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Why the RHPP has had little impact on the ground source heat pump market

Posted by John Barker-Brown on 9 January 2012 at 11:02 am

The renewable heat premium payment (RHPP) scheme was introduced on 1 August 2011. This Government scheme provides a grant to householders investing in renewable heat technologies – solar thermal panels, heat pumps and biomass boilers – and was introduced as an interim measure pending the launch of the domestic renewable heat incentive (RHI), scheduled for October 2012.

For a ground source heat pump (GSHP) installation, the grant is £1,250, and the social housing sector is served via a competitive bid process.

According to DECC presentations, a principal aim of the RHPP was to learn more about how these technologies actually perform prior to finalising policy for the domestic renewable heat incentive. As a consequence, grant recipients will be obligated to participate in two surveys: the first will cover their experience of the sales/installation process and the second will focus on system performance. In addition, a large number of installations will be subject to more sophisticated monitoring, undertaken at DECC’s expense, to deliver credible performance data.

DECC also made clear that it wanted to ‘to avoid a hiatus which hurts the sector and damages the supply chain and manufacturing’. At various stakeholder events, DECC officials expressed concern that the £12m householder RHPP fund would be over-subscribed which would necessitate measures to ensure all technologies and regions were treated fairly. Many within industry were confused, not believing that such modest grants would generate significant interest, particularly as qualification for an RHPP payment does not mean an installation will automatically qualify for any emerging RHI.

So what has happened?

More than half way through the eight month scheme the Energy Saving Trust in their last weekly update (5/1/12) show the following uptake:

Total number of vouchers issued: 3,954
Value of vouchers issued: £3,012,350 (of which 19% are for GSHP)
Number of vouchers redeemed: 1,603

Given there was pent-up demand at the outset of the scheme, with customers delaying system commissioning to qualify for the RHPP, it is clear that the run rate is far short of the required levels to distribute the entire £12m. Not every voucher will graduate into an RHPP, so it is clear this policy has done little to raise interest.

So why the poor take up?

I can only comment on the ground source heat pump market, although many of the reasons probably carry over to different renewable heat technologies.

Most importantly, for householders planning a green makeover, there has been increasing interest in solar PV thanks to the inflated feed-in tariffs. Indeed, many householders raced to complete installations ahead the 12 December cut off date for feed-in tariff reductions. With capital in short supply, most cannot contemplate a simultaneous heat pump installation nor is there much appetite until some certainty on the RHI emerges. £1250 certainly doesn’t provide sufficient stimulus.

Nor is the timing helpful. Many householders will choose to replace boilers during the summer months when space heating is not required. The delay in launching the RHPP until August meant that most people are hoping their existing system can survive another winter. This is a delay with the built-in bonus that they will not be gambling on being eligible for the full RHI.

Of course, if their boiler does fail, most householders will require an immediate resolution. As a consequence, any emergency purchase is typically a like-for-like replacement: certainly, the time taken to implement a heat pump installation means they are rarely installed in such circumstances.

Without doubt, all this was explained to DECC. The £1,250 is merely a reward for those who were going to install a heat pump anyway; it certainly isn’t a meaningful incentive designed to trigger additional sales. In truth, it was only after a considerable lobbying effort that DECC agreed to allow self-build installations to qualify for the RHPP so the weak demand could have been worse!

Sadly, it is questionable whether Government will actually achieve their main ambition of securing meaningful survey and performance data. It's likely that monitoring of most installations won't cover the whole heating system. Is it possible that DECC will argue for a continued delay in the launch of the RHI to provide further time to learn about the technologies?

In the meantime, until there is some parity with the electricity generating technologies, optimism within the heat pump sector is likely to remain in short supply. This is a considerable shame given the 4th Carbon Budget identifiest heat pumps as the preferred mass market technology for the residential sector. For the industry to deliver this outcome, it needs some help, and that should start with DECC respecting industry opinions on emerging RHI policy.

Photo: Kensa

About the author: John Barker-Brown is special projects manager at British heat pump manufacturer Kensa Engineering.

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

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7 comments - read them below or add one


FABECOComment left on: 5 March 2012 at 4:25 pm

In responce to NNW49 's comments it seems a common mishaprehention from all the Knockers of heat pumps that when retrofitting the technology you would do nothing to improve a properties heating demand the first stage of retrofitting is to assess the scope to improve the properties efficiency to reach at least the requirements of part L building code.

We have to start thinking long term when we talk about these technologies yes it is not a low cost option to retrofit underfloor heating but it will payback eventually. The average heating bill for a property using oil fired boiler is well in excess of the £1200 national domestic average and fuel costs could double in the next 10 years.

