It would be fair to say that the recent announcement that the full Renewable Heat Incentive is to be put back until summer 2013, did not receive a rapturous applause from the renewables industry. Hidden amid the Heat Strategy and up against the news that the Renewable Heat Premium Payment was to have a second phase, how is the industry viewing the delay? Lu Rahman reports
When the £860 Renewable Heat Incentive (RHI) opened in November 2011, its aim was to make the installation of heat pumps, biomass boilers and solar thermal systems, financially appealing. Companies such as Windhager UK report a significant upsurge in enquiries and orders for wood pellet appliances within the non-domestic sector since the Phase 1 of the scheme launched and the company sees it as being a significant factor to increased business.
There have however, been suspicions amongst the renewable heat world that the scheme would not be going ahead as planned. However, for many, the confirmation was a bitter pill to swallow, increasing the general uncertainty the industry has been experiencing of late, arguably created by the myriad of events surrounding the Feed-in Tariff. The Department of Energy and Climate Change (DECC) has also launched a consultation on interim cost control for the RHI, giving the government the power to suspend the scheme if it looks like it will exceed the annual budget.
Disappointment does seem to prevail. Stuart Elmes, chair of the STA’s Solar Thermal Working Group, says: “While we were expecting some delays to the RHI, a whole year is very disappointing for our solar thermal members. DECC has put a lot more energy into supporting renewable electricity than renewable heat – but heat is half the problem if we are to meet our carbon targets. This unbalanced approach represents a missed opportunity.
“Solar heating manufacturers, suppliers and installers in the UK stand ready to deliver with the right support structure. We call on DECC to accelerate the timeline for RHI2 and unleash the potential of solar heating.”
Commenting on the announcement, Windhager UK managing director, Oliver Duckworth, said, “The industry has been waiting with baited breath for clarification and further information of the proposed RHI phase 2 (domestic) scheme. The industry recently has been awash with rumours that the government were to once again delay the launch beyond the proposed date of October 2012. It was therefore of no surprise that the recent announcement from DECC at the end of March confirmed industry fears that the scheme now would not be consulted upon until September 2012 with the proposal to eventually launch the scheme by summer 2013.
“Despite DECC’s assurances that the domestic RHI scheme will be launched in 2013, this further delay will continue to delay the uptake of renewable heating in the domestic sector and prevent any short term growth in this important market; consumer confidence in the scheme is severely dented and concrete assurances are required to convince customers who are planning to invest in renewable heating systems.”
Neil Schofield, head of government and external affairs, Worcester, Bosch Group, believes the delay to this second phase of the RHI is eroding confidence in the government’s commitment to renewable technologies. He says: “The latest delay to the RHI is a disappointing but ultimately familiar story for the industry. The latest announcement from DECC suggests that the scheme is unlikely to come into play until the middle of next year, which is hugely disappointing given that it was originally scheduled for mid-2011. All momentum is being lost by this succession of delays.
He continues: “Whilst the Premium Payment scheme has also been extended as a result, the big problem here is that the Premium Payment concept remains too hard for the installer to sell to a potential customer. How can an installer be expected to sell renewables when they don’t know when the incentive will come into play, how long it will last for, or even how much funding will be on offer? My understanding is that fewer than 50 Premium Payments have been applied for in all of London.
“With the exception of solar thermal, the scheme is focused on those in off-mains gas areas, which already excludes some 90 per cent of the UK’s installer base. In order to encourage mass uptake, the initiative has to be opened up to act as the game-changer it was originally intended to be.
“Whilst it comes as no great surprise to see the incentive delayed even further, UK installers are continuing to suffer as a result of this prolonged uncertainty. I would urge DECC to act sooner rather than later in bringing some clarity to an industry which is nowhere near reaching its full potential.”
Bruce Allen, chief executive of HETAS, agrees that the situation is far from satisfactory. He says: “The delay in implementing the RHI for domestic applications is frustrating for everyone in the industry. There are many installers and manufacturers who have already invested in training and product development in anticipation of the RHI. Whilst we support the government in developing a viable RHI, the uncertainty is undoubtedly making it difficult for businesses to plan ahead and make decisions for the future.
‘It is however encouraging that there remains interim support for renewable technologies through Renewable Heat Premium Payments.
‘We recognise the need for cost control if we are to have a viable RHI, and HETAS supports the government through schemes to promote sustainability such as quality assured fuels, approved installers and products.”
As for the RHPP, Simon Allan, renewables director, Plumb Center, welcomes its extension, seeing this as an encouraging move for the sector. “I would however, have liked to see the government take RHPP further by increasing the financial tariff for each technology. Under the current scheme many homeowners requested vouchers but only a fraction more than 50 per cent redeemed them. This is definitely a missed opportunity, so incentive schemes must work harder to help independent installers, which are already investing in training, to win more work,” says Allan, adding that the lack of clarity over domestic RHI could lead to homeowners putting off the decision to adopt renewables and RHPP at current levels might not be enough of an inducement.
Stuart Elmes, STA, also sees a flaw in the RHPP. He says: “The previous incarnation of the RHPP was hopelessly undersubscribed. We are not convinced that this ‘bigger and better’ RHPP will be sufficient to spark increased uptake of solar heating technologies.”
Duckworth, Windhager adds: “On the positive side the announcement that the RHPP, which was due to close on 31 March 2012, is to be extended with £25 million being set aside, is larger than the original sum allocated for this scheme. The RHPP rate for the installation of a biomass boiler is £950 per household. Of the £25 million, £8 million will be set aside for communities and community groups wishing to install renewable heating and there is also £10 million being made available for social landlords.
It appears the industry does see flaws in the implementation of the RHI and whilst there is general positivity regarding the RHPP, there is still concern about its uptake. One thing is certain, it’s now up to the industry to work towards the advent of the scheme to ensure everything is in place when it does finally arrive.