Generate a guaranteed 20 year income
£13,000 typical RHI income per property – tax free
Installations of ground source heat pumps in both existing and new holiday accommodation are eligible for the Government’s Renewable Heat Incentive Scheme (RHI), the world’s first financial support scheme for generators of renewable heat.
It’s been introduced to encourage the take up of significantly more efficient renewable heating systems, helping to reduce the UK’s carbon emissions.
Holiday accommodation businesses are eligible for the Non Domestic strand of the RHI scheme, which aims to offset the cost of installing ground source heat pumps in commercial applications, providing a long term rate of return and fast payback.
The RHI: In brief
- Non domestic and commercial applications;
- Retrofit and new build;
- Quarterly payments for 20 years;
- Based on metered heat consumption;
- At a rate of 9.1p/kWh of heat generated.
How much will the RHI be worth?
- Payments are made every quarter for 20 years and are based on metered heat consumption.
- For this reason, holiday accomodation with extended season opening will benefit as a result of higher heating requirements, although heat usage also includes all the hot water as well as the space heating.
- The current tariff is 9.1p per kilowatt hour of heat energy produced. This is more than TWICE the cost per kilowatt hour to run the heat pump system!
- The tariff is payable on all heat produced by the heating system. The tariffs are index linked, so rise each year in line with inflation.
- Once on the scheme, you are locked in to the prevailing tariff rate, meaning you will not be affected by any future “digression” the Government might choose to make to the tariff.
- The RHI is enshrined in law for new installations to 2021, so it isn’t going anywhere fast. But unlike the infinite energy your ground source heat pumps can tap into, there isn’t a finite pot to fund their installations, so our advice is act now!
Typical RHI example
For each property you can expect to earn typically £540 in the first year of your RHI payments and £13,156 over the 20 year RHI period, assuming that the property:
- Has an annual heating and hot water requirement of 6125kWh;
- Is available for rent all year round;
- Has an intermittent occupancy profile, peaking in the summer and on average around 65% occupancy during the autumn, winter and spring;
- Retains some level of background heating during unoccupied periods.
All Non-Domestic RHI payments are paid to the system owner; they are index-linked for twenty years. These payments are currently based upon meter readings rather than the deemed consumption figure being used in the Domestic RHI.
The financial support will be paid every quarter at a set rate per unit of renewable heat produced (kilowatt hour or kWh), for twenty years, to the owner of the heating system.
Current tariff levels:
9.1p/kWh on the first 1314 hours of eligible energy produced followed by 2.7p/kWh on any additional heat produced.
For more information on the RHI, see our Grants and Incentives pages or download Ofgem’s Easy Guide to the Non Domestic RHI factsheet.
I would definitely recommend ground source heat pump technology to other holiday let businesses. It is very important that our guests are warm and comfortable and have enough hot water. Kensa designed systems that deliver exactly what is needed for our business and I found that their expertise, knowledge and customer support simply couldn’t be matched by other companies.
Mrs Robinson, owner of Broadgate Farm