RHI Premium Payment Scheme Announced

On 21st July, DECC announced the eagerly awaited Renewable Heat Incentive Premium Payment Scheme, which is the forerunner of the Renewable Heat Incentive Scheme for domestic customers.

Householders across the country could receive up to £1,250 of government funding to help towards the cost of installing renewable heating systems such as ground source heat pumps and solar thermal panels. 

The Government’s new £15 million ‘Renewable Heat Premium Payment’ scheme – which will open for applications on 1st August this year until March next year - will support up to 25,000 installations. It was made clear that the scheme is to be focused at around 4 million households in Great Britain not heated by mains gas,  and rely on higher carbon forms of heating to keep warm . These fuels ,such as heating oil and electric, tend to be more expensive than gas. Participants will be asked to provide detailed feedback on their experience through a set of surveys.  This will allow Government to gather information to better understand renewable heat technologies. 

Climate Change Minister Greg Barker said:

“Today starts a new era in home heating because we’re making it more economical for people to go green by providing discounts off the cost of renewable heat. This should be great news for people who are reliant on expensive oil or electric heating as the Premium Payment scheme is really aimed at them.

Simon Lomax Managing Director of Kensa Heat Pumps adds “A £1250 grant towards the cost of installing a ground source heat pump will help to stimulate interest in the technology, It should also be made clear that any qualifying domestic installation, that receives the Premium Payment, will still be eligible for the full RHI tariff due to start in October 2012.”

How to apply


The Premium Payment scheme will be run by the Energy Saving Trust and from today an information line and website will go live to provide people with more information. Householders can call 0800 512 012 or visit www.energysavingtrust.org.uk/RHPP .

Householders will need to ensure they have basic energy efficiency measures in place before applying on 1st August and grants will be available on a first come first served basis. Kensa Heat Pumps are urging customers considering installing a ground source heat pump, to read the factsheet titled “The Importance of Insulating your Renewable Project” where renewable energy heating systems are being considered.  This can be downloaded from the Kensa Website.

Insulation is the single most important aspect of any building. It is the easiest way to reduce any buildings heating costs and as energy prices spiral, fitting good quality insulation will save  energy, reduce fuel bills and reduce carbon emissions. Good quality insulation has the fastest payback of any energy saving measure that can be fitted to a building.

Upgrading the insulation of any building should always be the first step before considering any renewable technology, particularly heat pumps.

From 1st August, grants for the following technologies will be available:

  • Ground Source Heat Pump - £1250 grant (for homes without mains gas heating)
  • Biomass boiler - £950 grant (for homes without mains gas heating)
  • Air source heat pump - £850 grant (for homes without mains gas heating)
  • Solar thermal hot water panels - £300 grant (available to all households regardless of the type of heating system used)

£3m of the £15m will be set aside for registered social landlords to improve their housing stock.  DECC has stated that details of how to apply for these funds will be announced at a later date.

People who have installed the kit under the Premium Payments will also be eligible for support through the RHI providing they meet the eligibility criteria of the full RHI scheme, as will anybody else who has installed eligible equipment since 15 July 2009.

Following the announcement of the Renewable Heat Incentive Scheme in March, Social Housing providers were in an impossible position as they were unable to commit to an investment with no clarity on RHI tariffs.  Having little access to financial support following the closure of the Low Carbon Buildings Programme and CERT funding running out, the RHI was the only hope for landlords looking to improve their housing stock by replacing existing solid fuel boilers with ground source heat pumps.  The interim Premium Payment now opens a window of opportunity for social landlords who can revert back to planned 2011 installations on the understanding that £1250 financial support per property could be up for grabs.

Renewable Heat Incentive for industry, business and communitiesThe Government is also introducing financial assistance for industry, business and communities to generate their own renewable heat.  It is intended that the Renewable Heat Incentive (RHI) will be open for applications from 30th September and administered by Ofgem E-Serve. Those interested in finding out information ahead of being able to apply in September can contact Ofgem E-Serve from on 0845 200 2122 or by visiting www.ofgem.gov.uk/rhi.

The Renewable Heat Incentive Scheme  - An Overview including details of domestic support (Phase 2)

  • £860m government scheme expected to increase green capital investment by £4.5 billion up to 2020, stimulating a new market in renewable heat;
  • Incentive to increase number of industrial, commercial and public sector installations by seven times to 2020
  • A full system of RHI payments will be available to households from October 2012;
  • In the interim, more than a quarter of the first year’s budget to be guaranteed for up to 25,000 household installations through a “RHI Premium Payment” to encourage take-up;
  • 150,000 existing manufacturing, supply chain and installer jobs to be supported

There are significant changes from the details proposed in the original consultation documents released in April last year.  The scheme will be introduced in two phases.

In the first phase, long-term tariff support will be targeted in the non-domestic sectors, at the big heat users - the industrial, business and public sector – which contribute 38% of the UK’s carbon emissions.  The tariffs for these supported commercial sectors will commence In 2011.

The second phase of the RHI scheme will see households moved to the same format of long-term support offered to the non-domestic sector in the first phase, although the tariffs are likely to be higher. This transition will be timed to align with the Green Deal which is intended to be introduced in October 2012.

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