The RHI from 2017
On the 14th of December 2016 the government published its response to its latest round of consultation on the RHI and outlined its plans for 2017. There are three immediate take-outs for heat pump industry:
1. Volume sales are being encouraged by an actual and relative increase in the tarriff
Heat pump tariffs are increasing in the spring of 2017 as shown in the table below:
| Technology type | Current Tariff (p/kWh) | Tariffs from 1 Jan 2017 | Uplifted Tariff (p/kWh) |
|---|---|---|---|
| Air source heat pump | 7.51 p |
7.51p |
10.02 p |
| Ground source heat pump | 19.33 p |
19.33p |
19.55 p |
Those who apply to the scheme on or after 14 December 2016 will be eligible for the current tariff rate at the date of applying, and then will subsequently be eligible for the increased tariff rate from the day the amended Domestic RHI Scheme Regulations come into force in spring 2017.
2. A cap is being placed on amount you can earn from a single installation
This is another change aimed at changing a bias in the mix of installations; this time in the socio-demographic mix of applicants. Many of those receiving the payments up to now have been relatively wealthy individuals looking for a good return on capital they have spare for investment. To ensure a fairer use of the public purse and to prevent abuses installations will now have a cap of 20,000Kw for air source and 30,000Kw for ground source. This equates to an approx. 13.6Kw system for ground source – roughly 320 sqm of new build property or 100 sqm for an 80’s or early 90s property with double glazing and some basic insulation. For air source it will cover approx. 9Kw of system – which will completely cover 210 sqm of new build or 65 sqm of for an 80’s or early 90s property.
The RHI will still be available on larger projects, but they will receive benefit only up until that limit.
3. Electricity metering of heat pumps will become mandatory to ensure that systems are offering customers an efficient solution.
This move has been designed to give customers some basic visibility of the efficiency of a system and ensure that is offering a customer good value for money and minimizing their environmental impact.
Summary
Whilst the raise in tarrifs is welcome and should help drive the volume of heat pump sales, it is clear that the cap will somewhat decrease the attractiveness of heat pump projects for properties at the top end of the market. An AOR (assignment of rights) initiative for the RHI is still planned but has yet to be timetabled. This latter plan should help make heat pumps accessible to a much wider market as it will allow consumers to assign their RHI payments to a third party in exchange for financing the initial installation of a heat pump.
Stiebel Eltron are responding to these changes by augmenting their product range with a WPL classic package which will retail at a price aligned to maximize RHI returns. This package will be launched in 2017 to coincide with the changes to the incentive scheme.
Please don’t hesitate to contact your local specification manager for a more detailed information.