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Domestic Renewable Heat Incentive - 9th April 2014

Domestic Renewable Heat Incentive

RH & RW Clutton today (9/4/14) welcomed the launch of the domestic Renewable Heat Incentive (RHI), while advising that where circumstances allow the non-domestic scheme offers better returns.

“It can be relatively simple to extend a scheme to include more than one property” said Oliver Harwood, Partner responsible for renewables at RH & RW Clutton “We have designed and managed many installations for clients where the farm office (if separate from the farmhouse) or a nearby cottage share the same boiler and thus qualify for 20 years of payments rather than the seven offered under the domestic scheme”.

“while the initial payments look generous, they do require a green deal assessment and must be installed by a MCS accredited person” added Oliver “which adds to the upfront costs which will be higher than a non domestic scheme owing to the economies of scale that can be achieved with a larger installation”.

“I am concerned that many companies will be offering poor advice – such as fitting ground source or air source heat pumps into inappropriate buildings or adding them to conventional central heating systems” he said “ and would hope that householders are not taken for a ride – it is much better to get an independent professional to advise on all the options – including the non domestic RHI and  Feed In Tariff for renewable electricity”.

Oliver has been advising on renewable energy at all scales – large and small – for over 15 years. RH & RW Clutton have offices in East Grinstead and Guildford, and offer comprehensive property advice.

Key points – notes for editors

Domestic RHI

Installation must be by an MCS qualified person

Before applying for RHI support, all applicants will need to ensure that:

a. a Green Deal Assessment (GDA) has been carried out to find out which energy efficiency measures are cost-effective for the property;

b. loft insulation (to 250mm) and cavity wall insulation have been installed where these measures are recommended by the GDA; andc. where the GDA shows the required loft and cavity wall insulation is yet to be installed, an updated Energy Performance Certificate (EPC) is obtained following installation, as proof of installation (or valid evidence is provided proving why installation was not feasible)

The renewable heat generated will be estimated in most cases for payment purposes. For biomass and heat pumps, it will be based on an estimated figure of heat demand from an Energy Performance Certificate. For heat pumps, this will be combined with an estimate of the heat pump’s efficiency to determine the renewable proportion of the heat. For solar thermal systems, the payments will be based on the estimate of system performance completed as part of an MCS installation. Those applying for a space heating system who have a back up heating system, such as an oil boiler, or people applying for a second home, will need to install metering equipment on which the RHI payments can be based.

The deeming calculation for biomass and heat pumps will be the EPC estimated heat use (in kWh) of a property after the installation of the required energy efficiency measures.

Where the Assessment identifies that the measures still need to be put in place, the figure will be taken from the updated EPC completed after their installation.

The rates payable for 7 years are as follows:

Technology

Tariff

Air-source heat pumps

7.3p/kWh

Ground and water-source heat pumps

18.8p/kWh

Biomass-only boilers and biomass pellet stoves with integrated boilers

12.2p/kWh

Solar thermal panels (flat plate and evacuated tube for hot water only)

19.2 p/kWh

Worked example:

Typical 19thC traditional  3 -4 bed Wealden cottage, F rated, timber frame

Estimated heating and hot water use after insulation approx. 24,000kWh per annum

A biomass boiler would generate a payment of £2,928pa payable quarterly, or £20,496 over 7 years, which is roughly the cost of installing the system before fuel and maintenance costs.

Accordingly, in most cases the non-domestic scheme will deliver much better payback.

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