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Financial Return | Commercial Heat Pumps

Renewable Heat Incentive (RHI) – Heat Pumps

The Renewable Heat Incentive (RHI) is a UK Government scheme set up to encourage uptake of renewable heat technologies through the provision of financial incentives. The UK Government expects the RHI to make a significant contribution towards their 2020 ambition of having 12%  of heating coming from renewable sources.

For heat pumps the renewable heat generated will be based on an estimate of the heat demand from an Energy Performance Certificate (EPC) combined with an estimate of the heat pump's efficiency. The payments will be made quarterly over a 20-year period to the owner of the heat installation. Commercial RHI includes all eligible uses of heat generated by the heat pump, such as for a dwelling attached to a business rateable office. A non-domestic installation is a renewable heat unit in a building that is business rateable, or is a single pump providing heat to two or more domestic properties that are subject to separate council tax. This includes office buildings, schools and district heating schemes.

The financial incentive an installation receives will be fixed and adjusted annually with inflation.

What are the commercial RHI payments?

  • Ground Source Heat Pumps (up to 100kW): 8.7p/kWh  
  • Ground Source Heat Pumps (over 100kW): 2.6p/kWh 
  • Air to Water Heat Pumps: 1 tier only @ 2.5p

These payments will be inflation linked and degress annually for new installations, paid quarterly for a 20 years. Accreditation is gained after commissioning and the payments will not start until accreditation has been granted. Payments are a fixed amount based on the output of the heat meter.

What are the eligibility criteria for commercial systems?

Commercial customers can receive the RHI for their heat pump installation providing that they meet the eligibility criteria:

  • The applicant must be the owner of the installation; both their identity and their bank details must be validated. For multiple owners, the applicant must have permission to act for the others.
  • The plant must be an eligible renewable heat technology type and size.
  • No grants made by a public authority from public funding can have been or will be received in respect of all or any of the costs of purchasing and/or installing the eligible installation.
  • The plant must have been new at the time of installation.
  • The plant must have Microgeneration Certification Scheme (MCS) certification or its equivalent for installations less than or equal to 45kWth, and the installer of the plant have been MCS certified, or have equivalent certification at time of installation.
  • The plant uses either liquid or steam as the heat delivery medium.
  • The plant must provide heat for at least one eligible heat use: heating a space, heating water or carrying out a process, where the heat is used within a building.
  • The installation must not solely provide heating to single domestic premises.
  • The metering arrangements must include the right types of meters, correctly calibrated and placed in locations according to whether the installation is classed as “simple” or “complex”.

Renewable Heat Incentive (RHI) – Domestic

This scheme allows domestic properties to benefit from the government RHI too, but paybacks last for seven years, not twenty. Householders are required to undertake a Green Deal Assessment before submitting a claim to the Energy Saving Trust (EST). There is one rate at 7.3p/kWh for air source heat pumps and 18.8p/kWh for ground source heat pumps.

Domestic RHI Eligibility Criteria

  • The renewable heat generated will be based on an estimate of the heat demand from an EPC* combined with an estimate of the heat pump's efficiency.
  • To help improve performance of renewable heating systems, there will be an extra incentive for applicants who install metering and monitoring service packages, of £230 per year for heat pumps.
  • The system must be certified under the Microgeneration Certification Scheme (MCS) scheme and meet relevant standards for each technology.
  • All applicants are required to complete a Green Deal Assessment (GDA*) before applying and to ensure they meet minimum energy efficiency requirements of loft and cavity insulation where required by the GDA.
  • Any public grants previously received, including RHPP, will be deducted to avoid a double subsidy.
  • Tariffs will change annually in line with the Retail Price Index (RPI).
  • DECC intend to introduce a system of degression to control the costs of the scheme. This is where tariffs are reduced over time for new applications to the scheme. Those who have already secured their tariff will not have their tariff reduced due to cost control. DECC will announce further details on the cost control policy in due course.

Heat Pumps, Biomass Boilers, Solar Thermal, Lighting – are eligible for 100% first year allowance through the Enhanced Capital Allowance (ECA) Energy Scheme. All eligible products must be on the Energy Technologies List as published by DECC. For more information call us on 0845 643 2528 or visit http://etl.decc.gov.uk/.