The Green Homes Grant is a Government run scheme, offered to eligible properties in England. Release of vouchers began in November 2020, and the scheme lasts till March 2022.
The energy saving scheme offers up to £10,000 off the total installation costs and allows Primary and Secondary measures.
Primary Insulation Measures Included in the Green Homes Grant
Insulation is aimed at reducing the amount of heat entering or leaving a building. The more insulation you have, the better the building will be at retaining heat in the winter and therefore the lower the carbon emissions and bills.
This type of insulation can either sit in the rafters or the joists of your property. It creates a thermal barrier, preventing valuable heat escaping from the property during the winter or entering the property during the summer. Also qualifying are insulation for flat roofs and roof rooms.
Typical Cost: £300 Typical Savings: £200 Typical Payback: 1.5 Years
Properties built after 1930 will tend to have cavity walls, where the main external walls of the property will consist of two thin parallel layers of bricks with a cavity in the middle. They are built like this to help prevent moisture passing through the wall. Insulating material can be injected into this cavity to help slow down the passage of heat out of the home during the winter.
Typical Cost: £1,000 Typical Savings: £200 Typical Payback: 5 Years
Properties built before 1930 tend to have solid walls, where the main external walls consist of a solid brick about 250mm in thickness. In these properties internal or external insulation needs fixing to the solid walls to help slow down the movement of heat through them.
Typical Cost: £9,000 Typical Savings: £200 Typical Payback: 22 Years
Floors tend to be of two types; suspended timber or solid floors. Both types of floor are insulated in different ways, but perform a similar function in that they slow down the movement of heat through the lowest level of the property.
Typical Cost: £1,000 Typical Savings: £50 Typical Payback: 20 Years
Secondary Insulation Measures Included in the Green Homes Grant
Draughts in the home happen where there are unwanted gaps in the construction of your home, so potentially through floorboards, around doors or windows, or down the chimney. A draught is an inflow of air into the home, which during the summer may actually be a nice relief, but in winter can quickly decrease the temperature of the home so you need to use additional heating to keep warm. Draught proofing stops this cold air entering the home, helping to save you money on your heating bills.
Typical Cost: £75 Typical Savings: £50 Typical Payback: 1.5 Years
In new properties double glazing is often installed as standard since it vastly increases the energy efficiency of the windows and prevents heat escaping. It uses two panes of glass separated by a space which is normally filled with an inert gas such as Argon. Older properties can be retrofitted relatively easy with double glazing, and it comes in numerous different designs (wood, uPVC, metal) to fit in with the current characteristics of the property. The Green Deal also includes secondary glazing, which is much cheaper than double glazing and lets you add a pane of glass to the existing single glazed window. Triple glazing is also offered, which is slightly more efficient than double glazing, but costs more.
Typical Cost: £8,000 Typical Savings: £100 Typical Payback: 80 Years
Have you ever noticed how warm the airing cupboard is where your hot water tank sits? This is because heat is escaping from the hot water tank, meaning you need to spend more to keep the water within the tank at the required temperature. Insulating your water tank slows this heat loss, helping to save you money on your heating costs.
Typical Cost: £30 Typical Savings: £20 Typical Payback: 1.5 Years
The Domestic Renewable Heat Incentive – what is it?
The Renewable Heat Incentive (RHI) is a government scheme that pays people that produce their own heating and hot water using renewable energy sources such as heat pumps or solar thermal panels.
The scheme has been launched in an effort to help the UK government meet its legal commitment to ensure 15% of the UK’s energy comes from renewable energy sources by 2020.
This scheme has been up and running in the commercial sector since November 2011, however the domestic RHI scheme kicked off in April 2014 for households in the UK. The Renewable Heat Incentive works in a similar way to the Feed-in Tariff (which is for domestic renewable electricity production); households in this case being paid based on the amount of renewable heat they produce.
There are currently 4 technologies that are eligible for the domestic renewable heat incentive
Solar heating (also known as solar thermal – only flat plate and evacuated tube solar panels are eligible)
The payments will be made quarterly for seven years and should cover a significant proportion, if not all of the initial installation costs.
