be aware of this and will advise their customers accordingly.
Secondly, the RHI requires self (or “custom build”) properties to be occupied for at least 183 days before they are able to apply for the Domestic RHI under the deemed basis. Applications can be made before this time, however, this then requires heat to be metered and subsequently requires more administration by the owner and also means that the quarterly payments are both variable and no longer guaranteed to be at the same level each year (as payments will then depend on actual energy consumption). In Kensa’s experience, most self-builders wait until the 183 day period has expired before applying for the RHI.
Would you expect RHI payments to fully cover the cost of a GSHP system over the seven years?
In the majority of cases, the combination of the income from the RHI and the savings made compared to the fossil fuel alternative (often oil or lpg if the property is in a rural area) will cover the complete installation costs within around 5-7 years. To some extent this does depend on the choice of ground collector, with borehole systems costing more than horizontal/slinky ground arrays, with a subsequent impact on payback periods.
Kensa has a useful RHI calculator tool on its website which allows homeowners and self-builders to enter details of their properties and see what size heat pump they will need, what it will likely cost to install, what the likely comparative energy cost savings will be and how much RHI income the installation will return.
Want to learn more?
We have a dedicated resource area for self-builders which explains in further detail many of the benefits and considerations around ground source heat pumps and the Domestic RHI.
*Published in part in Build It magazine September 2015