Government Financial Incentives
The Government is committed to reduce the country’s CO2 emissions to comply with our reduction targets as part of a global reduction ratified under the Kyoto Agreement. To help achieve this, the Government will reward individuals who pay to install and run renewable energy sources, including air and ground source heat pumps. There are a number of different financial incentives available, the main ones are: The Renewable Heat Incentive (RHI), The Green Deal, Reduced rates of VAT
For full details of the Renewable Heat Incentive Tariff and Green Deal, please visit the official website on https://www.gov.uk/government/policies/increasing-the-use-of-low-carbon-technologies/supporting-pages/renewable-heat-incentive-rhi and follow the links.
The Renewable Heat Incentive (RHI) Tariff
The Renewable Heat Incentive (RHI) Tariff is a Government initiative whereby they will pay you a tariff payment each year for a set period depending on the technology chosen and energy savings made. For an explanation of the RHI scheme, click on the video link at the bottom of the page below.
Full details of the eligibility criteria and incentives for domestic applications can be obtained by following the link above
The RHI will be paid to the owner of the heating system at a set rate per unit of renewable heat produced (kWh) for seven years. For air source heat pumps (ASHP) the rate is 7.3p / kWh and for ground source heat pumps (GSHP) is 18.8 p / kWh.
To qualify for the RHI an installation must be certified under the microgeneration certification scheme (MCS). The Reina Group are approved MCS registered installers and all our heat pump installations will meet this requirement. In addition, all heating systems work more efficiently in a well insulated home. The government therefore requires that to qualify for RHI payments, all applicants must complete a “Green Deal” assessment before applying and ensure they have met minimum energy efficiency requirements of loft & cavity insulation where recommended by the Green Deal assessment. You can find out more about the Green Deal in the section below.
All heat pumps installed after 15th July 2009 will be eligible to receive the RHI , provided , of course , they meet the qualifying criteria. An air source heat pump installed in a well insulated property of circa 200m2 with an annual energy requirement of 21,000kWh, will be entitled to an annual RHI payment of £1,082 per annum for seven years (ie a total of £7,574 over the full period)
Alternativly, a ground source heat pump installed in the same property would receive £2,985.00 per annum for seven years. (ie a total of £20,895 over the full period). The different RHI payments are designed to reflect the increased costs associated with installing a ground source heat pump.
The RHI Premium Payment
Ended 31st March 2014
The Green Deal
The Government introduced the Green Deal in Spring 2013. This is an innovative financing mechanism whereby the costs of installing energy efficiency improvements, including Heat Pumps, are met by means of an extra charge on the householder’s normal energy bills. The concept is that the extra charge on fuel bills will be offset by the reduction in fuel costs as a result of greater fuel efficiency. Additionally, if the house is sold, responsibility for future payments passes to the new owner. For full details of the Green Deal follow this link:- https://www.gov.uk/green-deal-energy-saving-measures/how-the-green-deal-works. ***Please note the Green Deal is no longer open for new applications. See the DECC blog for more information.***
Reduced Rates of VAT
The rate of VAT applicable to heat pumps and their installation is currently at the Reduced Rate of 5% rather than the Standard Rate of 20%.