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Renewable heat incentive 'will be as big a flop as the green deal'

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Renewable heat incentive 'will be as big a flop as the green deal'

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Published by Jon Land for 24dash.com in Central Government and also in Environment, Housing

Renewable heat incentive 'will be as big a flop as the green deal' Renewable heat incentive 'will be as big a flop as the green deal'

The government’s domestic renewable heat incentive scheme is likely to be as big a flop as the green deal, heating industry experts warend today.

The new £1.8 billion RHI grant scheme is designed to reduce the country’s CO2 emissions by encouraging homeowners, social housing providers and private landlords in England to switch to renewable heating systems, but it has been branded "costly and impractical" by OFTEC (the Oil Firing Technical Association) and is unlikely to attract mass support.

Figures from the Energy Saving Trust back up estimates from OFTEC that show households face upfront costs of between £7,000 and £19,000 to install renewable heating systems, depending on the size of the property and the technology used.

With 1.1 million homes using oil for heating, OFTEC believes the initial cost of installing renewable technologies is still likely to be prohibitive for the majority, and will not be economically viable for the social housing industry. Therefore, the long anticipated domestic RHI scheme may not provide the boost to renewables the housing industry has been waiting for.

OFTEC says claims made by Greg Barker, minister for energy, that through installing renewables under RHI people will have “warmer homes and cheaper fuel bills”, are doubtful and any cost savings made are unlikely to justify the capital expenditure when the RHI will only pay subsidies for seven years. These incentive levels are also set to decline over time.

OFTEC calculates that during the first seven years of installation (period of RHI payments) a typical three-bedroom household taking out a loan to install an air source heat pump would be £3,473 worse off than if they simply upgraded to a high efficiency boiler. For commercially let or social housing sites, these costs would be multiplied substantially.

Furthermore, OFTEC adds, as heat pumps require large amounts of electricity to heat a home efficiently, it is also unlikely these technologies will meet the government’s required CO2 savings while the UK’s electricity supply remains carbon rich.

OFTEC says the impracticability of installing heat pumps will be a further deterrent. To work effectively they require, larger ‘low temperature’ radiators to be fitted and/or under-floor heating installed – both of which are expensive and difficult to retrofit in the majority of properties targeted by the domestic RHI.

Jeremy Hawksley, director general of OFTEC, said: “Whilst we support the need to reduce CO2 emissions from heating and recognise the potential of an RHI policy, the current scheme is highly unlikely to benefit the majority of rural properties due to the high upfront costs involved.

"Therefore, we believe the government is still not adequately tackling this issue and the industry will not be much better off under RHI than it has been with green deal, with the installation costs being especially prohibitive to the social housing industry.

“A more pragmatic approach OFTEC proposes is the re-introduction of the successful boiler scrappage scheme which ran in 2010 to encourage the replacement of old, inefficient boilers with modern condensing boilers. Upgrading to a modern boiler can save up to 20% on fuel costs and an equal reduction in CO2 emissions. The scheme saw nearly 120,000 boilers replaced and would be a more realistic first step for the majority of properties.”

Mr Hawksley concludes: “The domestic RHI needs to be re-designed to focus on a phased approach to decarbonising home heating to sufficiently spark consumer interest in tackling this important issue. Only a more affordable approach will get widespread public support and ensure that we successfully reduce the UK’s carbon footprint.”

But David Lacey, commercial director for heating and renewables at Daikin UK, said the RHI would provide a "massive boost" to the renewable energy market.

He said: “The introduction of the eagerly-awaited domestic RHI should give the industry a massive boost. It will provide financial help to households wishing to make the switch to renewable heating and is a really important step in providing a secure UK energy infrastructure and in reducing carbon emissions.

“As well as new systems, the scheme will be open to eligible installations commissioned since 15th July 2009. It’s worth remembering, however, that domestic RHI funding is only available for Microgeneration Certification Scheme (MCS) accredited products which have been installed by an MCS accredited installer.”

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