“What’s the commercial RHI – and how does it work?” This is easily one of the most frequently asked questions from our customers, so we thought we’d tackle it in more detail here – if you want to read about it in all its glory, check out the Ofgem website.
What is the Non-Domestic Renewable Heat Incentive (RHI)?
The RHI scheme is a government-led, long-term environmental programme designed to encourage individuals and businesses to generate heat from renewable sources, by providing a generous financial incentive for every kilowatt of ‘green’ heat generated. Eligible installations will receive often sizeable tax-free payments every year for 20 years, to help the government meet EU targets to reduce carbon emissions and secure the future of Britain’s energy supply.
What are the current payment levels?
There are two schemes – one for homeowners, and one for businesses – and they each receive different financial incentives. The current tariff for commercial installations is:
Systems under 200kw – 7.6p per kilowatt
Between 200kw and 1mw – 5.1p per kilowatt
The payments really add up – a 100kw biomass boiler will typically earn you £9,986 a year in RHI payments, which adds up to a guaranteed tax-free income of £199,720 over the 20 year term of the scheme. And this is before the savings you’ll make on your fuel bills are factored in – see our Save and earn page for more information and examples.
Please note – we can help businesses that need more than 200kw of heat maximise their RHI earnings by installing multiple boilers at 199kw, eligible for the higher 7.6p tariff payment. This is perfectly legitimate, common practice and makes a great deal of commercial sense, since if one boiler fails, you don’t lose your business’s entire heat-producing capabilities.
Is my business eligible for the Non-Domestic Renewable Heat Incentive (RHI)?
All businesses wanting to heat their premises using a renewable heat source can apply – it’s the installation itself that determines whether you are eligible to receive RHI payments. There are a number of criteria that need to be met – here’s an overview:
Biomass boiler installations
- The boiler must be specifically designed to generate heat using only solid biomass
- It must meet air quality requirements.
Solar thermal installations
- The collector type must be flat plate or evacuated tube
- The installation must produce less than 200kw of heat.
- Equipment must be new and have Microgeneration Certification Scheme (MCS) certification at the time of installation (or equivalent for boilers under 45kw)
- It must be fitted by an MCS-accredited installer ( we are…)
- It must provide heat for at least one of these purposes – to heat a space, heat its water or serve a commercial use like drying or cleaning
- It can’t solely provide heat to single domestic premises, though heating a number of homes is fine
- It must have the right sort of meter, calibrated correctly and located in the right place according to the type of installation.
We’re delighted to say that, thanks to our MCS-accreditation and our experience, all Lime-Circle biomass boiler and solar thermal installations have met Ofgem’s requirements and received RHI accreditation.
How are payments made?
If your biomass or heat pump installation is accredited and approved for RHI payments, you will receive them on a quarterly basis for the lifespan of your boiler or 20 years, whichever is the shorter. The amount of money you will receive depends on:
- The type of installation – biomass or solar thermal
- The size of the installation
- The heat output of the installation
Payments start from the date of accreditation of the installation – Ofgem will email successful applicants to let them know the official start date, and payments will be backdated to this point.
Because payments are made for 20 years or until your equipment fails beyond repair, it makes sense to install the best kit you can afford. It’s false economy to save money and buy a cheap biomass boiler, since if it dies in year 8, it will only just have started paying for itself and you’ll miss out on 12 years of guaranteed tax-free income.
How does my business apply for the RHI?
The government is investing a significant amount of public money in incentivising businesses to produce heat from renewable sources, so, as you can probably imagine, the application process involves answering a number of questions and submitting a volume of documentary evidence to prove that your installation is legit. We – and indeed any decent installer – will support you fully throughout the application process, helping you complete the application form and gather the evidence you need.
How long will it take for my installation to be accredited?
It depends on how accurately and completely you fill in the application form and how complicated the installation is – the more questions Ofgem have to ask, the longer the whole thing takes. Your application could sail through in as little as 10 days or take a couple of months, but we’ll help you get things moving as fast as we can. You can find out more about the RHI application process here.
Any more questions?
We’re here to help – give us a call on 0115 952 0263 or 07890 022002 and we’ll go over things in more detail.