The Renewable Heat Incentive is Being Replaced

In 2011, the Renewable Heat Incentive was introduced by the Government and its aim was to provide encouragement for people to switch to renewable forms of heating by paying them for the renewable heat they produce.

This covers a number of technologies such as biomass boilers, air to water heat pumps, ground source heat pumps, water source heat pumps and solar thermal. So, the scheme has been in place since 2011 and has helped a number of households around the UK make the switch but now things are changing, what do you need to know?

The Renewable Heat Incentive is going to remain in place until 31st March 2022 although the scheme was originally due to end in March 2021, although the government opted to keep it in place as it was considered popular. However, when the scheme does end in March 2022, it will be replaced by the Clean Heat Grant, which will come into force in April 2022. As it currently stands, the government is proposing to make the Clean Heat Grant available for just two years, with it ending in March 2024 while funding has a limit of £100m.

This grant has been designed for households and small non-domestic buildings throughout the UK. The aim is to help support the initial installation costs of heat pumps that provide space heating and hot water. The main advantage of this grant above the RHI is that it is simple, removing the demand-based system of the RHI.

The scheme, which is run by the Government will offer grants of up to £4,000 towards heat pump installation costs. This will cover ground source heat pumps, air source, heat pumps and water source heat pumps. The scheme also suggests that the eligible heat pump installations must have a capacity of a maximum of 45kW and that is the reason why the scheme is primarily aimed at installations that are smaller.

Through recent consultations about the Clean Heat Grant, the Government indicated that the grant could be used to support the installation of biomass systems too, but only where it is deemed necessary.

There are a few requirements that the applicant must meet in order to be considered eligible for the Clean Heat Grant. These requirements are:

• You must hold a valid EPC for the property which means that it must have been issued within the last ten years. This EPC register can be used to see if your property has a valid EPC in place.
• The EPC must not state that loft insulation or cavity wall insulation is recommended although this will be exempt in some cases such as grade listed buildings. The Government has also announced that the exemptions that are in place for the current scheme will also remain in place.
• The process for applying for a voucher will be different to that of the domestic RHI. All applicants will be required to have an assessment from an installer while they will also need to submit a quotation. This is all done for administrative purposes as it will help to limit the number of speculative applications while speeding up the process.

When we consider the future, the Clean Heat Grant forms part of a larger overall Clean Growth Strategy that was published in 2017. The aim is to decarbonise the UK’s heat while beginning phasing out installations that use a large amount of high-carbon fossil fuels by implementing off-gas grid properties.

However, for the consumer, there is a large reduction in funding. The domestic RHI is paid through a tariff system over a period of seven years and for those that have a standard renewable project, consumers could expect to receive around £28,000, however, through the new Clean Heat Grant, this is capped at £4,000.

Furthermore, there is a decrease in the range of heating systems that are eligible for the new grant when compared to the current RHI. This will mean that process heating, solar thermal, biogas combustion, hybrid heat pumps and heat networks will be removed from the new grant.

So, underpinning all of this is the simplicity of the scheme as it is easier to run a scheme that is grant-based than one that is based on heat demand.