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Funding & Returns

Non-Domestic RHI

Ground source heat pumps provide low cost and low carbon heating. When connected to a heat network scheme (also known as district heating), ground source heat pumps also generate regular Non-Domestic RHI payments.

At a glance:

  • 20 year income stream;
  • Quarterly payments;
  • 8.8p/kWh on the first 1314 hours of eligible energy produced followed by 2.6p/kWh on any additional heat produced;
  • Heat network schemes with ground source heat pumps only.
Read more

RHI in detail

RHI payments are split into two tiers – a higher Tier One tariff of 8.8p is paid for the first 1314 running hours and a lower tariff of 2.6p is paid for all subsequent hours.

The number of eligible Tier One hours is established by multiplying the rated output of the heat pump by 1314. In most new builds the number of running hours will not usually exceed 1314 although in colder parts of the country it may be higher.

The RHI payment is designed to support the additional cost of the renewable heating system over the cost of a fossil fuel counterfactual. As such the examples assume the developer contributes an amount equivalent to the estimated cost of a mains gas boiler or an air source heat pump installation.

Example:

Two bed flat linked to a communal borehole field

 

 Displacing mains gas boilerDisplacing air source heat pump
Cost of counterfactual heating system£3,000£4,500
Peak heat load of dwelling (kW)2.502.50
Capacity of heat pump (kW)4.004.00
Assumed space heating load (kWh)30003000
Assumed domestic hot water load (kWh)13751375
Total load (kWh)43754375
Eligible RHI1 Tier 1 hours52565256
Cost of GSHP system£8,500£8,500
Marginal cost of GSHP system£5,500£4,000
Estimated year 1 RHI 1 annual payment£381£381
Total RHI 1 payment over 20 years
Assuming 2.5% RPI increase each year
£9,966£9,966
Internal rate of return6.0%9.8%

Example:

Three bed semi-detached house linked to a communal borehole field

 

 Displacing mains gas boilerDisplacing air source heat pump
Cost of counterfactual heating system£3,500£5,000
Peak heat load of dwelling (kW)4.254.25
Capacity of heat pump (kW)5.255.25
Assumed space heating load (kWh)51005100
Assumed domestic hot water load (kWh)16751675
Total load (kWh)67756775
Eligible RHI1 Tier 1 hours68996899
Cost of GSHP system£10,000£10,000
Marginal cost of GSHP system£6,500£5,000
Estimated year 1 RHI 1 annual payment£589£589
Total RHI 1 payment over 20 years
Assuming 2.5% RPI increase each year
£16,023£16,023
Internal rate of return9.1%12.7%

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