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