The latest round of reforms to the government’s domestic Renewable Heat Incentive scheme successfully passed through Parliament in February and came into effect this week. So what do these reforms mean for Yorkshire Heat Pumps as an installer and for you if you’re thinking of switching to a renewable energy heating system for your home?
The Department of Business, Energy and Industrial Strategy (BEIS), which is ultimately responsible for the domestic Renewable Heat Incentive (RHI) scheme, has introduced changes in three key areas: metering, assignment of rights and changes to the scheme’s degression rules.
From 22nd May is it compulsory for any heat pump installation to have electricity metering arrangements installed alongside the heating system. This is to enable homeowners to monitor the performance of their heating system and provide a better understanding of a heat pump’s electricity consumption. To deliver savings on your fuel bills, your heat pump must be efficient.
You can comply with this metering requirement in three ways and each has slightly different cost implications:
- Installing a stand-alone electricity meter
- Having what’s called an on-board electricity meter, where this is already part of the heat pump set up
- Opting for a Metering and Monitoring Service Package (MMSP)
For the third option, an installer who offers a Metering and Monitoring service fits both heat and electricity meters to your system and puts in place an ongoing agreement with you. The agreement includes technical checklists to prove the MMSP meets the high specification and accuracy requirements of Ofgem, and it must also state that the installer will provide an ongoing advice service throughout your participation in the domestic RHI scheme. Due to other installation commitments, this is not something we are currently able to offer our customers.
You can apply for a MMSP agreement when you complete your RHI application and if accepted, you will receive some financial support to offset the cost of installing the meters and for sticking to the terms of the ongoing service agreement with the installer. This package provides both the homeowner and Ofgem with comprehensive data on system performance. Ofgem will, in turn, pass such data onto BEIS who will use this information to inform future research on the performance of heat pumps and biomass systems.
Payments under the MMSP now comprise a lump sum payment of £805 to offset the cost of installing the appropriate meters and an ongoing payment of £115 per annum for heat pumps and £100 per annum for biomass systems. These payments continue until the end of your RHI agreement.
Assignment of rights
BEIS appreciates that renewable heating can be expensive to install, but in the right properties can deliver significant savings on fuel costs as well as energy savings. The Department wants this opportunity to be open to as many people as possible and has therefore introduced an option to allow homeowners to access finance to overcome the barrier of the upfront costs of installation.
Homeowners can assign their rights to RHI payments to investors who cover the cost of the installation.
So what’s in it for you, you may ask? While the investor takes the RHI payments, the homeowner benefits from the ongoing fuel savings delivered by an efficient renewable heating system.
Assignment of Rights is due to come into effect on 27th June this year.
Degression is the process by which RHI tariffs fall for new applicants when uptake has been higher than anticipated and hits degression or super-degression triggers. This results in a 10% or 20% drop in tariff, respectively.
Until now, degressions have taken place even when there has been limited growth in the uptake of a particular technology, but from 22nd May the scheme rules have changed to ensure growth is always taken into account. Now degressions will not happen when uptake of a particular technology has slowed down.
So what can you expect to receive back in RHI payments?
The current domestic RHI tariffs are detailed in the table below and went up in line with RPI/CPI in April. These tariffs are paid per kW hour of heat deemed to be required to provide your home with heat and hot water. The deemed figure is taken from your property's EPC, but up to a specific limit: 20,000 kWh for air source, 30,000 kWh for ground source and 25,000 kWh for biomass.
Tariff from 1.7.17
Uplifted tariff from 20.9.17
Tariff from 1.4.18
*Annual inflationary adjustment depends on when the installation was accredited. Pre-April 2016 adjusted in line with RPI. Post-April 2016 adjusted in line with CPI.
Any further degression for the next quarter will be announced by 1st June to come into effect on 1st July 2018. Following a major consultation last year, the first stage of RHI Scheme reforms came into effect in September 2017. Perhaps the most significant of these changes was the introduction of uplifted tariffs for heat pumps and biomass boilers which encouraged fresh interest in renewables.
In the case of biomass this was a massive 70% increase. However, the tariff for biomass had dropped every quarter since the scheme launched in April 2014 to a low of 3.85p/kWh in July 2017. This degression was the result of strong uptake of this technology which had proved popular as it’s perhaps the easiest to retro-fit to an existing heating system.
Here at Yorkshire Heat Pumps we certainly found biomass to be popular with the owners of old stone Dales properties, with perhaps limited scope for improved insulation, and where a high temperature heating system was the ideal solution. When tariffs kept tumbling we saw interest wane, but the uplift has certainly encouraged people to consider biomass once more.
Want to find out more?
If you’re interested in seeing which might be the right renewable heating option for your home or to understand what return you might make under the RHI scheme, why not call in to see us at our Harrogate showroom, give us a call on 01423 788699, or get in touch via our Contact form.
We’d love to hear from you.