Solar thermal and an ASHP

In February 2010, the Government published a consultation document setting out its proposals for the design and operation of the Renewable Heat Incentive (RHI), with the aim of providing financial support to encourage individuals, communities and businesses to switch from using fossil fuel to renewable sources for heating. Following consultation, the RHI scheme will be launched in April 2011.

Key proposals of the RHI are as follows:

1. The scheme will support a range of technologies, including ground source heat pumps, air based heat pumps and solar thermal domestic hot water systems.
   
2. RHI payments will be claimed by, and paid to, the owner of the equipment. The RHI will be available to householders, local authorities and social landlords as well as the public, industrial and commercial sectors in England, Scotland and Wales, but not Northern Ireland.
   
3. All installations commissioned after 15th July 2009 will be seen as a ‘new installation’ and will be eligible for the RHI.
   
4. In small and medium-sized installations both installers and equipment must be certified under the Microgeneration Certification Scheme (MCS) or equivalent standard; this will ensure the quality of installation and aid consumer protection.
   
5. Payments will be guaranteed and made over the life of the equipment (see below) and will be linked to inflation. Payments will be distributed annually for installations below 45 kW and quarterly for those above this level. All payments will require evidence to support continued operation and maintenance of the equipment.
   
6. Tariff levels are proposed to provide a rate of return of 12% on the additional capital cost of renewables, with a lower rate of return of 6% given to solar thermal.

Payments will be calculated on the ‘deemed’ annual amount of heat output, in kilowatt hours (kWh). The proposal is for the amount of heat generated at the small to medium scale to be estimated, or ‘deemed’, at installation stage (in most cases). This will allow the homeowner to receive a set amount based on the deemed output, and should encourage low energy consumption whilst discouraging waste.

The RHI will encourage renewable energy systems to be installed in buildings adopting a basic level of energy efficiency measures in a ‘whole-house approach’; consisting of:

• at least 125mm of loft insulation;
• cavity wall filled where appropriate.

Buildings will be assessed for their ‘deemed’ heat demand though the Standard Assessment Procedure (SAP), or similar, which is already in use for energy rating of buildings, based on the assumption that these minimum energy efficiency measures are in place.

The renewable heat installation will be the only fixed heating installation in the property. Multiple qualifying technologies such as solar thermal and heat pumps will be included in the scheme. The Government has closed the LCBP to all new applications for grant funding from 24th May 2010. This will not affect Nu-Heat customers that have already received offer letters or those with a valid application.

Expected returns (estimates only)

Example 1

4 bed, detached house
Floor area:	250m2
Project type:	New build
Annual heating load:	38,376kWh/year
Domestic hot water load :	5,252kWh/year
Total heat load:	43,628kWh/year
Qualifying technologies:	Ground source heat pump (GSHP) Solar thermal

	Space efficiency	DHW efficiency	Tariff from RHI (pence/kWh)	Annual contribution from RHI	Electricity used by technology (kWh/year)	Annual running cost	Annual income from RHI	Life of unit (years)	Lifetime income from RHI
GSHP	320%	224%	7	£3,054	14,337	£1,720	£1,334	23	£30,671
Solar thermal	100%	100%	18	£567	150	£18	£549	20	£10,980

Example 2

3 bed,semi- detached house
Floor area:	100m2
Project type:	New build
Annual heating load:	17,628kWh/year
Domestic hot water load :	3,890kWh/year
Total heat load:	21,518kWh/year
Qualifying technologies:	Air source heat pump (ASHP), Solar thermal

	Space efficiency	DHW efficiency	Tariff from RHI (pence/kWh)	Annual contribution from RHI	Electricity used by technology (kWh/year)	Annual running cost	Annual income from RHI	Life of unit (years)	Lifetime income from RHI
ASHP	250%	175%	7.5	£1,164	9,274	£1,113	£501	18	£9,017
Solar thermal	100%	100%	18	£420	150	£18	£402	20	£8,040

Example 3

2 bed, mid-terrace house
Floor area:	60m2
Project type:	Cavity wall
Annual heating load:	9,242kWh/year
Domestic hot water load :	2,985kWh/year
Total heat load:	12,227kWh/year
Qualifying technologies:	Air source heat pump (ASHP), Solar thermal

	Space efficiency	DHW efficiency	Tariff from RHI (pence/kWh)	Annual contribution from RHI	Electricity used by technology (kWh/year)	Annual running cost	Annual income from RHI	Life of unit (years)	Lifetime income from RHI
ASHP	250%	175%	7.5	£917	5,403	£648	£269	18	£4,837
Solar thermal	100%	100%	18	£322	150	£18	£304	20	£6,080

Note: The above figures have been produced within Standard Assessment Procedure (SAP) guidelines and with an assumption that 60% of the hot water requirement is met through solar thermal. Annual running cost is based on 12p/kWh.

Application process for Homeowners

1. Decision to install renewable heating/DHW system
2. Contact certified supplier/installer
3. Installer fits system and sends certificate to Ofgem
4. Ofgem accredits new generator
5. Ofgem makes payment

The Next step

For further information please contact Nu-Heat or go to the DECC - RHI website.

	Published: 04/03/10
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