Renewable Heating - A closer look at going green and locking into 20 years of subsidised heating

The Non-Domestic Renewable Heat Incentive (RHI) is a government scheme that has encouraged thousands of businesses to install biomass boilers and heat pumps since it's launch in November 2011. However, the RHI as we know it is expected to close to new applications on 31 March 2022.

Whilst 2022 might seem like a long time away, the twists and turns of the RHI mean that you need planning permission, environmental permits, and finance in place for you chosen technology by the end of 2020 if you don't want to miss out.

What is the RHI?

The RHI is funded by government and pays the owners of eligible plant including biomass boilers and heat pumps for every kWh of renewable heat put to an eligible use. The amount paid depends on the technology used; for example a biomass boiler might be paid 3.15p/kWh whereas a heat pump can get 9.68p/kWh. Importantly, once you are up and running you are paid the RHI every quarter for the next 20 years.

What is an eligible heat use?

'Eligible' is a word regularly used in relation to the RHI as (understandably) government want to make sure that the heat they are paying for is doing something useful.

First, it is important to note that you don't have to be using fossil fuel heating already to apply for the RHI. If you are converting an existing, unheated building or building a brand-new office, factory or housing development that's fine, you can still apply for the RHI.

Second, what you use the heat for is important. The RHI legislation changed significantly in May 2018 so you might not be able to do what you know somebody else is already doing. Current eligible heat uses include:

  • Heating an office, factory, warehouse or multiple domestic properties
  • Hot water or steam within a building for direct use e.g. washing / cleaning
  • Carrying out a process within a building (including drying in specific applications)

What are the key dates & deadlines?

This depends on whether you apply for a Tariff Guarantee or not.

No Tariff Guarantee?

If you simply go ahead and install say a heat pump to heat your office you can be confident that as long as it is installed by a company that understands the requirements of the RHI it will be eligible for the RHI. In this case you can submit your RHI application once the installation has been commissioned.

If you take this route, following an extension announced in August 2020 due to the impact of Covid-19, the latest you can submit a full application is 30th September 2021. However, you must provide evidence by no later than 31st March 2021 that you have already invested capital into the project.

Tariff Guarantee

If you plan to install a biomass boiler that is > 1MW or a heat pump that is > 100kW you can apply for a Tariff Guarantee (TG) before you commit to installing the equipment. A TG locks you in to the RHI tariff available on the day your TG application is made (the tariffs are reviewed every 3 months so can go up or down). Tariff Guarantees offer the flexibility of securing your tariff now and having until March 2022 to get the project commissioned.

What are the key requirements for a Tariff Guarantee application?

There are many 'regular' requirements that good installers are fully aware of and can easily satisfy.

These include things like:

  • Make, model and kW capacity of the installation
  • Drawings detailing how the heating system is connected up and the location of heat meters

Documents that are sometimes handled by the owner, at times forgotten and more difficult to produce at short notice include:

  • Planning permission
  • Environmental permits

Where do you start?

OFGEM publish a lot of guidance on their website but the 'fine print' of the RHI can be complicated and confusing. With a 20 year income at stake it is important to work with established suppliers that:

  • Understand the requirements of the RHI
  • Design and install equipment that is built to last and easy to maintain
  • Will be around to provide support and maintenance for years to come

To discover if renewable heat can reduce your energy costs and future proof your business get in touch via [email protected] or call 01430 449440 for non-domestic RHI guidance tailored to your needs.

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