Qualifying technologies include solar panels, certain heat pumps, and most importantly for our customers, boilers that burn wood pellets or other wood-based fuel. The government has realised that with a finite supply of fossil fuels like coal and gas, the UK needs to reduce its reliance on non-renewable energy sources and increase the use of fuels that can be replaced by simply planting more trees.
The RHI scheme is intended to help people make the move from a heating system reliant on fossil fuels to a more environmentally friendly one based on renewable sources. It works by providing quarterly financial payments to help offset the costs of installing a new heating system and buying the fuel that runs it. The final amount that you receive will take a number of factors into account, but for a three-bedroom family home heated by a biomass boiler, you could expect a payment in the region of £650 a year for seven years. As our example below shows, this is very close to the annual cost of heating this property with a conventional gas heating system. Of course, you have to add the cost of buying the fuel for your biomass system, but if you have the space to store the wood or wood pellets, then you can get significant discounts by buying in bulk.
Take the following real example of a household that replaced its aging gas heating with the latest automatically fed pellet boiler.
| Property: | Three-bedroom detached semi-rural house in Trowbridge, Wiltshire |
| Previous annual spend on gas central heating: | £740 (averaged over 3 years) |
| Cost of installing biomass boiler system: Quoted price of new gas boiler installation: Difference: | £7,800 £2,200 £5,600 |
| Annual spend on wood pellet fuel: Saving per year | £672 (averaged over 3 years) £740 – £672 = £68 |
| Annual payment via RHI: | £650 |
| Years to pay off difference between gas boiler and biomass boiler installation (taking RHI subsidy and fuel saving into account): | 5,600/(650 +68) = 7.8 years |
As the example above shows, if you intend to stay in your home long term then there is a compelling argument for taking advantage of the RHI scheme and switching to a biomass boiler. Even if you do decide to sell, the prospect of free heating will add significantly to your property’s attractiveness and value.
Of course, the biggest winners will be those of you that already have a biomass heating system that meets the criteria set by Ofgem. No inspection is necessary, although you will need to submit details of your system including the manufacturer and installer. If you qualify for the maximum RHI allowance you will be very close to cancelling out your spend on fuel for your boiler, and will effectively be heating your house for free for a whole seven years. Now that is something to give you a warm feeling!