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Do RHIs mean good news?

Is there any good news from the RHI announcement for the RAC and heat pump industry?

Karl Drage, operations director, Geothermal International

“The announcement of the Renewable Heat incentive has been long awaited, and to that end probably overdue.  It is too early at this stage to note the effect that it will have on the market.

The stated intention is to return 12 per cent on capital employed.  Even if the calculations fall short somewhat, I am sure that a 12 per cent ROI will incentivise many to install systems who otherwise would not have.  So, on this basis, there is good news in the RHI announcement for the heat pump industry.

The Government has some stiff targets to achieve for 2020, and the RHI is part of its approach to deliver these.  If the change in the market is not effective, then there will be a good argument to increase or take further steps.

The domestic tariffs have not been announced yet, and we still eagerly await the level of stimulus that will be applied to the wanting retrofit domestic market; perhaps the area of the industry where the tariff could have the biggest effect. 

The Government have stated that setting the tariff levels is challenging and they want to get them right.  Let’s hope they do.

The scheme recognises installations since mid 2009.  This is good. Installations must be installed by MCS qualified installers.  Again this is positive for the industry.”

Mike Nankivell, Space Air

“Space Air’s initial reaction to the announcement on the RHI was one of cautious welcome and some disappointment. The RHI Consultation originally issued under the previous government left the industry in no doubt that air source heat pumps had an important role to play in achieving efficiency improvements and carbon emission reduction targets.

The clear understanding was that domestic applications would be the prioritised to stimulate growth in the market penetration of renewables.

While it might have been expected that the new government would introduce revisions to the original proposals, to leave this so late in the day and then to make an announcement that appears to reverse the priority and introduce levels of uncertainty regarding the eligibility of air source heat pumps and still to be clarified RHI tariffs, could we believe stifle growth - certainly in the short term.

The proposed £850 premium payment for air source heat pumps is fine in principle, but in reality if the total fund is only £15 million across all technologies, the number of projects benefiting will be inconsequential.

It is unlikely that the premium payment will act as an incentive if the RHI tariffs cannot be confirmed soon.

Whilst we understand the arguments regarding heating and cooling and air to air systems, there is no reason to not include air to water, heating only systems from the outset. Many are easy to monitor and have all the necessary accreditations.”

Jodi Willis, sustainability director, MTT/Sustain

From a commercial viewpoint the Phase 1 proposals seem of little impact or benefit since the technologies are those that are rarely seen in practice. Biomass is less favourable with planning, solar thermal has little contribution in many commercial applications, whilst ground source remains technically and commercially challenging.

As is the case in every discussion on renewables we would always question the exclusion of air source as a qualifying technology when ground and water are deemed acceptable.

The residential Phase 1 proposals are seen as a sensible approach and include all the technologies that we would use in best practice design. We wouldquestion whether the initial Premium Payment approach will provide sufficient incentive to steer homeowners away from the more conventional and cheaper, gas fired boilers, however our experience is that in order to meet the new Part L 2010 Building Regulations requirements the inclusion of air source heating and other qualifying technologies is one of the ‘silver bullet’ items within SAP 2009.

Once the full RHI system is implemented along with the Green Deal in 2012 we feel that the residential sector in particular will take off, even more so than it currently is.

In summary the proposals are welcomed, however there is disappointment concerning the exclusion of air source heating technologies that we have previouslyseen as a significant contributor to carbon emissions reductions.”

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