Make money by installing solar panels or a heat pump under the Renewable Heat Incentive

You could make money and receive a government grant for installing solar thermal panels or a heat pump under the Renewable Heat Incentive (RHI) – find out more here.

The RHI will help reduce
UK carbon emissions

Climate change and rising fuel bills are a growing problem; to help tackle this the government has come up a unique scheme called the Renewable Heat Incentive (RHI). They hope this will encourage people to heat their homes with renewable technology like solar panels by awarding them with grants and yearly cash payments. Speaking at 2011’s Ecobuild show, Alex Betts, Partner of Climate Change Capital says that: “The RHI is a great opportunity to create jobs and decarbonise the economy and for householders and landlords to invest.”

What is the RHI?

The RHI has taken eight years to plan, is a world first and has been allocated £860 million in government funding. It follows the success of the government Feed-in Tariffs (FITs) launched last April which offer cash back for renewable electricity generated by technology such as solar PV. “Ofgem figures for PV show healthy growth since FITs were introduced and the idea is to take that and apply it to renewable heat,” explains Adam Graveley, Senior Consultant at sustainable housing company BRE.

Why switch to renewable heating?

The Energy Act says that UK emissions must be curbed by at least 80% by 2050 compared to 1990 levels. Given that over a quarter of these emissions come from home energy use, says the Energy Saving Trust, it is essential that we tackle this by replacing traditional heating with renewable alternatives. Speaking at Ecobuild, Adam points out: “This means that 12% of all the energy we use for heating will have to come from renewable sources by 2020. Currently only 1.6% of our heat is generated by renewables, so to hit our targets we’ve got a lot to do.”

How will the RHI work?

The RHI will be launched in two separate phases:

Phase one

Grants for solar panels and heat pumps
will be available from July

The government have chosen to focus first on implementing the RHI in industrial, business and public sectors to make the biggest carbon savings; as the Energy Secretary Chris Huhne points out: “(These industries) contribute 38% of the UK’s carbon emissions.” The government estimate that the RHI will increase the number of renewable heat installations in this sector seven-fold by 2020.

The tariff scheme is currently being approved by parliament but the Department of Energy and Climate Change (DECC) say that tariffs will provide around a 12% return on investment. Levels are based on the size and type of technology installed; those eligible are:

• Biomass boilers
• Ground source heat pumps
• Solar thermal panels
• Biomethane technology

Payments are inflation linked and will be made for each Kilowatt hour (kWh) of renewable heat produced for 20 years; these rates will reduce over time. Installations which have been made since the 15^th July 2009 are also eligible for the RHI.

Renewable Heat Premium Payment (RHPP) – get a grant to install solar panels, a heat pump or biomass boiler

As part of the first stage of the scheme, the RHPP will be launched for domestic properties, costing £15 million. This means that from 1st August 2011, up to 25,000 households can receive grants towards the cost of installing renewable heat technology. You could receive:

• £300 towards the cost of installing solar thermal panels.
  
• £950 for installing a biomass boiler if you don't heat your home with gas.
  
• £850 for an air source heat pump if you don't heat your home with gas.
  
• £1,250 to install a ground source heat pump if you don't heat your home with gas.
  

A heat pump could earn you up to
£2,000 a year under the RHI

You can apply for a grant through the EST if you live in England, Scotland or Wales and own your property or have permission from the owner to install renewable technology. Your home will need to have basic energy efficiency measures such as loft insulation and cavity wall insulation (if possible) and have been awarded any necessary planning permissions. Those who take part must also be prepared to provide information on how the technology performs by answering surveys. To be awarded a grant you need to make sure your renewable technology is certified and installed by the Microgeneration Certification Scheme (MCS). Ray Noble from the Renewable Heat Association explains: “The MCS is a way of making sure that people use certified products which are installed properly to protect small investors from cowboys.”

Phase two

In 2013 household installations (carried out since July 2009) should also move on to the RHI tariff and make money. This has been timed to coincide with the launch of the government Green Deal, which will provide loans for property insulation.

How much money can you make with the RHI?

*Figures are approximate and come from the Energy Saving Trust and The Department of Energy and Climate Change

Other reasons to install renewable heating

The two main types of renewable heating technology covered by the RHI are:

• Heat pumps – ground or air source, find out more about how they work and whether you could install one here.
• Solar thermal panels – there are over 80,000 of these in the UK already, find out more about solar thermal panels here.

Installing solar thermal panels or a heat pump will also save you money on your fuel bills depending on which fuel you are replacing, here’s a guideline of annual savings when replacing gas, electric or solid fuel heating with renewable options: