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The best incentive

Now’s the sort of time when gazes are set towards this year’s promises. In terms of UK clean energy policies that affect people at home, one of the major items of interest for 2013 has to the domestic branch of the Renewable Heat Incentive (RHI).

The non-domestic version opened in November 2011. But domestic technologies are our thing, and indeed we handle the voucher scheme for the precursor to domestic RHI, the Renewable Heat Premium Payment (RHPP) scheme. It’s fair to say it was a useful learning experience, and with a consultation on the proposals for RHI having recently closed, we sent DECC our thoughts.

Firstly, it probably goes without saying, but we strongly support the introduction of a universally available tariff scheme. With rising bills and worries about energy security, there needs to be a major transformation in the way we heat our homes, and that’s without considering the Government’s own aspiration for a third of the UK’s 15 per cent renewable energy target from heating systems, and for achieving practically zero carbon heating in homes by 2050. So what will the domestic RHI look like?  Based on the Government consultation (so should not be considered the final word) ground source heat pumps, air source heat pumps, biomass boilers and solar hot water systems will all be eligible for the RHI. 

Both the products and the installer will have to be certified under the Microgeneration Certification Scheme (MCS) and there will also be an energy efficiency requirement to ensure that the property’s heat demand is reduced as much as possible. In terms of the amount of money you receive through the RHI then this will depend on two things. 

Firstly, each technology will have its own tariff (p/kWh) and secondly the total renewable heat demand will be based on a deemed (assumed) figure for the year based on property type. Multiplying this deemed figure by the technology’s tariff rate will calculate your annual payments.  These payments will be paid to you quarterly by the energy regulator Ofgem.   Anyone who installed since 15 July 2009 and who meet the eligibility criteria will also be eligible for the RHI. However, as it currently stands there is a risk that some of the ‘early adopters’ may not meet the eligibility criteria, in particular the requirement to meet “current MCS standards” as some of the MCS standards have changed since 15 July 2009.

In addition, early adopters may have to pay back any grants they have received in order to get the full RHI. We don’t think that these people should be missing out, even if they had the support of previous finance schemes and the MCS standards when they installed weren’t up to today’s. They installed in good faith, and should be able to have their investment supported like everyone else. The issue of whether RHI should be available for landlords is up for debate. We think it should be (that’s both private and social) but we recognise an issue here in terms of ensuring the incentive is fair for both landlord and tenant.  The issue mainly centres on biomass, where fuel costs would have to be met by the tenant.

We propose that tenants should not lose out and if considering biomass, the tenant should also receive part of the RHI. Energy efficiency is always vital when installing microgeneration technologies, but we don’t think people taking up RHI should necessarily be forced to take up Green Deal offers to do it. There should be a flexible way of making sure home energy efficiency is as high as possible before installation. Metering is another of the great debates here. We agree that blanket installation of meters would be too complex and costly, so we support deemed figures – with caveats. 

We believe a solid representative sample – around 10 per cent - should be monitored to benchmark the deeming and improve the methodology if necessary. Heat pumps have great potential, but as our field trial showed, they can be a tricky technology to get top performance out of in the home. It’s about getting the sizing right, but it’s also about behaviour and how they’re used. Higher tariffs for better performing heat pumps with performance guarantees for consumers, along with incentives for installers may contribute towards ensuring they operate as efficiently as possible.

And everything of course comes down to that question of trust once again. Consumers need to be protected from installers giving exaggerated claims about income and savings, and there simply needs to be greater awareness of the scheme, backed up by in-depth advice when it’s needed so consumers can make informed decisions. We recommend greater tightening of consumer protection in areas such as mis-selling, the provision of more in-depth consumer advice, wider marketing and better consistency of data. We need to make sure consumers get a fair deal, and this requires RHI to be as simple and straightforward as possible.

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I am a consumenr of electricity only(no gas, no oil, nothing else but electricity) in my end terrace property. We have a newly installed Air Source Heat Pump, but it is proving to be expensive to run. Does the government provide any compensation for the consumer, please? Or are the government incentives for the installer only? This is urgent and I would apprecaite a response asap, please.


We would recommend contacting the Energy Saving Advice Service on 0300 123 1234 (cost of a national rate call) - alternatively you can send them an email. They will be able to provide independent, expert advice that is bespoke to your needs.

We hope this helps.

EST Team