Launch of delayed renewable heat incentive scheme that will pay homeowners for generating power is welcomed
Householders will be able to claim hundreds of pounds a year for green heating technologies such as solar hot water systems from next year under a flagship renewable energy scheme. But Guardian analysis shows that despite the increases in the government payment levels announced on Friday, it will still take decades to recoup the upfront costs of installing these technologies.
Under the Renewable Heat Incentive (RHI), homeowners will be paid for energy generated by solar thermal panels, biomass boilers and heat pumps that they install in their homes at their own cost.
When initial tariffs were announced last September, the Guardian estimated it would take 20 years for owners of houses that are heated by oil to recoup their initial outlay on a £3,000 solar thermal unit. Under new tariffs, which will become available in the spring, owners could receive around £220 for the first seven years, in addition to savings of around £80 a year on their bills – meaning payback would come in 18 rather than 20 years. Savings for houses heated by gas would be significantly less.
The tariff levels were set at 7.3p/kWh for air source heat pumps; 12.2p/kWh for biomass boilers; 18.8p/kWh for ground source heat pumps and at least 19.2 p/kWh for solar thermal. Those figures are largely in line or modestly higher than the indicative ranges published last year, of 6.9-11.5p, 5.2-8.7p, 12.5-17.3p and 17.3p, respectively.
Greg Barker, the minister for energy and climate change, said the focus for the plan was the one fifth of UK houses off the gas grid who were facing expensive heating costs, but he would not be drawn on exact timelines for recovering outlays. “This is going to be particularly welcomed by people living off the gas grid who face very expensive heating oil bills,” he said.
“For the right location, for the right consumer, it adds up to good news. But everybody will need to make their own assessment before going ahead.”
The tariffs will not be available for new builds, said Barker, because “we can drive innovation and carbon reduction in new builds via building regulations”.
Mike Landy of the Renewable Energy Association said the announcement, which had come after a number of delays, was welcome.
“After several delays and stagnation in the market, today’s announcement will give a huge boost to the domestic renewable heat industry. Companies will now be able to tell homeowners exactly how much financial support they can earn through the use of renewable heating systems. Green heat can be very cost-effective, particularly for households off the gas grid,” he said.
The RHI has undergone several false dawns and delays. Under the Renewable Heat Premium Payment, an interim grant scheme introduced while the government finalised the details of the RHI, 11,000 homes were fitted in the past two years.
The Department of Energy and Climate Change said if the RHI, which is the first tariff scheme for renewable heat in the world, met its target of installations at 750,000 homes, this would represent an estimated carbon dioxide saving of 17m tonnes over the lifetime of the measures.
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