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Will Renewable Heat Premium Payments kick start the domestic market?

Posted by Cathy Debenham on 11 July 2011 at 9:47 am

Carrot: is the incentive enough?

The government is putting up £15m for the renewable heat premium payments between September (probably) and October 2012 when the domestic version of the Renewable Heat Incentive (RHI) is due to start. In essence they are a grant to help with the capital cost of installation; but will they kick start the domestic renewable heat market?

Word on the street is no, they will not. Manufacturers and installers that I've spoken to think that the Government probably won't even be able to spend the £15m, because no one's going to invest until they know for certain whether the product will be included in the final Renewable Heat Incentive (RHI), and what the rate of return will be over the product's life time.

According to one heat pump manufacturer it's not the government incentives that are key to whether their phone rings or not, but the price of oil. When it's up the lines are busy, when it's down they are quiet.

A biomass boiler installer thinks that renewable heat premium payments are too small, relative to the cost of an installation, to make any difference.

The rates are expected to be:

Solar Thermal - £300/unit
Air Source Heat Pumps - £850/unit
Biomass boilers - £950/unit
Ground Source Heat Pumps - £1250/unit

Do you think they will make a difference to take up? 

Photo by Malias

If you have a question about anything in the above blog, please ask it in the comments section below.

Comments

2 comments - read them below or add one

RenEnergy (Norfolk)

RenEnergy (Norfolk)Comment left on: 12 July 2011 at 1:28 pm

We were just discussing this in the office, our clients are largely motivated by improving their green credentials rather than financial returns but quite understandably they are nervous about investing in thermal technologies until they have a clear indication of the tariff rates.

Oxyvent is right in that the RHI doesn't make the technologies more affordable but neither did the FiT, however the FiT has helped to drive PV technology prices down due to increased uptake by those who can afford the systems. Bit of a catch 22!

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Oxyvent

OxyventComment left on: 12 July 2011 at 10:46 am

I think what's needed here is the Green Deal for decent take-up - these technologies are just too expensive right now in these times of austerity. Offering someone an incentive of £1,250 against costs of £10,000+ will only stimulate those with a lot of cash in the bank.

A lot of people are really trying to be more energy efficient (that's what Oxyvent customers are telling us) however it cannot be at such high prices - more ciost effective solutions will gain traction particularly as energy bills hikes are far outpacing inflation until the Green Deal's in place.

 

 

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