There are fears of further stagnation and decline within the UK renewable heating industry as a result of the recent decision by the Department of Energy and Climate Change (DECC) to delay the domestic phase of the Renewable Heat Incentive (RHI) for a second time.
“Given DECC secured a £864m budget, it is difficult to accept the repeated delays which mean the domestic scheme will only run for a maximum of a year before the next election and more uncertainty” said Simon Lomax, Managing Director of Kensa Engineering, one of the UK’s largest suppliers of ground source heat pumps. “Most of the money will be left unspent which may please the Treasury but will have a devastating impact on renewable heating businesses, many of whom have believed previous DECC pronouncements and invested heavily in readiness for the RHI. The Coalition originally said it would launch in Spring 2011.”
Mr Lomax spoke out in Westminster after having given evidence to the all-party Commons Select Committee on Energy and Climate Change. He added that the committee had appeared concerned that progress towards the legally-binding 2020 renewable heat targets was being compromised by a shambolic RHI policy. Even the first phase of the RHI, covering business premises, is struggling with deployment levels well below target. There is a particular absence of ground source heat pumps because the tariffs are set too low although DECC has acknowledge that tariffs have to increase in order to prevent market distortion. However the result of woefully slow progress is job losses and company failures.
Statistics compiled by BSRIA reveal that sales of ground source heat pumps have fallen by over 40 percent since hitting a peak in 2009.
“Given the 4th Carbon Budget projects 600,000 heat pump installations by 2020, and a far greater roll-out in the following decade, it is hard to understand why DECC appears hell-bent on destroying a once healthy supply chain” Mr Lomax continued. “There is an emerging likelihood that installations will not be performed in accordance with the Microgeneration Certification Scheme (MCS) because the potential carrot – eligibility to the RHI – is not seen as worthwhile. The heat pump industry has devoted an enormous amount of time to strengthen the MCS installation standard yet many plumbers will see little point in complying; they will simply offer lower cost, lower quality alternatives. This is a worrying development but one that is entirely understandable and predictable.”
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