Various grants, incentives and tax breaks are available for the installation of heat pumps and solar systems.
In order to obtain these incentives an MCS accredited installer such as Geowarmth must be used. To find out more about the various benefits click on the links below and you will be redirected to the relevant organisation.
The Renewable Heat Incentive (RHI) will commence in July 2011. It will provide a quarterly cash back payment for renewable heating systems such as heat pumps and solar systems installed after 15 July 2009. It will apply to non domestic buildings initially and to domestic dwellings from October 2012.
For heat pumps, only ground source models are included initially. Air source heat pumps are expected to be included from October 2012 when the domestic scheme starts.
The value of the payment will depend on the technology installed and the size of installation. All non domestic schemes will require heat meters to measure the amount of kilowatthours (kWh) of heat produced. Domestic schemes are expected to be based on the "deemed” number of kWh: the reasonable annual heat requirement that the installation is intended to serve.
Some examples of the anticipated cashbacks are as follows:
Technology Output Typical building £ per annum
Ground source 8kW Medium domestic 700
Ground source 14kW Large domestic 1,200
Ground source 30kW 600m2 building 2,600
Ground source 150kW 3,000m2 building 9,000
Solar thermal 4m2 Medium domestic 120
Solar thermal 6m2 Large domestic 150
Before the start of the domestic scheme in 2012 an interim RHI premium payment will be made for domestic installations. This is like a one off grant. Available from July 2011, the amount is:
Ground Source Heat Pump £1,250
Air Source Heat Pump £850
Solar Thermal
£300
Eligibility has yet to be confirmed. For example this payment may be restricted to well insulated properties; there may be a focus on properties off the mains gas network and there will be an obligation to provide feedback on the performance of the renewable system installed. Further details are expected in May 2011.
The Feed in Tariff provides payments from an electricity supplier for electricity generation. It means solar PV systems can be worth over 50p per kWh. There are 3 components to this. Firstly there is a quarterly cash back payment of up to 43.3p (or 37.8p for new builds) for each kWh of electricity produced. Secondly there is a saving by not buying electricity from your normal supplier, typically 10-14p per kWh. Thirdly any electricity generated and sold back to the grid earns 3p per kWh. For a 2kW domestic installation this could all be worth around £900 per year.
The EDF scheme allows community groups to apply for grants to install renewable energy systems in buildings such as village halls, visitor centres or schools.
Other grants
Following the introduction of the Feed In Tariff and the Renewable Heat Incentive, the grant schemes that these are designed to replace have closed. Check with your local authority, Business Link, Regional Development Agency what other local or regional incentives may be available.
Renewable Energy Finance
Geowarmth can provide access to finance facilities for the installation of air source heat pumps, ground source heat pumps and solar thermal hot water systems. Through our partnership with Dimplex we can offer an alternative to cash purchase via an instalment option, which not only can reduce the potential barrier of the initial capital outlay but can assist in matching cost against the actual benefit derived from the renwable energy and deliver tax and VAT efficiences.
Businesses may be eligible for a Carbon Trust loan for installing a renewable energy system such as a heat pump, solar thermal or solar PV system
A ground source heat pump, air source heat pump, solar thermal hot water or solar PV system can qualify for enhanced capital allowances (ECA) allowing businesses to write off the full cost against tax in the year of installation. The product needs to be on the ECA list; few are.
Rather than the more specific ECA listed products above, a business can include heat pump and solar installations as part of their Annual Investment Allowance, which provides for a 100% writing down allowance. This means the full cost of a renewable installation up to £100,000 could be written off immediately against tax.
Heat pumps and solar systems are defined as energy saving devices by HMRC and a reduced rate of VAT of 5% can be charged by us where the installation is in a residential dwelling. The proportion of the project relating to the underfloor heating or radiators will be standard rated. If the renewable energy system is installed during the course of construction of a new dwelling or the property is listed, our entire supply may be zero rated. If you require more information obtain downloads of VAT notices 708/6 and 708.
