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RHI falls short of real incentive for RAC firms

The long-awaited Renewable Heat Incentive scheme offered good news for the environment, but mostly bad for rac firms reports Andrew Gaved

The launch last month of the Renewable Heat Incentive was greeted with a large collective groan by the cooling sector. The key decision, that the first, non-domestic, phase of the scheme would not include Air Source Heat Pumps, was a bitter disappointment for those who have spent the past two years fighting for the technology to be taken more seriously as a renewable – by planners, by policymakers and by people outside of the sector in general. The decision by the Department of Energy and Climate Change to refer air source heat pumps for further analysis of the costs involved before they could be accepted into the full incentive scheme was a bitter blow.

Many in the sector blame the damning report by the Energy Saving Trust last year, which concluded that air source heat pumps rarely reached their design performance levels,  due to poor installation and over-complicated control systems

DECC said the reason was ‘more work is needed to better understand the costs associated with the technology and, for air to air heat pumps, we have not yet developed a means of measuring direct air heating.’

Sanyo European sales and marketing general manager Bob Cowlard reacted to the news saying: “Air to water is one of the easiest technologies to install and it is bound to restrict market development for the next year. The news that it is the whole air-to-water technology that has been dropped irrespective of product, is disappointing.”

The skeptics are convinced that the real reason DECC has put the ASHPs on hold is that it doesn’t have the budget to support the burgeoning number of models now available.

DECC has undertaken to include the technology when it unveils the second phase alongside its Green Deal in 2012, if the review is successful.

Energy Secretary Chris Huhne also appeared to back the ASHP’s future saying at the RHI’s launch: “I expect heat pump technologies will be the ones that will be key in terms of heating our households.”

DECC has however, ruled ASHPs into the Renewable Heat Premium, a transitional grant designed to pay for installation, which will be available in July. In return for the payments, participants will be asked to provide some feedback on how the equipment works in practice. This information will help better understand how to maximise performance of the various technologies.

The fact that this grant amounts to £850 for air to air heat pumps for instance makes the proposition of installing a split system for room heating look more attractive.

For ground source heat pumps, the short term outlook is even rosier. Ground source heat pumps and the less common water source version, will qualify as long as they can demonstrate a COP of 2.9. GSHPs up to 100 kW will give the owner a 4.3p payment per kWh, or 3p per kWh for larger installations. The one-off installation payment is £1250 per unit.

Mr Huhne said a typical clinic with an energy use of 920,000 kW hour per year could expect to spend £300,000 on a ground source heat pump and would receive a subsidy of around £27,600 per year.

The Incentive payment will be paid to any installation after July 2009 where MCS or equivalent credentials can be proved. Owners will have to apply to Ofgem for the staged RHI payments.

But in a further disappointment, indications that the cooling element of heat pumps would be eligible for the RHI, came to naught.

The other key move is that none of these incentives – including the installation grant -  can be claimed unless both product and installer are registered with MCS or equivalent. It is now hoped that this  will have the effect of imposing a de facto industry standard on both the  equipment and the installation.

 However there is another part of the cooling indusstry which could benefit from the RHI, as the government has ruled cooling from absorption and adsorption chillers as eligible for payments.

DECC said: “Heat used for cooling counts towards the renewables targets under the Renewable Energy Directive and therefore, provided it meets all other eligibility criteria, it will be eligible for RHI support.”

With the tariff likely to be dictated by the initial heat source, and increasing pressure from planning authorities for local generation this is likely to boost trigeneration specification.

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