An integrated heat pump/solar thermal/solar PV system and underfloor heating system might well be expensive but if it saves you between £2K-£4K every year and gives you an income from FIT and RHI well just how long before it's paid for itself and in the long term 20 plus years it will have paid for itself at least twice over and saving you a lot more than £4K a year I bet.

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Fred1Comment left on: 10 January 2012 at 6:50 pm

DECC has no money, and had cut the payment for FIT to a level which is sub economic compared to annuities ISA saving etc, so Solar is not for profit only for "green interest".

Why would DECC evolve any other shemes which give money to anyone ? , the schemes they will probably evolve will also be sub economic and pay lip service to " Green Govt"

It is a shame there was an good opportunity to make 20% of energy from sustainable sources, but it has been wasted...




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Simon Lomax

Simon LomaxComment left on: 9 January 2012 at 4:18 pm

First, I should make clear that I work at Kensa Heat Pumps so wish to support he technology, wherever possible.

Secondly, the post (below) suggesting that heat pumps are not always the most appropriate technology is absolutely right but there are still very significant opportunities in the retrofit market, especially in areas with no access to mains gas, as evidenced by the increasing number of social housing providers who are installing GSHP's. 

Yes, it is necessary to insulate, and yes, the design of the heat distribution system must be carefully considered but it is absolutely essential that heat pumps are installed into existing properties in order to meet the take-up figures required by the 4th Carbon Budget.

At some point, perhaps once the carbon intensity of the grid has reduced, and the certainty of continuing gas supplies becomes a more pressing concern, there will also be a justification for installing heat pumps in place of gas boilers too. 

Indeed, since heat pumps don't need a mandatory annual service, and last considerably longer than a condensing combi, their lifetime ownership cost (to a housing association) can be appealing even against gas-fired heating systems.

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nnw49Comment left on: 9 January 2012 at 3:41 pm

Fitting a GSHP in place of an oil boiler in an existing property (e.g. in an "off gas grid" area) is going to require replacing all the radiators as the water temperature from the HP isn't going to be anywhere near that provided by the oil unit. Some suppliers neglect to point this out!

Perhaps it is attractive to places that had either premium rate or economy 7 electric heating, but will entail fitting a wet CH system - so is not a minor project....

The way that HP's do the heating (little output over a prolonged period) doesn't fit well with people whose homes are unoccupied during the day. The occupants don't want to feel they are heating the house when everyone is out, but there's no scope for the "quick burst of heat" that a boiler can give. That being said, they DO work well where the house is (nearly) continuously occupied.

The killer is getting an existing property to such a level of insulation that a HP can cope with the losses of the building!

All in all, HPs (of either type) aren't that attractive for retro-fit even with a subsidy to many people.

(sorry to sound negative - HP's are a good technology, but I think there are many situations where they may not be the best option)

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michael moggeridge

michael moggeridgeComment left on: 9 January 2012 at 3:29 pm

Excellent article, clear and concise.  Do we blame the previous government for being so overly generous with FiT rates that this government is now being so ultra cautious with renewables that it is damaging the renewable heat industry.  RHI levels on GSHP's are never going to make anybody millionaires and they are not so prone to folk saying, I'll have 30 acres of GSHP's in the lower meadow this year.

The Government need to understand that without the renewable heat industry on board they can abandon all hope on 15% renewables by 2020.  The most frustrating thing in all of this is that it is not hard or difficult or EXPENSIVE to get this moving in the right direction.

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Macclesfield Renewables

Macclesfield RenewablesComment left on: 9 January 2012 at 1:17 pm

Completely agree with the main point of the article. Taking into account how much initial investment is needed by the householder for a GSHP (and the current economic climate); a one-off payment of £1250 was never going to be enough to persuade consumers to install a GSHP in place of a much cheaper option such as a conventional gas boiler.

A ground source heat pump is very much a long term solution, which lends itself to a long term, tariff based scheme like the comment above suggests. Simply because the government has been put off by the generosity of the FIT scheme doesn't mean there isn't room for tariff based schemes in the future. It rewards householders who are thinking long term about the environmental benefits of installing such a system.

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Bob Irving

Bob IrvingComment left on: 9 January 2012 at 11:48 am

Mystifying as why they thought that RHPP would make any difference. The similar level of payment under Low Carbon Buildings Programme failed to make much impression, so why would this? Until there is a coherent long-term programme of incentives, such as a domestic RHI, the number of heat pumps installed will remain small. Perhaps we will be exhorted to install microCHP as in this strange report from the Heating and Hot Water Task Force

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