Last updated: 17 July 2013

Last week’s announcement from the Department of Energy & Climate Change (DECC), confirming tariff levels for the domestic Renewable Heat Incentive (RHI), has been largely welcomed by industry.

The tariff levels have been set at 7.3p/kWh for air source heat pumps, 12.2p/kWh for biomass boilers, 18.8p/kWh for ground source heat pumps and at least 19.2 p/kWh for solar thermal.

Energy & Climate Change minister Greg Barker said the announcement sent a clear signal to industry that the Coalition is "110% committed to boosting and sustaining growth in this sector", and stressed that government remains committed to opening the scheme for applications in Spring 2014.

“This marks a major milestone in achieving our renewable heat goals,” he said. ““Householders can now invest in a range of exciting heating technologies knowing how much the tariff will be for different renewable heat technologies, and benefit from the clean green heat produced.”

Industry response

Heating manufacturer NIBE has hailed this as the green light for market growth and a vital step towards securing a more sustainable heating landscape nationwide.

“Today’s news is just what the industry has been waiting for,” said Phil Hurley, managing director at NIBE. “After numerous delays and uncertainty surrounding the scheme, DECC’s announcement has been a welcome injection of confidence, providing clarity that secure, long-term tariff support will be made available to the domestic renewable heating technology mix.

“We’re also particularly encouraged to see the significant uplift in tariff levels for GSHPs, as well as confirmation that eligible technologies installed since the scheme was announced in mid-2009 will also have access to incentives.

“Now that RHI tariffs are set, the industry has the tools it needs to go forth and educate the masses about the long-term financial benefits of switching to renewable heat. This means installers can advise customers with confidence, which in turn will help stimulate uptake of renewables and ensure they can compete with conventional heating systems on the necessary widespread scale.”

Paul Hicks, sustainability and design manager at VELUX, said the company was encouraged by the Minister’s new RHI, and households that lead the way by implementing energy-efficient and renewable technologies should be rewarded.

“By utilising efficient and renewable technology, homeowners will alleviate the amount of energy taken from the grid, thus making a vital contribution to the government’s CO2 reduction strategy. Households need to see that by adopting such measures, they can make significant steps towards cutting the country’s carbon emissions and reducing bills in the process.”

Jonathan Tedstone, product manager at Baxi, said the much-anticipated launch marks a step forward for UK renewable heating, and will likely incentivise householders who may have considered installing renewable energy technology, but not made the leap.

“For installers, the launch of the domestic RHI means a growing need to embrace Green Deal assessments. In addition, installers should take steps to undertake adequate training on renewable products, in addition to credentials such as MCS accreditation, to take advantage of what we hope to be a spike in installations in the next 24 months.”

Tim Pollard, head of sustainability at Plumb Center, believes the domestic RHI has been a long time coming, and that the new tariffs are a big step in the right direction. “The link between the RHI and the Green Deal is exciting. There’s no point fitting renewables (or any heating system) in homes that are poorly insulated because the heat will just escape out of the walls or the ceiling, so I’m happy a Green Deal assessment and minimum insulation requirements are needed.

“People can also combine the Green Deal with the RHI, so it’s possible to get Green Deal finance to buy a ground source heat pump and claim the tariff money for the energy you produce. This makes renewables more affordable than ever,” he said.

John Kellett, general manager of Mitsubishi Electric’s Ecodan range of air source heat pumps, similarly welcomed the connection between the RHI tariffs and the Green Deal.

He said: “In particular, we are encouraged by the links with the Green Deal, which will ensure that renewable technologies are only installed in properties that have been thermally improved to ensure that any renewable heat generated is not wasted.

"Ecodan units are already proven in their ability to reduce running costs and CO2 emissions throughout the UK…We fully expect greater interest now, particularly in off-gas areas where Ecodan compares so favourably with oil, LPG and direct-electric heating."

Mr Kellett added: "We should now see a transformation in the use of renewable heat in this country and welcome the certainty that this will brings to the domestic sector.”

The Micropower Council's chief executive Dave Sowden commended the inclusiveness of the scheme, saying: "We are encouraged by the government's decision to make the scheme as accessible as possible, with social and private landlords and self-build homes all allowed to apply for the domestic scheme, as well as homeowners."

However, Darren McMahon, marketing manager at Viessmann, said: “The tariffs are a mixed bag when it comes to the attractiveness of the different technologies and the outright winner has to be ground source heat pumps.

“Unfortunately, we can’t see biomass faring as well under the scheme. Unless the end user has access to free fuel/pellets, a tariff of just 12.2p/kWh (that’s 6.6 p/kWh less than ground source heat pumps) is unlikely to make biomass boilers a cost-effective investment, especially as the initial investment level is higher than for ground source heat pumps.”

Mr McMahon added: “The announcement is certainly good news for solar thermal sales. Eclipsed by the success of solar PV in previous years, the boost to at least 19.2 p/kWh will see payback brought forward to around 10 years. Combined with future fuel savings, this makes the technology extremely viable and we’re extremely pleased that DECC will make this increase, as we’re convinced that solar thermal should play a big role in reducing energy demand and carbon production."

Meanwhile, HETAS chief executive Bruce Allen said that although the company is "delighted" by the announcement of the tariffs and the 2014 target date, it would "really like to see a firm date set for when the scheme will start".

Kensa's managing director, and chairman of the Ground Source Heat Pump Association, Simon Lomax concluded: "The domestic RHI announcement is three and a half years after the initial consultation, and is disappointingly short on detail."

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