Renewable Heat Incentive

*5.18p per kWh – 200kW to 1MW boilers, index linked and guaranteed for 20 years!

Phase 1 Eligibility – Commercial and District

The Renewable Heat Incentive (RHI) is a Government scheme which provides very beneficial financial support to businesses and individuals who install biomass heating.

If you are a commercial operator or are looking to heat more than one domestic property with a single biomass boiler, you will probably be eligible to receive the new RHI payments.

The RHI is a Government scheme administered by Ofgem, a total of £860 million has been set aside to fund the scheme with the aim of reducing carbon emissions in the UK by 44 million tonnes by 2020.

The scheme guarantees regular ‘tariff’ payments for 20 years based on the amount of renewable heat generated by the biomass boiler. Once an installation has been approved the tariff rate cannot be adjusted other than to be raised in line with inflation and will be paid for 20 years.

Government funding has been allocated for the scheme for four years, there is an annual budget which limits the amount allocated each year, there is no “roll-over”. There is no commitment to continue the scheme after the four year period and the tariff rates for future projects can be adjusted at certain times during the scheme.

Therefore it is important to act now, this incentive will not last forever nor will the beneficial rates currently set.

RHI – Essential Information 

  • Guaranteed quarterly tariff payments made for 20 years based on the amount of heat generated, payments index linked therefore adjusted annually in line with inflation.
  • The owner of the installation must be the applicant, however Asgard Biomass will provide application assistance.
  • Heat meters may be required to record the amount heat produced by the installation and to record the amount of heat distributed to individual properties.
  • An installation is only eligible for accreditation if it was was completed and first commissioned on or after 15 July 2009
  •  Installations heating one single domestic premises are ineligible, but district and community heating is eligible, as are commercial premises.
  • Projects that receive any other form of public funding will not be eligible for RHI support. Projects will have to pay back the grants received in order to qualify for the RHI.
  • Only new equipment and the replacement of existing renewable installations will be eligible for the RHI. Converted installations will not qualify.
  • Preliminary accreditation is available for installations over 200kW
  • Outdoor swimming pools and certain other facilities do not qualify for RHI income (they can still be heated but will not receive the tariff payment).
  • The system must be well maintained and boilers must conform with emissions standards.

The RHI Tariff

Quarterly RHI payments will be made by calculating the metered number of kilowatt hours (kWh) of renewable heat produced and multiplying it by the appropriate tariff.

Regardless of installation band, the Tier 1 tariff will paid until the boiler has operated to the equivalent of 1,314 hours at the rated capacity of the installation, anything over this amount is paid according to the Tier 2 tariff.

Tariff   Name

Eligible   Technology

Eligible   Sizes

Tariff   Rate*
(p/kWh)

Small Biomass Solid Biomass;
Municipal Solid Waste (incl. CHP)
Less than 200kWth

Tier 1: 4.18

Tier 2: 1.11

Medium biomass 200 kWth and above; less than   1000kWth

Tier 1: 5.18

Tier 2: 2.2

Large biomass 1000kWth and above

2

*Tariff Rates from 1 October 2015

Incentive Payments and Fuel Savings - Examples

The following provides a series of examples of tariff payments and fuel savings based on installations recently undertaken by Asgard Biomass.

The cost of installation can vary considerably depending on how much construction work is required for the boiler house and fuel store, also the amount of underground pipe required for district systems and the civil works required for installation.

1.      50 kW Pellet Boiler, Replacing Oil,  Installation, 2 Properties

A 50 kW pellet boiler located in an existing garage with adjacent wood pellet silo and around 40m of underground pipe to farmhouse and office complex. All boiler room components included. Replacing two oil boilers.

Installed cost approx £40,000

RHI Payments: £2,746 each year for 20 years (£73,800 total over 20 years, index linked to inflation).

Fuel Consumption: 13.7 tonnes of wood pellets, compared to 6,400 litres of oil (per annum).

Fuel Cost Saving Wood Pellets vs Oil: Around 20% or £700 per annum

Annual Gain: £3,500 a year (Project cash flow over 20 years £77,400 index linked to inflation).

Payback Period: 10 years on project outlay (combining RHI income & fuel savings).

CO2 Saving Over Oil: 22 tonnes per annum.