Domestic Renewable Heat Incentive tariffs
Each of the renewable technologies eligible for the renewable heat incentive have different RHI rates associated with them, mainly because the cost of installing the different technologies varies considerably and the RHI payments are designed to help cover some or all of the initial install cost.
On the whole, the RHI rates have increased very slightly in line with inflation except for biomass boilers and wood pellet stoves with back boilers which have dropped considerably – the rates below are correct as of September 2018. These can change from quarter to quarter, depending on how many people claim the payments. This is known as ‘digression’. You can find current rates here.
The payments are made on a quarterly basis and last for a total of 7 years. In addition, the tariff amounts are RPI index linked, so as inflation increases over time, the tariff rates above will increase with it. The RPI increases will be applied to the rates on 1st April each year.
RHI Payments will last a total of 7 years
Much like with the feed-in tariff, once you sign up to the RHI you will be locked in at the tariff rate that you initially get – so if you installed a Ground Source Heat Pump today you would get a payment of 20.46p per kWh of renewable heat you produced for the next 7 years (although it will increase with the the RPI each year).
Since there is a finite pot of money available for the RHI payments, it is likely the current tariffs will get smaller over time (again much like the solar feed-in tariff) therefore if you are considering installing a renewable heating technology it is worth moving quickly to ensure you get the highest payment rate!
The government do a quarterly review of the RHI scheme and adjust the tariff amounts in line with the total RHI budget so as to control the costs. Therefore if you install a renewable heating system you will get (and lock in) a better rate potentially than someone who installs a renewable heating measure 2 years down the line.
RHI payments are estimated based on heat demand rather than Metered
Tariff payments will be deemed rather than metered, which means they will estimate the heat demand of the property and base the RHI payment on that. This means that it is paramount to install a heating system that is correctly sized; because if you install a more expensive, oversized biomass boiler (that creates more than you require), you will be paid the same through the RHI and potentially won’t recoup the additional unnecessary investment.
Likewise, there are ways to maximise your RHI payments!
For biomass boilers and wood pellet stoves, the RHI payment can be fairly easily calculated based on the heat demand of the property. This heat demand figure can be found right at the bottom of the Energy Performance Certificate (EPC) expressed in kWhs – so it is simply a case of multiplying £0.0674 x this number, which will give you the total annual payment.
For solar thermal, the MCS approved installer calculates the RHI payment. They will deem a figure that is the estimated contribution of the solar thermal to the home’s hot water demand, but the calculation is based on occupancy – the more people that reside in the property, the higher the payment – worth bearing in mind when you are speaking to your installer / green deal assessor.
For heat pumps (both ASHP and GSHP) the heat demand figure from the EPC is combined with the heat pumps estimated efficiency to calculate the RHI. Remember not all the heat produced by heat pumps is renewable, therefore only the part that is will receive RHI support.
The technical term for the estimated efficiency is known as the Seasonal Performance Factor (SPF) – and this tends to be somewhere between 2.5 and 4 (this is also sometimes referred to as the Coefficient of Performance or CoP). So an SPF of 3 for example, means that for every one unit (kWh) of electricity used, 3 units (kWh) of useful heat will be produced.
Therefore the RHI for heat pumps is calculated using the 2 formulas below:
1. Eligible Heat Demand = Total Annual Energy Demand x (1 – 1 / SPF)
2. Annual RHI = Eligible Heat Demand x RHI Tariff
Example calculation for Air Source Heat Pumps:
For a home with a heat demand of 25,000kWh installing an air source heat pump with a SPF of 3.5 the annual RHI payment would be:
Then multiply by RHI tariff (10.49p / kWh) = £1,873.20 per year
Only heat pumps with an SPF of 2.5 or more are considered renewable under the EU Renewable Energy Directive and only those that are considered renewable will be eligible for the RHI.
How long will my renewable heating investment take to pay back?
This is a difficult one to answer to be honest because it is so dependent on your home’s individual heat demand.
