What is the Non-Domestic RHI?
The Non-Domestic RHI (Renewable Heat incentive) is a government backed scheme aimed at businesses and owners of multiple domestic properties that offers financial reward for changing to renewable heating solutions. The Non-domestic RHI scheme has been running since November 2011 and is operated by Ofgem on behalf of the UK government in an attempt to meet their targets on renewable heating technologies and carbon emissions for climate change directives. Since its inception, over 5,000 applications have been submitted, and in excess of £38,000,000 has already been paid out to successful applicants. The scheme allows businesses to prosper from adopting more efficient and greener heating options, giving them a guaranteed return on their investment, along with cheaper and more stable fuel costs and green credentials for their business.
Get paid for 20 years indexed linked
Who can benefit?
Systems paid off in as little as 4 years
The Non-domestic RHI is aimed at all businesses, or installations that supply to more than one domestic property (often called district or community heating). Although there are strict guidelines to adhere to, the Non-Domestic RHI scheme is open to all industries from sole traders to large corporations, not-for profit organisations and charities, and will pay for heat generated for all space and water heating, plus most processes using heat involved in your business. Suitable boilers are available for all types of business, from single storey retail units to office blocks and warehouses. There is no restrictions on type of business, location, size or how long the business has been trading for, though the heat must be used in buildings of a permanent nature with enclosed sides. Options are also available for premises where space for a biomass boiler and fuel store may be limited, whereby an external “Energy Box” can be implemented to provide a source of heat for a single, or multiple buildings.
What payments can I expect?
A cheap clean fuel that doesn’t increase in cost like gas or oil
The RHI scheme is offering generous payback for those who successfully apply for the scheme. Like the domestic RHI payments, you will be paid for the eligible heat you generate from your Biomass boiler. Payments are calculated using Heat meters which measure the amount of heat in kWh (Kilowatt hours) that is used in your premises. Readings are taken every 3 months and submitted to the RHI who then verify the readings and arrange payment. Current levels of payment are set at 8.6p per kWh for the first 1314 hours, and the payments are guaranteed for 20 years and index-linked. That means that the rate is locked in and should increase year on year.
|RHI Payback||Yr 1||£5,781.60||£11,563.20||£17,344.80||£23,010.77|
|Total after 5 years||£30,389.99||£60,779.98||£91,169.97||£120,952.16|
|Total after 10 years||£64,773.47||£129,546.94||£194,320.42||£257,798.42|
|Total after 15 years||£103,675.23||£207,350.45||£311,025.68||£412,627.40|
|Total after 20 years||£147,688.99||£295,377.98||£443,066.98||£587,802.19|
|Est. Tonnes of Wood Pellet/year||16.6||33.3||50||66.6|
|Annual Cost saving vs Oil||£1,120.00||£2,240.00||£3,360.00||£4,480.00|
|Fuel svaings over 20 yrs||£22,400.00||£44,800.00||£67,200.00||£89,600.00|
|Financial benefit Yr 1||£6,901.60||£13,803.20||£20,704.80||£27,606.40|
|Financial benefit over 20 years||£170,088.99||£340,177.98||£510,266.98||£677,402.19|
Potentially, a 56kW boiler will produce 56 x 1314hrs = 73,584 kWh per year, equating to £6,328.22 a year payback. With a 3% RPI increase annually and 20 years of payments, the overall payback is in the region of £170,000.00. Obviously, the size of the boiler limits the potential payback so it is worth considering what your potential heat requirement is to ensure that you will get the best return from the scheme. Add to these figures the cheaper fuel costs of using biomass fuel, which are typically 25 – 50% less than oil or LPG and marginally better even than mains gas prices, and you have a very attractive
Tariffs will change and Ofgem have stated that the level of funding will reduce significantly as the scheme gains in momentum. Current levels are about as high as they have been and when certain targets or triggers are met, they will fall to reflect the impact that needs to be achieved. For this reason, it is crucial that clients considering changing their heating system and applying for the non-domestic RHI do so at the earliest opportunity as the level of payment is set at the date of approval and will not be lessened even if future levels are reduced.
Are there any drawbacks?
The scheme is essentially a win-win situation, enabling businesses to make money from adopting renewable technologies on top of fuel savings and lower carbon emissions. There are a few important factors to consider, however, to ensure that you are eligible for and will be able to get the most from the RHI scheme. Firstly, the payments are made after the installation is completed so you will have to finance the installation yourself and Biomass boilers are more expensive than conventional heat generating means because of their inherent technology, efficiency, robustness and control systems. Long term, however, the amount of money returned is far in excess of that invested and before any contracts are signed we will produce for you a detailed estimation of fuel usage and anticipated financial gains. Most systems we design will offer a complete payback of the system installation costs within 6 years of commissioning, meaning the RHI payments and fuel savings for the subsequent period of the RHI are pure profit from the investment.
30-40% cheaper than oil and LPG
An important point to mention is that the boiler you choose must be up to the job. When applying for the RHI payments, it is essential that the boiler will remain operational and efficient for the duration of the scheme – i.e. 20 years. If your boiler fails to deliver the heat for any reason, the RHI will essentially become void, meaning you will lose any future payments from the point it ceases to work. The boilers that we supply are Austrian made and of the highest quality; they give well over the 20 years of service and have won numerous awards for their design, technologies and customer satisfaction. We offer full installation services to the necessary accreditation for the RHI and also ongoing service and maintenance options to make sure your boiler is in full working order throughout its life.
Use your own wood fuel supplies
What do I need to do now?
Consider your options. Biomass boilers can usually be plumbed straight in to existing radiator, hot water and underfloor heating circuits, and with the use of heat exchangers and hot air systems can be used for a variety of purposes throughout the workplace. There are several good reasons to implement a biomass boiler, so the RHI is an added yet significant bonus. If you think that your business could benefit then please talk to us – we will offer free and helpful advice and be able to give examples of how much a Biomass system can help your business without obligation. Contact us by phone or e-mail and we’ll get straight back to you.