Changes to the Renewable Heat Incentive – industry reaction

With the news that the RHI launch has been delayed, how has the renewables industry reacted and does this government still seem to be living up to its pledge to be the ‘greenest government’ yet?

Andy Buchan, Cotswold Energy Efficient Centre said: “Thousands of consumers, including our customers and installers, have been waiting so long now for RHI phase 2. I have lost count on the amount of times the start date has been deferred.

“The decision to consult in September with a proposal for the scheme to be running next summer will have a detrimental effect on renewable energy installers being able to promote low carbon technologies.

“The sweetener of continuing the RHPP is a false dawn. We were already getting £300 for solar from Clear Skies in 2005 so we’re no further forward.

“Here at CEEC we can not advise our visitors on any incentives as our greenest government ever is continually moving the goal posts. Understanding its policies is like knitting fog.

“I remember at the first Tory conference in Birmingham when Oliver Letwin announced confidence had been restored in the renewable heat incentive, not sure of the date, probably the 1st  April.”

Like Buchan, Damian Baker, RenEnergy, is disappointed with the government’s move. He said: “The announcement regarding the Renewable Heat Incentive was another embarrassment for the government and another blow to the domestic renewable energy industry. Sadly this news means many renewable energy companies in the UK are in a position where we once again cannot plan, invest and recruit, and many could face making a financial loss due to preparation for the scheme to be launched. It is very disappointing that consumers are once again missing out on the opportunity to save money and lower their energy bills, as well the RHI having no clarity. We at RenEnergy urge the government to launch this incentive as soon as possible. The only upside is that the Renewable Heat Premium Payment will continue to be supported which means that people who invest in these technologies will get a payment of between £300 and £1,250 depending on technology, secondly if you install now you will still be eligible for the RHI payment when it is brought in.”

Harry Shepherd-Cross, Ardenham Energy, feels the government cannot justify its actions regarding the RHI. He said:  “The delays to the RHI in the domestic market are inexcusable. DECC is still caught up with the aftermath of the Feed-in Tariff debacle and its obsession with cost control via an arbitrary ‘budget’, and this is distracting away from the work needed to get the scheme fully operational.

“The government’s ambition to have 1.2 million heat pumps installed by 2020 is a pipedream without the RHI. So far we only have 28,000 so need to install more than five times this cumulative total per annum to hit their target.

“The Renewable Heat Premium Payment is doing next to nothing to stimulate demand. The government’s own customer insight research shows that this has not been a determining factor in people’s decision to proceed.  They need to get on with finalising the scheme, promote it, and end the uncertainty which damages an important new green industry for the UK.”

According to John Lynch, Sentinel Performanace Solutions: “The government’s decision to delay the RHI to 2013 is very disappointing and extremely frustrating for everyone in the industry. The lack of clarity over government rebates for technologies means that customers are unable to calculate any return on investment and are, ultimately, concluding there is a risk that their investment in renewables will not pay off. This has therefore slowed the growth of renewable technology uptake within the market place which is costing the industry. We need the RHI to kick start the renewable industry if we really want to make progress.”

Following the announcement by climate change minister Greg Barker that further investment will be made in RHPP but RHI for domestic properties will be delayed until 2013, Clare Hierons, Climate Energy, said: “The extra investment in the Renewable Heat Premium Payment Scheme go a long way in enabling more households in the UK to benefit from cheaper, cleaner fuel. We also welcome the news that the second phase of RHPP will also help community schemes and more social housing schemes to take advantage of renewable heat.

“However it is disappointing that there’s still uncertainty around the future of RHI for domestic properties. This incentive could help thousands of households in the UK take advantage of renewable heat as well as cutting carbon emissions, but we fear that many people will be put off investing in this technology while they don’t know for sure when they will receive RHI payments.  For the sake of those people still waiting for RHI payments and households that want to invest in clean energy we urge the government to complete the consultation around the future of the RHI as soon as possible.”

Garry Broadbent, ICS Heat Pumps, is not entirely surprised by the announcement: “Well the inevitable has actually happened, the news that we all knew was coming has finally arrived. However, those of us who are long servers and have been in this market for the last four years will raise the same point.

“Looking back to 2009/20110 we saw heat pump sales steadily increasing with what was viewed as an acceptable incentive of £900 for an air source heat pump under the LCBP 1 scheme, everything was moving well until the LCBP scheme was pulled and the new domestic RHI was launched to great acclaim.

“But did we really think it plausible that an average individual household could benefit to the tune of circa £18,000 for installing a different type of heat source whilst potentially still saving a reasonable amount of money on fuel costs at the same time?

“I suspect once we took the rose tinted glasses off, reality dawned and it was clear that subsidising a carbon reduction initiative to the extent of the RHI consultation payment figures was farfetched to say the least, especially in the current economic climate!

“Regardless of all this, what has happened?  For the last two years we have done a great job of launching, publicising and “selling” the RHI to such a level that not only do customers now believe that heat pumps are not feasible without significant subsidies but, guess what, we also have started believing it ourselves!”

Broadbent has some advice:  “Where do we go from here is the question surrounding the industry. PV subsidies have reduced and now we have no RHI so where is the future for renewables ? The answer is very straightforward. Our industry has to become proactive in terms of taking the sales message to the market that correctly applied heat pumps are a fantastic alternative to current and accepted heating systems either working independently or on a bi-valent basis with a conventional heating system.

“In a retrofit environment heat pumps can provide convenience, reduce carbon and reduce fuel costs especially within the off gas market. Secondly within the area of mains gas or the new build market heat pumps provide a very practical and usable alternative to a gas boiler.

“It is time to realise that our industry is sat on a huge opportunity, we have 30M boilers in the UK installed on virtually every property with 1.4M boilers sold and applied every year.

We have a tremendous alternative in heat pumps to offer into this market for the right applications, but importantly this is not dependent on subsidies! This is our opportunity, it is an existing market and it is not a year away it is here now.”

Like Broadbent, Mark Mc Manus, Stiebel Eltron, is not altogether shocked by the RHI news. He commented: “The further delay of the RHI is of course disappointing, but not entirely unexpected. We understand the government’s need to ensure that the scheme it is fully thought through, as we cannot afford another situation like the FiT, where an unforeseen influx in applications meant the payback rate was quickly slashed. There needs to be a measured approach which gives the scheme credibility and long term sustainability.”

Whilst recognising the disappointment to the delay of the RHI, Tony Staniforth, Kingspan Renewables, highlighted some positive: “Despite obvious disappointment at the delay to Phase 2 of the RHI (domestic), the government’s announcement has provided some clarity regarding the timescales of long-term tariff support for the domestic market. What’s vital now is that DECC adheres to these timings – this will make for a robust, long-term policy that works for consumers, government and the industry as of summer 2013.”

Likewise, Adrian Troop, Nu-Heat added: Although it is disappointing that the RHI has been delayed, Nu-Heat is pleased that there has, at last, been an update on the future of the scheme with realistic timescales. As an interim measure, the extension of the Premium Payment scheme, which has proved fairly straightforward to access, gives our customers tangible help towards the cost of renewable equipment and safeguards them against bad practice in system design and installation, all of which are very welcome.”

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