All figures are approximate or estimates and are given as guidance only

2.      90kW Chip and Pellet Boiler, Replacing Oil, Installation, 3 properties

A 90 kW pellet boiler located in an outbuilding with adjacent wood chip store and around 65m of underground pipe to 5 bedroom house and two rental properties. All boiler room components included. Replacing three oil boilers. Chip produced on the premises using wood from owners woodland.

Installed cost approx £63,000

RHI Payments: £4,943 each year for 20 years (£132,800 total over 20 years, index linked to inflation).

Fuel Consumption: 143 m3 of wood chip, compared to 12,750 litres of oil (per annum).

Fuel Cost Saving Wood Chip vs Oil: Around 50% or £4,000 per annum

Annual Gain: £8,900 a year (Project cash flow over 20 years £220,500 index linked to inflation).

Payback Period: 7 years on project outlay (combining RHI income & fuel savings).

CO2 Saving Over Oil: 40 tonnes per annum.

All figures are approximate or estimates and are given as guidance only

3.     350kW Chip Boiler, Replacing Oil, Installation

A 350 kW pellet boiler located in a modified outbuilding adjoining the main property with adjacent wood chip store. Heating hotel and 6 additional properties. All boiler room components included. Replacing 7 oil boilers.

Installed cost approx £186,000

RHI Payments: £23,823 each year for 20 years (£640,128 total over 20 years, index linked to inflation).

Fuel Consumption: 130 tonnes of wood chip, compared to 49,500 litres of oil (per annum).

Fuel Cost Saving Wood Chip vs Oil: Around 50% or £15,400 per annum

Annual Gain: £39,200 a year (Project cash flow over 20 years £1,036,587 index linked to inflation).

Payback Period: 5 years on project outlay (combining RHI income & fuel savings).

CO2 Saving Over Oil: 154.5 tonnes per annum.

All figures are approximate or estimates and are given as guidance only

4.     200kW Chip and Pellet Boiler, Replacing Oil, Installation, District System

A 200 kW chip and pellet boiler and fuel store located in a modified outbuilding, heat supply to four properties via 60m of insulated underground district pipe. All boiler room components included. Replacing two oil boilers.

Installed cost approx £95,000

RHI Payments: £13,613 each year for 20 years (£365,787 total over 20 years, index linked to inflation).

Fuel Consumption: 74.2 tonnes of wood chip, compared to 25,400 litres of oil (per annum).

Fuel Cost Saving Wood Chip vs Oil: Around 50% or £8,795 per annum

Annual Gain: £22,408 a year (Project cash flow over 20 years £603,621 index linked to inflation).

Payback Period: 4 years on project outlay (combining RHI income & fuel savings).

CO2 Saving Over Oil: 88 tonnes per annum.

All figures are approximate or estimates and are given as guidance only

Phase 2 Single Domestic Dwellings

The Domestic Renewable Heat Incentive (RHI) was launched on April 9th 2014. From 1 October 2015 the domestic tariff level will be 6.43p/kWh for biomass boilers less than 45kW output. An installation must be undertaken by an MCS registered installer using an MCS registered boiler. Like the commercial RHI boilers must also show proof of compliance with emissions limits on particulate matter (30g/GJ) input) and nitrogen oxide (150g/GJ). More information on the scheme can be found in An Introduction to the Domestic Renewable Heat Incentive Scheme

Call Us:

As one of the most experienced specialists in biomass technology Asgard Biomass can take care of all aspects your biomass system and help you take advantage of this attractive financial incentive.

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Useful Information

The OFGEM website can provide information about the RHI http://www.ofgem.gov.uk/e-serve/RHI/Pages/RHI.aspx

The following OFGEM publications can provide further information:

A simple Guide to the Renewable Heat Incentive – OFGEM 322Kb .pdf

Introduction to the Renewable Heat Incentive – OFGEM 1060Kb .pdf

RHI Guidance Volume 1 – OFGEM (November 2011) 1,446Kb .pdf

RHI Guidance Volume 2 – OFGEM (November 2011) 1,073Kb .pdf

OFGEM Contact details:

By telephone: 0845 200 2122 (RHI enquiry line open Monday to Thursday 9am-5pm and to 4.30pm on Fridays)

By email: rhi.enquiry@ofgem.gov.uk