In terms of investment, you can expect to pay about £8,000 for an air source heat pump, £20,000 for a ground source heat pump, £8,000 for a biomass boiler and £4,500 for solar thermal.
If you can get an accurate view of the heat demand (from the EPC) then you should be able to calculate the annual payment from the domestic RHI, which multiplied by 7, will give you to the total payments to expect over this period.
With the investment figure and the total lifetime RHI return (comparing renewable heating to the next best alternative), you should be able to get a rough feel of the payback.
Eligibility requirements for the Domestic Renewable Heat Incentive
Renewable heating systems don’t come cheap – the domestic RHI makes these systems more affordable by offering a financial incentive based on the amount of heat they produce. However, there are quite strict eligibility criteria, so it is worth ensuring that you adhere to the rules to make sure you are entitled to the payments.
Which technologies are eligible for the domestic RHI?
As previously mentioned, the renewable heat incentive is available on installations of any of the following technologies:
Air source heat pumps (limited currently to those that heat water)
Wood pellet stoves with back boilers
Ground source heat pumps (this term also covers water source heat pumps, which are considered GSHP by RHI guidelines)
Solar thermal (only flat plate and evacuated tube solar panels are eligible)
Download the full list of eligible installations here.
Who is eligible for the domestic RHI?
The scheme covers single domestic dwellings (as soon as the heating system is providing heat to more than one property, you would need to look at the non-domestic RHI). It is open to owner-occupiers, private landlords, registered providers of social housing, third party owners of heating system and self-builders.
Note to private and social landlords: you will need to agree with the tenants that an annual servicing visit will be required to ensure the system complies with the detail set of requirements and continues to be eligible for domestic RHI payments.
New builds are not eligible for the RHI – this means the renewable heating system was installed in the home before it was inhabited for the first time.
You heating system needs to be on the Government approved list
In order to ensure eligibility for the RHI, you must make sure the renewable heating system you get installed is listed on the Governments product eligibility list (PEL) – you can download this here.
MCS accreditation is a must!
To be eligible for the scheme, the installers must adhere to the European Standard EN 45011. The Microgeneration Certification Scheme (MCS) adheres to this standard, therefore as a rule of thumb you need to ensure that the team installing your renewable heating system are MCS accredited and the kit being installed is also MCS accredited.
Equivalent schemes to MCS do exist, but don’t simply take your installers word for it that they adhere to EN 45011 – check all the relevant paperwork before getting any work done.
Getting a Green Deal Assessment is no longer required!
In early 2016, the Government changed the elegibility requirements for the RHI and one of those changes involved scrapping the need for the Green Deal Report. The EPC is still a requirement though – this needs to be dated within the last 48 months – and will be used to calculate your RHI payments.
If your EPC recommends loft and cavity wall insulation it must be installed before you apply and you’ll then need to get a new EPC that no longer recommends these measures. The reason for this is that heat pumps and solar thermal tend to produce hot water at lower temperatures than traditional gas central heating systems. This means that radiators and underfloor heating will be operating at cooler temperatures compared to regular central heating systems, therefore it is very important the house is really well insulated prior to having them installed. The insulation process should bring the heating requirements of your home right down.
I have received other grants to pay for the technology. Do I still get the domestic RHI?
DECC confirmed in 2013 that any public funding paying for the domestic renewable heating installation would be deducted from RHI payments made. In addition, where an installation was not at least in part paid for by the owner, even where the installation was funded from a private source, that installation will not be eligible for the domestic RHI. An installation which has been part-funded by the owner will be eligible.
I have already installed my renewable heating system – Can I still claim the RHI?
You must apply to join the Domestic RHI within 12 months of the commissioning date of the renewable heating system. This can be found on the MCS certificate. The team that run the admin side of the RHI at DECC offer very little wriggle room here (99 times out of 100 – zero wiggle room!) so make sure you apply within the stipulated timeframes.
