Incentives for solar thermal panels, heat pumps and biomass

At last the Renewable Heat Incentive (RHI) is open to domestic installations. This means you can get paid for the heat you generate with solar hot water panels, air and ground source heat pumps and biomass boilers. The RHI is quite similar to the Feed In Tariffs (FITs) for renewable electricity - I have written a table comparing them here. One big difference is that the RHI is paid from central government funding through our taxes whereas the FITs are paid through the electriicty companies and hence from our energy bills. Many regarded the FITs as unfair because everyone pays for electricity regardless of their income. The RHI steers clear of that criticism.
The RHI was first promised back in July 2009. We had our solar hot water panels installed in November that year. If, like us, you already have a system that was installed since the announcement you can still get the RHI if you don't hang about too long - you have a year to get your application in.

Whether or not you already have the installation, to get the RHI you must have a Green Deal Assessment and if this recommends loft or cavity wall insulation you must have that done. We have neither loft nor cavity walls so it seems a bit pointless but there you are.

The EST has a table estimating annual payments for hot water panel by household size starting at £190/year for a two person households so £1,330 over seven years. Estimating the return on household size is sensible as the RHI payments are based on the estimated heat yield for the system, limited both by your system capacity and your heat need. You can't export spare heat like you can spare electricity. Your solar hot water panels are normally sized for your needs and your needs are usually estimated based on household size. You will also have some benefit from savings on your heating bill. If you have an efficient gas boiler that adds perhaps 4.5p to the 19.2p/kWh so another 23% if you actually use the amount of hot water you are expected to. The EST estimates the installation cost at £3,000 - £5,000. That includes quite a lot of plumbing and usually a new hot water tank with a second heating coil as well as the panels. (We paid £5,000 back in 2009 but that included an enormous mains-pressure tank). Solar hot water probably isn't a good deal for a couple but for four or more people it would definitely be worth considering.

The other RHI technologies are for space heating and are aimed mainly at households who don't have mains gas, because the savings will be minimal if you do, both financially and in carbon emissions. However, neither heat pump systems nor biomass boilers are straightforward replacements for an oil fired central heating system. Heat pump systems perform best in well insulated air tight homes with under floor heating. This is because heat pumps are not efficient when generating high temperatures (see advice from Transition Cambridge here). You can get hybrid systems which use a conventional boiler to top up the heat when necessary. However, if you are considering these I would recommend you look very carefully at the installation costs to make sure you get a good return because the hybrid system is more complex and more expensive.

Biomass boilers also have their drawbacks. The RHI was supposed to have sustainability requirements for biomass fuel but these are delayed until the autumn. At that point there will be an approved supplier list and you will have to show you have bought your fuel from there, or fill in a lot more forms. It will be interesting to see what happens to the market then - will approved biomass be more expensive because of the RHI or less because of increased competition? You can also become a self supplier if you have your own wood. Apart from the fuel issue, biomass boilers require considerably more maintenance than an oil boiler. You will need to empty the ash weekly and check the flue is clean and the hoppers are running freely. This is necessary because wood does not burn cleanly like oil or gas and the residue has to be dealt with. I don't wish to put you off biomass heating - just be aware of the commitment you are making. The biomass energy centre has excellent advice, although their enquiry service is now closed for lack of funding.

The RHI has been available for non-domestic installations since late 2011 although air source heat pumps were excluded. As of the end of February there have been a total of 2523 biomass boilers, 327 solar hot water panel systems and 82 water and ground source heat pumps receiving payment. The overall total heat paid for under the scheme is 800 GWh [1]. This hasn't made much dent in our heat demand but it is a start. In 2012 we used 550,000 GWh of gas for heating and industrial use, other than to make electricity [2].

While the domestic RHI was delayed the government ran the Renewable Heat Premium Payment scheme offering vouchers for cashback on domestic installations of RHI technologies. This started in 2011 and has paid towards 2032 biomass boilers, 5255 air source heat pumps, 2058 ground and water source heat pumps and 4480 solar hot water systems [1]. This means there is quite a lot of experience now with all the RHI technologies and you won't be in the vanguard if you choose to go ahead.


[1] RHI and RHPP deployment data February 2013 (gov.uk)
[2] Digest of UK Energy statistics 2013 (DECC)