On the 27th June, the Department for Business, Energy & Industrial Strategy (BEIS) introduced some changes to the Domestic RHI (what is the Renewable Heat Incentive or RHI?), which could ultimately make renewable heating much more popular in homes throughout the UK. This scheme – known as an “Assignment of Rights” agreement or AoR – allows a third-party investor or company to fund a heat pump installation in your home.
But how does it work? How did it come about, and what do you need to know before applying?
What is an Assignment of Rights agreement? How does it work?
An Assignment of Rights agreement allows an approved investor to buy, install and maintain a renewable heating system in your home. In return, the homeowner would assign their Renewable Heat Incentive payments to their nominated investor.
The problem with the Domestic RHI
The government has encouraged homeowners to install renewable heat generators like heat pumps and biomass boilers for many years with the Domestic RHI (Renewable Heat Incentive). This scheme rewards homeowners who install renewable heat technologies with a 7 year-long payment system. The Domestic RHI was designed in a way so that after the 7 years, the homeowner should have recouped the total cost of purchasing and installing their heat pump, biomass boiler or solar thermal panels.
The only problem with this system is that these technologies aren’t cheap, and the RHI doesn’t change the fact that homeowners would have to pay the large upfront cost. In the past, this has put heat pumps and biomass boilers out of budget for many homeowners. Thanks to Assignment of Rights, this is changing.
Top 5 ‘need-to-knows’ about the Assignment of Rights
- Unlike the Rent-a-Roof Scheme for solar panels, you are the individual owner of the heating system. Your nominated investor can’t own any part of your system.
- You will assign the payments to your investor during the Domestic RHI application process.
- You aren’t tied to a single investor even after the agreement is made. If you’re dissatisfied with your current investor, you can switch so long as they agree.
- Once everything is up and running, you need to follow the Domestic RHI rules. This is crucial for both you and your investor to ensure ongoing RHI payments. To name a few of these ongoing obligations:
- The heat pump needs to be regularly maintained.
- If you need to change the heat pump or metering equipment (i.e. if it stops working or something needs replacing), you’ll need to inform your investor and/or Ofgem.
- If you want to sell your house, let your investor know. The new owner would normally continue the agreement and assign the RHI payments to your current investor.
- For consumer protection, the investor will need to be a member of either the Renewable Energy Consumer Code (RECC) or the Home Insulation and Energy Systems Contractors Scheme (HIES). Additionally, the investor must be registered as an investor with Ofgem.
- You need an up-to-date EPC taken no more than 24 months ago to qualify for the Domestic RHI. If your EPC recommends loft, floor and/or wall insulation, make these improvements and get a new EPC before applying.
You can download Ofgem’s free guide to RHI and Assignment of Rights here: Guide to RHI and Assignment of Rights.pdf
If you’d like any more information on the Assignment of Rights agreement, or you’d like to register your interest with us, fill out our contact form. One of our Technical Account Managers will soon be in touch to explain how we can help you.