Technology Specific Eligibility Requirements
All heat pumps must have a Seasonal Performance Factor (SPF) greater than 2.5 to be eligible for the RHI. Heat pumps installed by legacy applicants will automatically be considered to have an SPF of 2.5, and will require a full assessment by an MCS installer to prove a higher SPF (which would lead to higher RHI payments – so may well be worth doing!)
If a heat pump is installed alongside another space heating system then a meter will need to be installed to gauge exactly how much heating is coming from the heat pump. RHI payments will be based on these meter readings rather than the estimated heat demand for the property.
Biomass boilers/wood pellet stove with back boiler
If a biomass boiler is installed alongside another space heating system then a meter will need to be installed to gauge exactly how much heating is coming from the biomass system. RHI payments will be based on these meter readings rather than the estimated heat demand for the property.
New installations of biomass boilers will need to meet strict air quality standards in relation to particulate matter and oxides of Nitrogen – as mentioned previously – legacy applications will not need to adhere to this.
If the air quality standards change in the future, you do not need to concern yourself with your installed boiler not meeting the standards.
To be eligible for the RHI, the fuel needs to be sourced from a supplier registered on the approved supplier list.
How do I apply for the domestic RHI?
The application process for the domestic Renewable heat Incentive is fairly simple, however numerous pieces of evidence (installation certificates, EPC, and photos for example) are required for the submission.
Since the RHI is funded out of a public kitty (through tax payers), it is important that the money being spent to subsidise the scheme is under the right level of scrutiny, hence the volume of evidence required.
Applying for the domestic RHI
Applications for the domestic RHI are made through the OFGEM website through the My RHI portal
However if you find the thought of carrying out this process a little too onerous, there are third party companies offering to complete this on your behalf, although obviously there is a charge for this service. The process genuinely is pretty easy though, so in our opinion certainly worth giving it a try yourself before getting this kind of company in!
The RHI is now closed to legacy applicants
If you are a new applicant (so the installation took place after the scheme launched), then you will be able to claim the RHI straight away.
Unfortunately the scheme has now closed to legacy applicants (i.e. those who installed their renewable heating system prior to the scheme going live in April 2014).
Can the set RHI levels be changed once I have applied?
The headline RHI tariff figures do change, like we have already seen for the biomass renewable heat payments, and as time goes on and the RHI budget gets used up, we expect further drops in the tariff to take place. The Government will look at the tariff levels every 3 months and adjust them accordingly – however if you are receiving the RHI – you have locked in to whichever rate was agreed at the beginning – this is the rate that you will receive for 7 years (although it will increase with RPI each year).
Is there anything else I need to know?
The government will run a “Metering and Monitoring Service Package”, which consumers can volunteer for. Data collected under this scheme will be shared by the Department of Energy & Climate Change (DECC) with the installer and consumer. Domestic RHI recipients who volunteer will receive £230 per year to have their heat pump installation monitored and £200 per year to have their biomass installation monitored.
Hybrid systems installed with a gas boiler or oil boiler will need to be metered, except solar thermal systems.
The system will need to be serviced annually in accordance with manufacturer’s instructions to ensure efficient running of the system.
Unlike the previous Green Deal scheme which was loan operated, the Green Homes Grant offers grants of up to £5000 and £10,000 to wholly or partially cover the full cost of the energy saving measure.
The Green Homes Grant was set up to help improve the energy efficiency of properties across the UK, since many of the properties we live in are very inefficient, with solid walls, old heating systems and very little insulation. This scheme allows people to improve their homes without having to stump up the entire upfront costs of the works.
How does the Green Homes Grant work?
The Green Homes Grant is divided in to two separate grants, which each have different eligibility criteria.
£5000 – available to any home in England that fits the correct criteria for the specific measure. This grant covers 2/3’s of the full cost and caps at £5000. There will be a remainder in all cases using this grant and it will be paid as a customer contribution.
£10,000 – available to any homeowner receiving certain benefits listed here, and whose home fits the correct criteria for the specific measure. This grant covers 100% of the full cost up to £10,000 and the remainder is paid as a customer contribution.
e.g. Fitting external insulation on a small terraced house (approx 50sqm), using the £5000 green homes grant
The average supply and fit cost of external wall insulation is £120 per sqm (inclusive of materials, labour, VAT, skip hire, any extra remedial work required, scaffolding). Therefore, a 50sqm house would cost £6000.
