RHI Payments and Degression

The commercial Renewable Heat Incentive (RHI) was introduced in November 2011 to pay participants for each unit of heat generated from renewable sources. The payments for these are divided as shown in the below table, and are paid for 20 years at a fixed rate from when the boiler is commissioned and approved as in working order by OFGEM

Table Showing the Current Commercial RHI Tariffs (October 2015)

The division between Tier 1 and Tier 2 is at 15% of the boiler’s annual capacity; as there are 8760 hours in a year, this comes at 1314 hours. For a 199kW boiler this is (1314x199=) 261,486kWh, or for a 999kW boiler (1314x999=) 1,312,686kWh. After this, the payment drops into the Tier 2 tariff.

This is the method of calculating the income of a boiler per annum. For example, the 199kW boiler would receive (261,486x£0.0418=)£10,930 per annum for 20yrs in Tier 1 alone, with any usage over Tier 1 dropping into Tier 2 and receiving the lower payment of £0.0111/kWh.

A 400kW boiler would receive Tier 1 for (400 x 1314 =) 525,600kWh, which equates to (525,600 x £0.0518 =) £27,226. Compared to the 199kW boiler (half its capacity), it generates a far greater income per kilowatt, with a significantly lower capital expenditure on the equipment than if two 199kW boilers were installed.

If you would like advice or assistance on receiving this payment, we offer an RHI Application Service if you Contact Us.