How can homeowners benefit?
The Renewable Heat Premium Payment (RHPP) scheme has been extended for private householders (with the premium payments available being doubled from May 2013) and two more rounds have been added to the RHPP scheme for social landlords. Both these extensions were absolutely necessary to prevent the domestic renewable heating market from grinding to a halt (prior to the introduction of the domestic RHI). It is intended that private properties receiving RHPP vouchers would still be eligible for the RHI (albeit at a proportionally lower rate). Therefore there is less reason for the market to delay until the scheme launches.
I say less reason rather than no reason simply because, until the final tariffs are published in the summer, there is still a huge question mark over the financial returns to householders. Both the tariff levels and durations suggested during the domestic consultation were much lower than we would like to see announced in the summer, and with this in mind many home-owners won’t be willing to put their hard earned pennies into it until the final pieces of the jigsaw fall into place.
What about the social housing sector?
In the social housing market, the levels of grant support are much higher per system than for private householders (see table) but there is greater uncertainty over the eligibility of systems for the RHI tariffs when they arrive. The government has said that they “are considering whether social landlords should be eligible for support through the RHI” and are likely to announce their decision this summer. Interestingly this is after the next round of social landlord RHPP applications so social landlords who apply in this round are doing so with no assurance that they will receive any support beyond the immediate grant.
So is the RHPP for social landlords a good opportunity for them or not?
That depends on your perspective. Looking at it from a purely financial perspective, maybe not. The registered social landlord (RSL) will need to pay around 50 per cent of the total capital but gets no return (the bill savings go to the tenants). Indeed, they may need to pay for on-going maintenance as well. So in that context they are paying to install it, paying to maintain it and getting no income at all – it doesn’t sound great!
But if the RSL has organisational objectives to reduce tenants’ bills, reduce the carbon footprint of its stock and is intending to provide these systems anyway, the RHPP simply becomes a helping hand. The RHPP grant means RSLs can meet some of these wider objectives and with a fairly substantial subsidy.
Finally, is the RHPP a good thing for the market as a whole?
Well, in that it is providing some temporary support to a very slow market, yes – it’s a good thing and absolutely necessary. But it is only temporary and the longer term success of the domestic renewable heating market has much more to do with what kind of domestic tariff system we end up with. As I’ve already said, we need to see better tariff rates and/or tariff duration within the domestic RHI when it arrives next spring, than were proposed within the consultation. Beyond that, I would really like to see a sensible mechanism for moving tariffs up as well as down on a clear timetable. This will ensure sufficient uptake is supported without having long delays for major tariff reviews, and should avoid what we saw with 50% FIT cuts overnight.
Technology New private household RHPP voucher value (from May 2013) Maximum grant for Social Landlord’s RHPP Phase Two Extension 2013/14 ASHPs £1,300 £4,400 GSHPs £2,300 £7,900 Biomass £2,000 £6,100 Solar £600 £2,000 Eligible for RHI tariff when it launches? Yes – but at a reduced rate so that systems are not “over compensated” It is currently under consideration whether social landlords will be eligible for the RHI
Climate Consulting Ltd have worked in the renewables market since we started in 1997 and have helped hundreds of client’s assess the feasibility of using renewable energy technology. We are happy to help RSLs submit an application to the RHPP scheme and can also assist with managing the installation programme. Please send any questions to tom.vosper@climate-consulting.co.uk