The Renewable Heat Incentive Premium Payment Scheme

On Monday 1st August a new UK government incentive is available for up to 25,000 homes for householders who opt to install a renewable heating system. A householder can get a grant of as much as £1,250 towards the installation costs of solar heating panels, air and ground source heat pumps and biomass boilers. Those who are not on the gas grid network will get precedence as they will almost inevitably be heating their homes and their water using electricity or heating oil, instead of natural gas, which is the cheapest and most environmentally friendly of all the fossil fuels.

The incentive will run until March 2012 and will have an initial budget of £15, million, which will be reviewed after the first 10,000 homes have take up the subsidy. Each technology gets a different level of support and has different criteria and it is important that householders do not choose the maximum grant assisted technology, because that technology may not be the most cost effective in their own circumstances.

Ground source heat pumps can attract a grant of £1,250; these systems are expensive to install because they require underground piping of many tens of metres to be effective, relatively expensive to maintain (if something goes wrong they can be horrendously expensive) and still cost electricity. A good ground source heat pump may use at times a third of the electricity for water and space heating that a normal electrical system uses. Unfortunately the colder the weather the lower the efficiency of the ground source heat pump so that in very cold weather, when you need the most heat, the heat pump may use exactly the same amount of electricity as a n old fashioned electrical heating systems uses. The subsidy for ground source heat pumps is only available to those off the gas grid network.

Air source heat pumps qualify for a grant of £850. They are cheaper to install but apart from that the comments that I have made about ground source heat pumps efficiency and the need to be off the gas grid network apply.

Biomass boiler can qualify for £950. Again, you have to be off the main gas grid network and again you have to pay for the fuel – usually wood pellets – to power the boiler. The price of biomass pellets is almost certain to rise because a significant part of the cost is in the transportation. Biomass pellets have low calorific value compared with fossil fuel and the present and likely to be continued high petrol and diesel costs will inevitably be reflected in future pellet fuel costs.

The fourth technology to qualify is solar thermal panels, usually used for water heating. Here the householder will be entitled to a one off payment of £300, but faces no fuel charges because the panels use solar energy, rather than a fuel or electricity source, and installations in the United Kingdom in the past ten years have shown that solar panels used to heat water have no or almost no maintenance costs or servicing costs. The subsidy for solar thermal panels is available to all households, not just those off the gas grid network.

These subsidies are a precursor to the Renewable Heat Incentive, which comes into force in just over a year’s time. If you apply for a subsidy and then apply for the Renewable Heat Incentive you will be paid, from late 2012, a further quarterly amount based upon the amount of kWh that your renewable heat system generates. In the case of solar thermal the quarterly subsidy, which will be paid as a deduction from your electricity bill, is higher than the other technologies, at 8.5p a kWh, which is more than double what most householders are paying for their natural gas, although I should caution that the Government has not yet finalised all the details of the RHI.

This preliminary subsidy, known as the Premium Payment Scheme, is designed to (a) enable the Government to understand the benefits of each technology, as some installations will be monitored and feedback will be invited and (b) ensure that no one will be disadvantaged by installing the technology now – in fact they will be better off by the capital payment, which will no longer apply once the Renewable Heat incentive is up and running.

You can get details of how to apply from the Energy Savings Trust at 0800 512 012 or visit[External link]. Eeven better, you installer can assist you in applying and ensure that you understand all the conditions and qualifications that surround the incentives.

“Hurry now, don’t delay

Amaze your friends and apply today”

because the premium payment incentive is time limited and you must spend the money before next March.

2 Responses

  1. Very comprehensive post.

  2. Great Information… Thanks for share!

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