Funding

New build and retrofit social housing properties featuring Kensa’s micro district heat network system are eligible for 20 years of guaranteed income from the Non Domestic RHI, and in addition may benefit from further support via the HCA and ECO grants.

The RHI, HCA, & ECO

The Non Domestic stream of the RHI is far more favorable and rewarding for retrofit social housing compared to the Domestic stream; the Domestic Renewable Heat Incentive (RHI) is structured in such a way that it fails to adequately support retrofit social housing, nor is it available to new builds.

A significant and unique opportunity therefore exists for new build and retrofit social housing schemes with the Non Domestic RHI; Kensa’s micro district ground source heat network solution offers the answer.

The Department for Business, Energy and Industrial Strategy (BEIS) has confirmed that Kensa’s innovative micro district ground source heat network design – where an individual ground source heat pump is installed inside each property and linked to a communal ground array – qualifies as a heat network system (district heating) and thus is eligible for the non domestic RHI.

 

 

All non domestic RHI payments are paid to the landlord or the entity deemed as the system owner; they are index-linked for twenty years.  These payments are currently based upon meter readings although a recent RHI consultation proposes this changes to a deemed consumption figure; this refinement eliminates the cost of metering/communications equipment and also provides certainty about the payment levels.

In new build developments, Ofgem and the HCA have confirmed that the non domestic RHI can also be paid even if the development has benefited from an HCA grant.

In retrofit schemes, the solution also complies with the definitions of a heat network system under the Energy Company Obligation (ECO), which provides a capital subsidy towards the system investment costs, based upon the amount of CO2 savings made. Kensa has arrangements in place with several of the largest energy suppliers to provide ECO funding to social housing micro heat network housing schemes.

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HCA grants

Ofgem has confirmed that installations at properties which have also benefited from HCA grants are eligible to also receive funding under the Non Domestic Renewable Heat Incentive (RHI).

Importantly, receiving an HCA grant for the building does not rule out also receiving RHI, providing:

  • the correct accounting separation is in place and;
  •  the original HCA grant offer did not highlight any intent to use renewables.

Ofgem clearly states that RHI support will only be available for an eligible installation if no grant from public funds has been paid or will be paid in respect of any of the costs of purchasing or installing the eligible installation. This means it is vital to transparently separate the renewable heat installation costs from the house building costs towards which HCA grant is accounted.

The National Housing Federation has provided a guidance note on this issue for social landlords, a copy of which can be downloaded here.

Download guidance

ECO grants

  • Enhanced support for properties in rural areas (i.e. off gas grid)
  • Grant level dependent on CO2 savings
    • Displacement of electric and oil heating are most attractive
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Retrofit example

 Ground Source Heat PumpAir Source Heat Pump
Lifetime CO2 savings:85 tonnes65 tonnes
Typical annual running cost saving vs. night storage heaters:£485£350
Total capital cost*£13,600£7,850
Existing system replacement costs:£3,100£3,100
ECO funding contribution:£2,500£0
Total net cost:£8,000£5,350
Total RHI contribution:£14,400£2,900
Overall rate of return (IRR):6%0%
Based on 2 bedroom end of terrace house.
* Includes: Heat pump, ancillaries and installation, boreholes and ground collector system, new radiator system and domestic hot water cylinder, design (EPC, borehole design).

With the support of our contractors and Kensa Heat Pumps, Trent & Dove has achieved an outcome that many housing associations dream of; halved tenant energy bills, halved CO2 emissions in our stock, improved tenant health and well-being, and £2.3m of income through the RHI to off-set our £1.8m investment – and all of this in just 3 months.

Steve Grocock, Director of Property Services, Trent & Dove Housing

Related Content

The Non-Domestic RHI

The purpose of the Non-Domestic Renewable Heat Incentive (RHI) is to compensate for the cost of installing ground source heat pumps in commercial applications, providing a long term rate of return and fast payback for business owners, developers and social housing providers.