The launch of the long-awaited domestic Renewable Heat Incentive (RHI) scheme is promised before Easter. This will appeal to rural homeowners off the gas-grid looking to replace a fossil fuel heating system.

It offers quarterly payments for seven years to those who install approved eligible heating systems such as biomass boilers, solar thermal panels and air or ground-source heat pumps.

Domestic RHI payments (to be confirmed)

Air-source heat pumps 

Ground-source heat pumps 18.8p/kWh

Biomass boilers 12.2p/kWh

Solar thermal 19.2p/kWh

The RHI payments should easily cover the initial investment and possibly even pay for fuel and maintenance costs over the seven-year period.

These have not been confirmed but are anticipated to range from 7.3-19.2p/kWh depending on which technology is installed (see right).

Payments are exempt from income tax and will be index-linked over the seven years.

See also Domestic RHI scheme delayed until 2014

To ensure that renewable heating systems are installed into well insulated and energy-efficient homes, a Green Deal assessment must be carried out before applying for the domestic RHI.

This may require loft or cavity wall insulation to be installed and an updated Energy Performance Certificate (EPC) to verify that improvements have been made.

Typical farmhouse system

For an older, less energy-efficient house looking to replace an oil- or LPG-based heating system, a biomass boiler would be most appropriate.

Newer or refurbished houses that are well insulated with good draughtproofing might use a ground or air-source heat pump, especially if underfloor heating is already installed.

A typical biomass system with an automated pellet boiler stove, utility boiler, or larger woodchip or log system would cost between £10,000-20,000 fully installed.

If the property has a suitable roof, solar thermal panels would work well alongside the biomass boiler to help heat the domestic hot water, and this could qualify for a further RHI payment.

A four-bedroom house with a heating and hot water demand of 30,000kWh/year would require about 6t of wood pellets a year, costing in the region of £1,300.

This would represent a saving of about £700/year compared with heating oil. RHI payments should be about £3,600/year, giving a total financial benefit and cost saving of around £30,000 over seven years.

Potential pitfalls

For the domestic RHI, the plant must only heat a single eligible property. Plant-heating multiple properties may be eligible for the non-domestic RHI scheme.

Installed technology systems need to be certified under the Microgeneration Certification Scheme (MCS) and the installer must also be MCS-accredited.

The Department of Energy and Climate Change and MCS strongly recommend that all installations commissioned on or after 16 March 2014 and intended to be eligible for the domestic RHI should be installed according to new MCS standards applicable from that date.

Domestic RHI

  • For single domestic properties only
  • Quarterly support payments for seven years for approved technology
  • Offers savings on installation and operation of fossil fuel-based heating systems
  • Must be MCS-certified kit and installer
  • Consider practicalities of feedstock supply and storage
  • Green Deal assessment needed
  • No income tax on payments
  • Payments are index-linked
  • New boilers must comply with new emissions limits

In order to receive the RHI, biomass boilers will require evidence of an RHI emissions certificate, proving air-quality requirements have been met. It is essential to check that your chosen boiler has been tested and received an emissions certificate before installing.

Biomass boilers require more fuel handling compared with a conventional fossil-fuel heating system.

Smaller pellet boilers may need refilling every few days, while larger systems housed in an outbuilding can use an automated hopper providing several weeks or months of fuel. It is vital to consider whether a suitable storage area is available and if fuel can easily be delivered to the boiler or fuel store area.

Legacy applicants

Those who already have a biomass boiler, heat pump or solar thermal system, which was commissioned on or after 15 July 2009 may be eligible for domestic RHI payments.

They must apply within 12 months of the scheme opening and must also have a Green Deal assessment carried out, installing any recommended loft or cavity-wall insulation.

Legacy applications will need to meet the MCS standards applicable at the date of commissioning, but legacy biomass boilers don’t need to meet the current air quality requirements.

Green Deal assessment

A Green Deal assessment will cost about £100 and is required as evidence for the RHI application. An EPC is produced as part of this assessment and the heat demand figures on this form the basis for RHI payments.

DECC provides an online facility to find a Green Deal assessor or provider offering this service.

Dan Thory is a renewable energy adviser based at Fisher German’s Market Harborough office