Domestic Renewable Heat Incentive changes

The Domestic Renewable Heat Incentive has changed for all installations of renewable heating. There seem to be 2 principles:

  1.  There is a cap on how much heat you can produce. This is limited to 30,000 kWhs per annum for a Ground Source Heat Pump and 20,000 kWhrs for an Air Source Heat Pump, and 25,000 for a biomass boiler
  2.  The rates have been increased to help in particular the adoption of heat pumps

Perhaps there has been a criticism that larger homes have taken advantage of the Renewable Heat Incentive, leaving less funds available for smaller homes. In addition the Climate Change Committee has strongly suggested that heat pumps need to be installed if the UK is going to meet the climate change targets. The progress made to date on climate change is in part due to closing of power stations.

The new rates are valid from 20th September as follows:

  • Biomass 6.54p per kWh
  • Air Source Heat Pump 10.18p per kWh
  • Ground Source Heat Pump 19.86p per kWh
  • Solar thermal 20.06p per kWh (Hot water only)

domestic renewable heat incentive for biomass

Heat demand X tariff = revenue per annum X 7 = total revenue

A biomass boiler that needs 25,000 kWhs will receive £1635 per annum for 7 years. £11,445 in total. This should be enough funds to fit an accredited boiler depending on make. Biomass fuel is generally pellets and these need to be accredited also. Current prices are from £135 per tonne bulk and £170 for a bagged pallet. At £170 per tonne this is 3.5p per kWh. Compared to oil this is marginally cheaper currently with oil being around 40p a litre.

It is really difficult to predict oil and pellet prices over the next 7 years. Traditionally oil prices have risen over the winter period, and pellet prices tend to stay more stable, however these are all independent businesses so you have to make the assumption that the prices are going to be around the same year on year. If you have a bulk delivery and gain the full bulk discount then you would be better off with pellets providing the fuel hopper is cost effective.

So why install biomass?

If you need a new heating system and therefore have to pay for a new oil boiler and fuel hopper, then it is clearly cheaper over time to get a biomass boiler. It is also carbon neutral as the pellets are made from sustainable forests, and much is a bi-product of the timber industry.

We have extensive experience in biomass installations, If you would like to discuss the potential of biomass for your home please contact us

domestic renewable heat incentive for Air Source Heat Pumps (ASHP)?

The domestic renewable heat incentive formulae for ASHP is more complex as it takes into consideration the electricity used to power the heat pump is not necessarily renewable.

Heat demand X (1-1/SPF) X tariff = revenue per annum X 7 = total revenue

We calculate the SPF based on each home and the temperature of the water heated. In the below example we picked the last one we have done. It happens to be a Panasonic ASHP:

20,000 X (1-1/3.2) X 10.19 = £1401 X 7 = £9807.88

The fuel bill will be the electricity needed to power the heat pump. In this case it is 0.3125 X 20,000 = 6250 kWhrs. The cost of this will vary depending on electricity tariffs and/or self generation using solar PV.

15p tariff will leave an electricity bill of £937 per annum

If you compare this to biomass or oil you would need to burn 20,000 kWhrs of fuel using the efficiency of the boiler and the heating system. This is very different to the published efficiency of each boiler – this is just how well the boiler “burns”. You now need to also take into consideration the heating system that is being used and any heat losses. Typically 80% efficiency is a published figure, although this can be more for some boilers, and significantly less if the boiler is away from the house.

So 20,000 / 4800 (kWhrs of 1 tonne) X 1.2 (to give 80%) gives number of tonnes needed, which is 5. If you purchase pellets at £170 per tonne this is £850.

The key is understanding your electricity bill and being on the right tariff. For instance there are providers who have cheap night time rates e.g. 4.99p with an expensive period during the early evening 24.99p. As heat pumps are consistent, it would be possible to reduce power during the peak time.  We calculate that this could be £531 per annum.

We have extensive experience in ASHP installations, If you would like to discuss the potential of ASHP for your home please contact us

domestic renewable heat incentive for Ground Source Heat Pumps?

A ground source heat pump (GSHP) works more consistently than an air source heat pump (but costs more!) it has a higher tariff, but this has not risen much.

The formulae is the same as an ASHP, and to illustrate we have used a slightly higher seasonal figure as you would expect this. GSHPs can be used for larger properties, and the domestic renewable heat incentive will pay for the first 30,000 kWhrs.

30,000 X (1-1/3.7) X 19.86 = £4349 X 7 = £30,445 over 7 years

There is a lot more work to install a GSHP, and the units are also more expensive. This is reflected in the higher rate.

We have extensive experience in GSHP installations, If you would like to discuss the potential of GSHP for your home please contact us

domestic renewable heat incentive for solar thermal?

Solar thermal can only be used to generate hot water for a home. The domestic renewable heat incentive  remains unchanged at 20.06p for installations.

As an installer we calculate the annual production of solar thermal based as part of the accreditation purposes. However as a guide you will have hot water calculated on your EPC in kWhrs, and solar thermal will provide around 60% of this. To illustrate a typical home:

2000 X 20.06 = £412 per annum or £2884 over 7 years

Typically a solar thermal system will cost a little more than this, but of all the technologies above it is likely to carry on providing free hot water for 20 years. The best bit is…. you do not need any fuel. Arguably you are saving a further £70-100 a year in fuel costs.

We have found that solar thermal works well with biomass as during the summer you can turn your boiler off when it is least needed.

We have extensive experience in solar thermal installations, If you would like to discuss the potential of Solar thermal for your home please contact us

Leave a Reply

Your email address will not be published. Required fields are marked *