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Policy changes to Domestic Renewable Heat Incentive (RHI) Scheme and You...


In March 2016, the Government published a consultation on changes to the Domestic Renewable Heat Incentive (RHI) scheme. After taking into account the feedback it received, The Department for Business, Energy & Industrial Strategy (BEIS) published its consultation response on 14 December 2016.

The tariffs that determine the rates for your Domestic RHI payments are set by BEIS. BEIS announced tariff increases for three of the eligible renewable heating technology types for the scheme. The tariff uplifts for new air source heat pump (ASHP), ground source heat pump (GSHP), and biomass system. There will be no changes to tariff rates for solar thermal systems.

Those who apply to the scheme on or after 14 December 2016 will be eligible for the current tariff rate at the date of applying, and then will subsequently be eligible for the increased tariff rate from the day the amended Domestic RHI Scheme Regulations come into force in spring 2017.

Domestic RHI subsidy payments are publicly funded so BEIS must ensure the subsidies represent good value for money in order to protect the public purse.

For this reason, BEIS is introducing ‘heat demand limits’ to the Domestic RHI scheme. This means that there will be a limit to the financial support that scheme participants can receive for their heat use annually.

So what does this mean for our customers? Well a few things. Those that have already applied (before 14th December 2016) have an as-expected tariff at the rate of applying that will increase some time in April of this year. This tariff increase will happen automatically so you don’t need to do anything. For those just starting the process you are most likely to benefit from the changes as very few properties will suffer from the increased tariff (which is now capped with the heat demand limits).

Heat demand limits will be set for ASHPs, GSHPs and biomass systems. Payments for heat pumps will continue to be made only on the renewable proportion of the heat demand, in line with the current scheme rules. There will be no heat demand limit for solar thermal. Solar thermal payments will continue to be based on the annual generation figure on the Microgeneration Certification Scheme (MCS) certificate.

You can still apply if your annual heat demand on your Energy Performance Certificate (EPC) is higher than the heat demand limit, however your RHI payments will be capped in line with these limits. Metering heat pumps for performance.

After the Regulations come into effect in spring 2017, all new accreditation applications for heat pumps to the Domestic RHI scheme will be required to have electricity metering arrangements installed alongside their heating system. The three metering options are electricity metering, on-board electricity metering, or a metering and monitoring service package (MMSP). Xpert Energy can make these arrangements when installing your heat pump. Read more about all of the options in the Government’s consultation response here.

This change is being introduced to enable consumers to monitor the performance of their heating system and to provide a better understanding of the heat pump system’s electricity usage.

Efficient heat pumps are essential to deliver savings on energy bills for consumers. Domestic RHI payments will continue to be based on the deemed heat load - or the new heat demand limit (where relevant) - of the property stated on your EPC, unless your property is required to have metering for payment under the existing scheme rules.

BEIS is also introducing a new payment schedule for MMSP: New MMSP registrations will be able to get 50% of the total MMSP payment alongside their first Domestic RHI payment following registration of the MMSP, and the remaining 50% over the course of their remaining Domestic RHI tariff payments.

Degression To keep the scheme within budget, BEIS lowers the tariff rates for new applications when uptake of the scheme is higher than anticipated. These tariff controls are required to ensure the scheme remains affordable and open to new applicants. This mechanism is called ‘degression’. A degression takes place for a specific technology when expenditure thresholds set out in the Regulations have been exceeded, which means the tariffs for that technology are reduced for new applications.

(Source) and for further info see RHI Fact sheet

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