Government must push ahead with the domestic RHI

on 10 August, 2012

The Government must push ahead with the Renewable Heat Incentive and desist from stop-start policies if it is to achieve its ambitious goals for decarbonisation, while delivering investment returns, employment opportunities and the growth of the renewables industry.

While RHPP phase 2 and its increased funding in such austere times - £18m increase in total across social housing and community projects - are of course welcome developments, the specific details of the scheme simply came too late to maintain the momentum of RHPP phase 1, and the compliance requirements of phase 1 were so onerous that the scheme seriously under-spent its budget.

What should have been a serious boost for industry in terms of greater sales, and for Government in terms of delivering greater renewable heat deployment, greater levels of monitoring and better understanding of the technologies, has become something of a missed opportunity on the road to 600,000 installed heat pumps by 2020.

The next step must be to ensure intensive dialogue between the industry and the DECC and ensure that lessons are learnt from RHPP phase 1 and the current status of RHPP2 in order to make sure that systems are installed in such a way to facilitate learning and pave the way for more effective and consistent support of the renewable heat technology market.

A second matter within the current policy, which has had a seriously negative impact on the market development, is the continued exclusion of commercial scale air to water heat pumps from the RHI. This is really important and another missed opportunity. The commercial renewable heating market is today distorted and develops much slower then everyone would prefer it to develop because other renewable heating technologies are in the RHI, and this one isn’t.

We therefore urge the Government to proceed with the inclusion of air-to-water heat pumps in the commercial RHI to the original timetable of October 2012? This would mean that air-to-water heat pumps can compete fairly with other renewable technologies which are already included in the scheme and may well lower the cost of delivering the RHI.

The third, but surely not the least, the big announcement we are all waiting for, of course, is the domestic Renewable Heat Incentive, now due to launch in 2013.

It was very encouraging to see Government engage with Micropower Council members in such a constructive dialogue to help Government calibrate the residential RHI to achieve all our objectives: renewable heat and decarbonisation for Government; investment returns, employment and growing companies for the industry.

With this sort of constructive engagement, I feel confident the domestic RHI will be effective, both in terms of delivering the Government’s renewable energy targets, while also providing the consumer with a genuinely competitive alternative to existing technologies.

Looking beyond the next two to three years, it is equally important to recognise that planning for a future away from incentives must start. Continued progress on Building Regulations will be key to bringing about a wider shift away from traditional heating solutions towards lower carbon alternatives. We had ambitious plans in this country to use this valuable instrument. Until, that was, we saw the CLG consultation on next year’s Part L – a significant watering down in substance of the zero carbon homes policy, or at least the step changes towards it.

Given the uncertainty in the retrofit sector due to RHI, the Part L consultation has also had a serious impact on confidence in sales of renewable heating technologies into the new build sector – the main sector that should really keep the supply chain up and running ahead of next year’s introduction of the RHI.

But the big challenge, set out by the Government’s own heat strategy consultation, is how we move to mass market decarbonisation of heat. In tackling this, we have the example in 2005 of condensing boilers being regulated into existence. We believe the Government should strive for a similar measure for heat pumps, for implementation at the end of the decade.

Renewable heating in this country has a bright future – that is why we continue to invest in new product development - we will launch the new Daikin Altherma LT split range in the next few weeks and several other fantastic new products to follow shortly. We are also continuing to invest in developing a robust and highly skilled installer and service network and we are proud to say that we have become the first HVAC manufacturer’s hub to join the National Skills Academy for Environmental Technologies.

So yes, the future for renewable heat technology has great potential. We support the government’s ambitious and laudable long term vision for decentralised energy. Industry and Government can, and should, work in partnership to unlock this potential and secure the future of renewable technologies for generations yet to come.

Peter Verkempynck is managing director at Daikin UK.

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