Changes to RHI payments greeted with scepticism
The Heat Pump Association (HPA) has expressed scepticism about funding changes for the non-domestic Renewable Heat Incentive. About the middle of June, the DECC announced an upper limit of £70 million for 2012/2013 and a reduction in the notice period for the scheme to be suspended shortened from a month at 80% threshold to a week at 97% threshold. ‘Bizarrely,’ says a comment from HPA, ‘it probably means very little in practice as all, including DECC itself (!), suspect a massive RHI underspend under-spend for 2012/13.’
The statement continues: ‘Hence reducing the funding from £108 million to £70 million and the notice period for the scheme suspension is like to have little effect than to further reduce confidence in the reliability of these incentives.’
The HPA expresses ‘serious concern’ about the message conveyed by the DECC announcement, especially coming only a few weeks after a previous interim cost-control announcement following industry consultation.
‘Finding a positive angle, these measures are to ensure that the funding for 2013/14 is protected, which presumably means that DECC is at least expecting a much more significant overall uptake when additional renewable technologies such as air-source heat pumps are added to the scheme later in 2013.’
One reason for the underspend comes from David Parsons, head of training and assessment with Kiwa GASTEC. He remarks on the ‘disappointing quarterly review from Ofgem confirming that only 20 out of 376 applications for RHI had been accredited and registered by the end of March. He remarks, ‘Unfortunately, Ofgem’s first quarterly report suggests that 95% of applications were returned due to significant flaws. Ofgem suggest that metering the amount of heat generated by eligible technologies had been a major stumbling block for applicants.’
Ofgem reports that 5.25 MW of total capacity was accredited to the RHI from the end of November 2011 to the end of March 2013, of which 2.8 MW was preliminary. During the period, total RHI payments of £9707 were made. The report remarks, ‘The number of enquiries and applications being received are increasing on an accelerating basis.’
Solid biomass boilers dominate the installed capacity of renewable heat — at 98%. Ground-source heat pumps are 1.5% and water source 0.5%. However, heat pumps make up 20% of accredited installations — implying they are much smaller than biomass.