In this case, 2/3’s of the full cost is £4000, so this is how much the Green Homes Grant would cover. The homeowner would pay the remainder of £2000.
e.g. Fitting external insulation on the same size house (50sqm), using the £10,000 Green Homes Grant
As above, the total cost of the works would amount to £6000. With the £10,000 grant, the whole £6000 would be covered by the Green Homes Grant and there would be no customer contribution.
If the house were bigger (for instance, 100sqm) the total cost would be £12,000, the Green Homes Grant would cover £10,000 of the amount and the homeowner would have to pay £2000.
Who can get the Green Homes Grant?
In theory, any home in England can access the Green Deal considering you are eligible, but the scheme has been specifically tailored to the private home owner or the private rental sectors. The reason being is that the social housing sector already has several ways in which improvements are funded and undertaken – namely the ECO scheme.
The following section talks a bit more about how the Green Homes Grant process works end-to-end – starting with a finding a Trustmark approved installer to quote for the works.
Find a Trustmark approved installer to quote you for the works. The installer will also have to be registered to specific certifications regarding the measure they are installing – MCS/PAS2035. It is recommended to get three quotes for comparison.
How does the Green Homes Grant help improve energy awareness?
The Green Homes Grant provides homeowners with knowledge of energy efficient home improvements. In turn, better energy awareness should drive occupiers to use their energy more wisely, which should drive down the cost people pay. For example: reducing the temperature of the hot water cylinder thermostat, installing central heating thermostats in the correct location, reducing water levels in kettles, washing clothes in ‘eco-mode’, and turning off unused high energy usage appliances like chest freezers should all help with lower energy bills.
We list 100 ways to save energy in the home here – even if you adopt a few, you should see some nice energy savings on your utility bills.
After the closure of the Feed in Tariff (FiT), the government introduced The Smart Export Guarantee (SEG) which launched in 2020. The scheme allows growth in electricity generation from green microgeneration technologies.
How does the Smart Export Guarantee work?
Licensed electricity suppliers can offer a tariff and make payment to small-scale low-carbon generators for electricity exported to the National Grid (considering certain criteria are met).
The following low-carbon, renewable technologies are eligible for the SEG:
solar panels (solar pv)
micro combined heat and power
If you decide install any of the above renewable generation for the home, you should be eligible for the SEG tariff, providing you meet certain criteria.
Your installation must be 5MW capacity or less (50kW for micro-CHP).
You need to take electricity readings from your meter – this is going to be easier if you have a smart meter installed, which will automatically take the readings for you.
Your installation must be MCS-certified.
Savings on electricity bills
Every kWh of electricity that you create yourself and then use in your home means that you don’t need to buy that unit from the electricity company. Electricity is currently priced at about 15 pence/kWh when you buy it from any of the big six energy companies, so the more electricity you produce and use in your home, the more you save.
Smart Export Guarantee registration
In practice in the UK, the energy companies with over 150,000 customers (British Gas, EoN, SSE, Scottish Power, EDF and NPower, etc) are required by law to provide the SEG to homes and businesses. Other smaller electricity suppliers may not offer the SEG as it is not compulsory for them to do so. The full list of registered SEG licensed suppliers is available on the OFGEM website here.
Once you have the product installed through the MCS, you should receive a certificate confirming MCS compliance. Speak to your energy company that is approved for the SEG – express your interest in receiving the SEG. Your supplier will confirm your eligibility, cross checking your details to the MCS database. On confirmation of the SEG your details will also be added to the OFGEM Central SEG Register.
You may also need to agree a process for meter reading and whether you want to opt out from export tariffs. An important point to note is that it is far more economical to use as much of the electricity you produce in the home as you can, rather than selling it back to the grid. Using a kWh of the electricity you produce in your home saves you buying it from the energy suppliers at 15p, while you can only sell it back to the grid for 4.77p.
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