The Renewable Heat Incentive is working alone

  • Building Design Expert
  • 5 years ago

Much has been trumpeted about the imminently launching ‘Green Deal’. That’s the one that allows you the luxury of active and passive green technology in your home, reducing your energy bills with the savings going back to the energy provider to pay for the installation. There, that’s a good deal isn’t it? Not sure? No neither am I.

Quietly slipping under the bar has been the ‘Renewable Heat Incentive’. If you are familiar with the ‘feed-in-tarrif’ (FiT)  which applied specifically to the installation of solar PV panels, then this is a very straight forward follow on taking into account other renewable technologies such as Biomass boilers and Heat Pumps. It works by paying a fixed amount per kWh to the property owner.

Up until March 2012 phase one of the RHI was made available to both domestic and commercial energy users, but the domestic consumer was then sidelined, with the promise that a phase 2 would be launched alongside the Green Deal on 1 October. This was of course a governmental promise with a full binocular guarantee, for which the lenses have misted over and we are still waiting, with little threat on the horizon let alone a sign of a head above a parapet.

The good news is that the commercial world carries on. Business users and building owners continue to benefit from the system that provides a net financial gain. So what’s the catch? Unlike the Green Deal the consumer must provide the capital investment that facilitates the installation. The incentive to do this is that the net financial gain as a result of the RHI accelerates the pay back on the cap-ex. So take a look at the balance sheet and businesses are actually making money in comparison to their prior expenditure on energy. Any one who runs a business will further appreciate that cutting edge accounting can minimise the impact further still, such that it all stacks up quite favourably.

So what’s wrong with that? The RHI pays out on active technology only. Install a biomass boiler, a PV array, solar thermal panel(s), or a heat pump in the right combination and the benefits we have already highlighted. In order to maximise the benefit of such an installation the next move would be to retro-fit insulation to the walls, roof and ground bearing or exposed floor(s). That would reduce energy consumption further, but the legislators didn’t count all their tools when they finished the operation, and there remains a large spanner inside this machine that stops these cogs from turning.

Installation of high levels of insulation on a new build basis is relatively straight forward, as you can design it, and factor it in to the project costs. Not so with a retro-fit programme; the costs of which will inevitably vary, but will almost certainly hit the ‘significant’ meter level. Building owners are understandably voting with their feet on increasing their capital expenditure, and the possibility of their pay back period further still.

So we have an incentive system that most definitely works, but in terms of energy savings doesn’t go nearly as far as it could. It could work theoretically alongside the Green Deal, but we have yet to see how GD and RHI will interact – A space demanding to be watched. Meanwhile the Renewable Heat Incentive is working alone.