New build social housing properties are eligible for RHI payments from the Non Domestic RHI which supports district heating.
The Renewable Heat Incentive (RHI) is the world’s first financial support scheme for generators of renewable heat. It’s been introduced to encourage the take up of significantly more renewable heating systems, helping to reduce the UK’s carbon emissions.
The recently launched Domestic Renewable Heat Incentive (RHI) stream does not support new build developments, however new builds are eligible under the Non Domestic Renewable Heat Incentive (RHI) stream, which can also be used to support residential heat network systems, (also known as district heating).
DECC has confirmed that an individual ground source heat pump at each property, linked to a communal ground array, qualifies as a heat network system where as few as two dwellings are linked together. And both Ofgemand the HCA have confirmed that the Renewable Heat Incentive can be paid to a social landlord, even if the development has benefited from an HCA grant. More information on the requirements around this can be found here.
All Non-Domestic RHI payments are paid to the landlord or the entity deemed as the system owner; they are index-linked for twenty years. These payments are currently based upon meter readings rather than the deemed consumption figure being used in the Domestic RHI.
Importantly, receiving an HCA grant for the building does not rule out also receiving RHI, providing:
- the correct accounting separation is in place and;
- the original HCA grant offer did not highlight any intent to use renewables.
This means that social landlords may use a system eligible for the Non Domestic RHI, such as a common ground array serving individual household ground sourced heat pumps, and offers a real opportunity to benefit from a 20 year income through the delivery of renewable heat, helping to offset the additional costs over a conventional heating installation.
Within its guidance on the topic, Ofgem clearly states that RHI support will only be available for an eligible installation if no grant from public funds has been paid or will be paid in respect of any of the costs of purchasing or installing the eligible installation. This means it is vital to transparently separate the renewable heat installation costs from the house building costs towards which HCA grant is accounted.