The Renewable Heat Incentive tariff levels are set according to the installation cost of each technology plus any potential increase in running costs against traditional fossil fuels. Tariffs are banded according to the size of installation.
Current RHI Tariff Levels
The pence/kWh is shown on the table below.
|Tariff Name||Eligible Technology||Eligible Sizes||Tariff Rate (pence/kWh)||Tariff Duration (Years)||Support Calculation|
|Small Biomass||Solid biomass; Municiple Solid Waste||Less than 200kW||Tier 1: 4.40||20||Metering Tier 1 applies annually up to the Tier Break, Tier 2 above the Tier Break. The Tier Break is installed capacity x 1,314 peak load hours, i.e.: kW x 1,134|
|Tier 2: 1.17|
|Medium Biomass||200 kW and above; less than 1000 kW||Tier 1: 5.18|
|Tier 2: 2.24|
|Large Biomass||1000 kW and above||2.03|
|Solid Biomass CHP||Solid Biomass CHP||All||4.17||20||Metering|
|Water/Ground Source Heat Pumps||Ground-source heat pumps; Water-source heat pumps||All||Tier 1: 8.84||20||Metering|
|Tier 2: 2.64|
|Solar Thermal||Solar thermal||Less than 200 kW||10.16||20||Metering|
|Air Source Heat Pump||Air Source Heat Pumps||All||2.54||20||Metering|
|Technology||Tariff Rate (Pence per kWh)||Tariff Duration (Years)||Measurement System|
|Wood Pellet Boiler||8.93p||7||Metering or Deeming|
|Air Source Heat Pump||7.42p||7||Metering or Deeming|
|Ground Source Heat Pump||19.10p||7||Metering or Deeming|
|Solar Thermal Panels||19.51p||7||Metering or Deeming|
How does it work?
For non-domestic users, payments will be made quarterly by OFGEM against the heat meter readings submitted by the customer. The payment made is a simple calculation of pence per kWh x kWh’s used. However, with biomass the payment is calculated as per the example below.
Large, Multi-Use Office Block
- Annual heat requirement of 600,000 kWh’s
- Installed capacity of biomass boiler – 195kW
- Tier 1 payment calculated as:
- Capacity of Boiler x Peak Hours x Tier 1 Tariff Level
- This Example: 195 x 1314 x 4.4=£11,274.12 per annum
- Tier 2 payment calculated as:
- Annual requirement – Peak kWh x Tier 2 Tariff
- This Example: 600,000kWh – (195 x 1314) x 1.17 = £4,022.11 per annum
- Annual RHI payment would be:
- £11,274.12 + £4,022.11 = £15,296.23
The typical cost to install a 195kWh wood pellet boiler is around £100,000 which includes the use of a pre-packaged plant room or heat cabin. As you can see from the worked example, not only is the payment from the RHI significant, but with a payback of 6-7 years, users benefit from an income stream of circa £15,000 for a further 13 years. Add to this any fuel cost savings compared to heating oil and the financial benefits of switching into wood pellets are persuasive.
For Domestic Biomass users the number of kWh will be fixed, based on an estimated figure of heat demand from an Energy Performance Certificate (EPC) for the property in question.
Will my tariffs change?
Once the tariff has been confirmed for an installation this will be set for the full duration of the scheme and will be adjusted annually in line with RPI. If there has been large scale take up of the RHI then tariffs could well be reduced for people coming into the scheme at a later date, making it advantageous to switch early at the current tariff levels.
How do I get paid?
The payments to non domestic users will be made quarterly based on the metered heat used and submitted to OFGEM.