If you are unsure about installing solar panels read this article for more information on how they work and the difference between solar thermal and solar PV.
The RHI Scheme
If you choose to install solar thermal in your home, you could be eligible to receive payments from the government through the RHI scheme. It is important to note that the scheme is only for solar thermal and not solar PV. Below are some key parts of the scheme:
- To aid with the upfront cost of installing solar panels, The Department for Business, Energy & Industrial Strategy have introduced the ‘Assignment of Rights‘. This works by an investor footing the upfront cost and the subsequent RHI payments going to the investor rather than the owner.
- Solar thermal must be designed and installed only to provide heating for domestic hot water. Space heating and heating a swimming pool will not be eligible.
- Solar thermal systems don’t require any metering for payment or performance in any situation.
These are the top-level parts of the scheme. Before investing in a solar thermal or applying for the scheme we recommend you read Ofgem’s Essential Guide for Applicants.
Examples of the RHI and Assignment of Rights
The below examples use certain assumptions, specific numbers will differ for each individual situation. The following assumptions have been made for solar thermal for a semi-detached three-bedroom house:
- We have assumed that you will pay £5,000 for your solar thermal (materials, labour and VAT). Cost will vary considerably with the system purchased and installation charge so do get a full quotation.
- We have assumed a total return of £1,540 over 7 years in RHI payments. This is for a south-facing roof with little shading. You can work out a more accurate estimate for your specific house using your EPC certificate here, and input this into the calculations below for a more accurate calculation.
- We have assumed an investor will seek a 154% overall return on any upfront funding. Most investors will provide a calculator that you can use to verify this amount.
RHI Scheme – you pay the price of the solar thermal and receive all of the RHI payments over the next seven years:
- Solar thermal installation = £5,000 (paid by you upfront)
- £1,540 paid to you quarterly over 7 years through the RHI scheme.
- Total cost of £3460 paid, but bills will be cheaper and it could increase the value of your property, eventually offsetting this price.
Assignment of Rights + RHI – you will end up paying more with this overall but you will be helped with the upfront cost:
- Solar thermal installation = £5,000 (£1,000 paid by investor, £4,000 paid by you)
- £1540 from the RHI scheme paid directly to your investor over 7 years.
- Total cost of £4,000 paid, but bills will be cheaper and it could increase the value of your property, eventually offsetting this price.