Blog: The Future of Clean Heat – Will a move away from RHI work?

17 June 2020

By Ian Rippin, CEO of MCS

MCS, and the industry it works with, face interesting times.

The UK domestic renewable energy sector has radically changed since our organisation was formed in 2007. Since then nearly 1.2 million homes have been fitted with renewable energy technology. Whilst hugely positive, these changes have led to some immediate challenges for us and our sector, as the UK Government has amended its renewable energy policies away from consumer incentives. Established subsidy schemes the Feed in Tariff (FiT) has closed and the Renewable Heat Incentive (RHI) is set to end in March 2022 following a brief extension.

So, what does the future look like and what role will MCS play?

In April 2020, the Department for Business, Energy and Industrial Strategy (BEIS) launched the ‘Future support for low carbon heat’ consultation. It details proposals for support mechanisms following the closure of the non-domestic RHI, with the government announcing grants of £4,000 set to replace it as part of several heat proposals.

But is this enough to stimulate the growth needed in the market? Will it reach the consumers who could benefit the most from the installation of a renewable technology? Is it ambitious enough to edge us closer to 2050 net zero targets that domestic energy will play a huge part in achieving?

It is crucial that we ensure that changes to the policy and subsidy regime are supportive of the future market growth that we know is achievable. As an industry we need to give people confidence in home-grown energy; this includes boosting confidence in the range of low carbon technologies as well as supply chains.

That is why MCS have formed a Low Carbon Heat Task Force to inform our consultation response. The Task Force boasts membership of several industry experts including MCS certified Installers, who will explore the key themes of the consultation and the impact on technologies including heat pumps, solar thermal and biomass. They will work directly with MCS colleagues over the next few weeks to provide valuable feedback, expertise, insight and evidence that will contribute to the MCS consultation response, ensuring that it is truly representative of our industry and its requirements.

Some early thoughts and emerging themes coming out of our Task Force meetings are interesting.

They say that the £4000 grant won’t support them, it won’t enable any growth of the market and opens up complexities around selecting the most appropriate renewable heat technology. There is some concern around how this will affect the future uptake of Ground Source Heat Pumps and a real fear that this already small market will be totally stifled. This new policy clearly favours Air Source Heat Pumps as the renewable technology of choice, and whilst these can be a really great solution for some consumers, there is a risk that other solutions will be overlooked that may be more expensive up front but deliver better longer term savings, both financially and in relation to reduced carbon output.

The flat, technology neutral grant has its positives in terms of simplifying access to incentives for consumers, and probably being a less bureaucratic application process for installers compared to the RHI. However, it fails in taking into account the nuances of the UK housing stock potentially disincentivising what could be a more appropriate energy improvement for a home. Heat pumps are one of the primary technologies for decarbonising heat but Ground Source Heat Pumps and Air Source Heat Pumps are distinctive and should be treated as such. This grant fails in doing this.

Questions of ambition have been raised with the proposal aiming for a central deployment scenario of 12,150 heat pumps a year. When we compare this to the data that MCS holds on the total number of certified heat pumps installed in 2019 being 13,779, it’s obvious that not only will the grant not cover what we need it to – but the policy doesn’t appear to want to be a driver of pushing deployment levels beyond what we are currently seeing.

Whilst generally speaking, we are supportive of the consultation, questions do need to be raised about how effective this two-year proposal could be. Have we got two years? Our Task Force argues not. Two years doesn’t give enough confidence for businesses to scale up, nor invest in training a workforce. Whilst we cannot afford the hiatus we witnessed with FiT and SEG, this does feel like this is just a “holding pattern” until 2025 and the next general election.

As we emerge from the COVID-19 crisis and the global economic shutdown, there is no better time to ensure that government policy enables our greener future and the achievement of net zero carbon emissions. Their policies need to be supportive of the required market growth, should be in the interests of the MCS certified Installers who have already been working hard to meet climate targets and that Standards and an emphasis on quality is embedded to protect consumers and encourage adoption.

Working in this way is how we’ll build confidence – for the market, for installers and for consumers. But it’s important that as an industry, we unite, and raise our voices to advocate for the positive policy changes that are required. Proposals within the consultation will fundamentally change the future market and will have a direct impact – some positive, some adverse on renewable technologies.

So, I implore you, read the consultation and submit your views.

You can view the consultation here and the closing date for submitting responses is 7th July 2020.

If you would like to hear more from our Task Force and join the debate – please sign up to our webinar with Futurebuild later this month.