Tariff levels have also been confirmed to the domestic RHI, due to launch in the spring. For full details of the changes to both strands of the scheme click here.
Dave Sowden, Micropower Council chief executive, said: “This is a welcome step forward, and our early analysis suggests that there is sufficient funding for substantial growth in the market over the next two years. The inclusion of air to water heat pumps in the non-domestic scheme is particularly welcome, and something we have campaigned for over the past two years and puts this technology on a fair footing with other renewable technologies.
“There is much detail to digest, and in particular it looks likely that the domestic air source heat pump market will hit its degression trigger in the first year, but overall this is very positive news for the industry.”
REA chief executive, Dr Nina Skorupska, said: “We welcome these improvements to the world’s first Renewable Heat Incentive. Although the scheme has under-performed in its first two years, the government deserves credit for listening to industry’s concerns and implementing many of the necessary changes.
“Mixed messages from government have unnerved many in the renewables sector lately, so today’s RHI announcement gives a timely boost to the green economy. There is still room for improvement, but what the RHI needs most now is to be left alone for a while, so the market can develop without fear of further changes.”
Phil Hurley, NIBE managing director, said: “As a manufacturer supplying both the domestic and commercial markets, here at NIBE we welcome today’s RHI announcement. The decision to include air source heat pumps (ASHPs) in the non-domestic scheme represents long-awaited recognition of the unique benefits of this technology, and marks a much-needed step forward in the movement to cut emissions in the commercial sector.
“We are also pleased to see an increase in the non-domestic tariff for ground source heat pumps (GSHPs). Whilst these have not reached the level suggested in the original consultation, increasing tier 1 payments to 8.7p/kWh will undoubtedly provide an important market boost. Heat pumps continue deliver high-performance results in commercial applications across the UK, and we look forward to seeing even more see positive results as the updated scheme rolls out.”
John Felgate, head of technical at heat pump manufacturer Stiebel Eltron UK, said: “This announcement is good news for manufacturers and installers alike – there has been much lobbying to include Air/Water source heat pumps as part of the commercial RHI and the industry will be happy that DECC has listened to our advice.
“The tariff itself of 2.5p is pitched very well to give businesses the right kind of return that they need.
“Up to now only ground source heat pumps have been incentivised and we have certainly seen an increase in take-up – we hope to see a similar rise in demand for Air/Water heat pumps now that consumer confidence will grow and a return on investment is guaranteed.
“At Stiebel Eltron UK we have continually called for stronger support from the government and this is another step forward to assist the renewable energy sector. We are also currently lobbying to get DHW heat pumps for commercial projects listed on the Enhanced Capital Allowance (ECA) Scheme, as this will be a further incentive for businesses to go green.”
Peter Verkempynck, managing director at Daikin UK, said: “By recognising air-to-water heat pumps as a viable alternative to fossil fuel systems, this helps ensure parity with other renewable technologies and gives commercial building owners a full range of options to reduce their running costs.”
Kensa‘s commercial director, Chris Davis, said: “The ground source heat pump industry is in a better place, with more certainty, than it was last week – it just could’ve been so much better.
“The rise in tariffs is a good thing and the certainty it brings will help the industry move forward. But we are disappointed that the final tariffs are at the lower end of what was suggested in the consultation. To make the industry really fly and address the inbalance that has skewed the market in the past two years, the tariffs need to be at the top end of what was initially proposed.”
Clare Campbell, product marketing manager at Dimplex Renewables, said: “We welcome DECC’s announcement that air to water heat pumps are to be included in the non-domestic RHI following a period of consultation with the industry.
“The non-domestic scheme has suffered from the glaring omission of air source heat pumps since it was first introduced in 2011. It was a bewildering omission of a proven technology which is well suited to commercial retrofit projects, particularly in off-gas areas in place of oil or LPG.
“DECC has listened to the industry and this announcement, together with improved tariffs for other technologies including solar thermal and ground source heat pumps, is fantastic news for both installers and commercial organisations looking to take advantage of renewable heating technology.”