Calls to replace RHI “vastly premature”

UK: The Heat Pump Association has hit back at recent OFTEC calls for the RHI scheme to be removed, describing them as “vastly premature”.

While admitting that the Renewable Heat Incentive (RHI) had not been the roaring success for a spread of renewable heat technologies that had been hoped for, the HPA suggests it requires adjustment rather than wholesale replacement.

“Calls for the RHI scheme to be removed and replaced by some unspecified alternative, as recently proposed by OFTEC, are vastly premature,” the Heat Pump Association (HPA) told the Cooling Post.

“There should be no talk of  rejecting it at least until a robust replacement is in place, and to date, no credible, well thought through alternative has been suggested,” it says.

Quoting Department of Energy and Climate Change figures, OFTEC and its director general Jeremy Hawksley last month claimed that the RHI was achieving less than 10% of its target with just 11,149 new renewable installations completed since the RHI launched in April 2014. OFTEC maintained that around 10,800 installations would be needed every month to reach the government’s goal of 750,000 installations by 2020. (RHI achieving less than 10% of target – May 20)

Claiming that the RHI simply wasn’t working, OFTEC blamed the high upfront costs of installing renewable technologies, public perceptions of the importance of tackling climate change and suggested that the government was using the wrong vehicle to encourage people to cut CO2 emissions.

Misunderstandings

In response, the HPA has accused OFTEC of some key misunderstandings of the RHI scheme, claiming that it was not specifically targeting carbon reduction but rather a precise EU commitment to deliver a proportion of our energy consumption from renewable sources including heat.

“It is wrong to focus on the number of installations,” it says. “The key issue is how much renewable heat is generated, not numbers of installations, and in terms of our EU obligations the secondary question is how much greenhouse gas (inc CO2) emission reduction does this provide.”

OFTEC called for a scheme which also encompass what it sees as more affordable measures such as boiler scrappage scheme to incentivise the switch to high efficiency condensing boilers. In response, the HPA says “Scrappage schemes often only encourage us to do the bad things slightly better. In the past they have proved to most often only distort the market and encourage early replacement of equipment that itself has embodied GHG emissions in the production of the replacements.”

The HPA voiced concerns that this would be attractive as it was the lowest investment for a small gain but that it does nothing to invest in a longer term low carbon infrastructure.

High upfront costs

The association is in agreement with OFTEC over the high upfront cost as a key barrier to the wider adoption of the RHI. “This is evidenced by the RHPP scheme which although in the main giving a much smaller amount of money than RHI, it was on completion of the installation, when expenditure is at its greatest and resources stretched and proved popular. By comparing RHPP and RHI it is clear that upfront smaller payments attract a very different size of installation,” it says.

“The RHI in its current format has been more attractive to those with some financial resources and/or those who feel unlikely to move in the medium term as any new occupiers/owners would benefit from the scheme and not the original investor,” admits the HPA.

For that reason it is pushing for improvements to the scheme to include changes to the upfront grant payment and the Green Deal calculations, should it survive.

Specifically, the HPA says there should be an option to take a smaller upfront grant payment like RHPP and its many forerunners, either as an alternative option altogether or repayable over the life of a an RHI accreditation.

It also maintains that if the Green Deal is to survive the government should re-appraise how much of the income from RHI should be allowed to be included within the GD calculation.

“Of course, for this to work there must be an ability for assignment of rights to the payment and hence the third party funding mechanism agreed,” says the HPA.

“If the GD does not survive, which many suspect, the issue of upfront cost and legacy benefit will need to be tackled another way.”

The HPA also calls for a reduction in the burden placed upon manufacturers and installers of heat pumps in terms of demonstrating design and performance of plant and systems that no other technology whether renewable or fossil fuel based have to demonstrate

“Heating technologies must be very careful they do not allow agenda’s that promote just their technology cloud their judgement,” says the HPA. “All balanced commentators accept there is no one single solution, but most seem to agree we cannot rely on compulsion only and that incentives are required to encourage the low carbon economy.”