Government reforms have changed!
On the 14th December 2016, based on the feedback received from The Department for Business, Energy & Industrial Strategy (BEIS), the Government published its consultation response on changes to the Domestic Renewable Heat Incentive (RHI) scheme. The following changes will require the approval of Parliament and are expected to take effect from Spring 2017.
In simple terms, the BEIS has announced tariff increases for three of the eligible renewable heating technology types.
Tariff uplifts apply to the following;
• New Air Source Heat Pump (ASHP)
• Ground Source Heat Pump (GSHP)
• Biomass Systems
Please note that Solar Thermal Systems are not included in the uplift.
Figure 1 shows the new tariff uplift rates
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. This tariff increase will happen automatically so you don’t need to do anything.
Heat demand limits
Fig 1: Tariff uplift rates
The Domestic RHI subsidy payments are publicly funded so the BEIS has a responsibility to the public purse to ensure subsidies offer good value for money for all concerned.
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.
Heat demand limits will be set for ASHPs, GSHPs and biomass systems. The figures for the heat demand limits can be found in Figure 2.
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.
It’s important to note that 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.
Fig 2: Heat demand limits
Metering heat pumps for performance
Spring 2017 sees new regulations come into effect whereby all accreditation applications for heat pumps to the Domestic RHI scheme will need electricity metering installed alongside their heating system.
There are three metering options available.
• Electrical Metering
• On-board Electricity Metering
• Metering & Monitoring Service Package (MMSP)
Of the three, the MMSP option provides the most detailed data.
The primary reason for this change is to allow consumers the ability to monitor the performance of their heating system. Efficient heat pumps are essential to delivering savings on energy bills for consumers and provide a better understanding of the heat pump systems’s electricity usage.
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.
New MMSP registrations will be able to get 50% of the total MMSP payment alongside their first Domestic RHI payment following MMSP registration. This is part of a new payment schedule being introduced by BEIS. The remaining 50% over the course of their remaining Domestic RHI tariff payments.
Degression is the term used to describe the mechanism whereby the BEIS lowers the tarrif rates for new applications when uptake of the scheme is higher than ariginally anticipated. The tariff controls are in place to ensure the scheme always remains affordable yet still open to new applicants.
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.
At present, the approach is such that even when there has been limited growth, degressions can still be put in place so BEIS will be introducing a new rule to always take growth into account.
This means degressions will no longer be able to activate when the number of accreditations for a particular technology has slowed.
There are three scenarios in which a degression can be triggered:
1. If the estimated budget spend for a specific technology is above the ‘technology trigger’ and the growth in estimated spend is also above the ‘growth trigger’, the tariff for that technology will be reduced by 10%.
2. If the estimated budget spend for a specific technology is above the ‘super-technology trigger’ and the growth in estimated spend is also above the ‘super-growth trigger’, the tariff for that technology will be reduced by 20%.
3. If the estimated budget spend for a specific technology is above the ‘super-technology trigger’ and the growth in estimated spend is also above the ‘growth trigger’, but less than the ‘super-growth trigger’ the tariff for that technology will be reduced by 10%.
In all other circumstances, there will be no degression.
If there is to be a degression, BEIS announces this in its quarterly forecast.
Figure 3 shows the process of how a degression is determined.
Fig 3: Degression process
Assignment of Rights
To overcome the barrier of the up front cost of a renewable heating system, the Government held a ‘call for evidence’ between January and March 2015 on the possibility of opening up the Domestic RHI to help householders access finance.
To ensure there are robust consumer protection measures in place, the option for households to assign their rights to RHI payments to investors will not be introduced alongside the spring 2017 reforms. BEIS will continue to consider this option and intend to introduce this reform at a later date.
Timeline of changes to the Regulations
Fig 4: Regulations change
The Renewable Heat Incentive: A reformed and refocused scheme:
The full consultation response is available to read here
For queries regarding Domestic RHI scheme requirements and eligibility:
Energy Saving Advice Service
(England or Wales) 0300 123 1234
Calls are charged at the standard national rate.
Home Energy Scotland
(Scotland) 0808 808 2282
Calls are free from landlines and most mobile networks
Online email form
For consumer protection information:
Renewable Energy Consumer Code (RECC)
The Home Insulation and Energy Systems
Contractors Scheme (HIES)
If you need help with a Domestic RHI application:
Domestic RHI Application Support Centre
Telephone: 0300 003 0744