Unfortunately, the Renewable Heat Incentive comes to a close in 2022, so the industry and indeed the public look to the Government to provide the next phase of incentive for people to replace their out dated fossil fuel systems. The Government’s proposed solution is the Clean Heat Grant.
What is the CHG FOR?
The clean heat grant is designed as an upfront ‘payment’ to homeowners who want to install renewable energy systems to replace fossil fuel. The system is designed to support the installation of heat pumps.
How much is the CHG worth?
The grant will be worth a flat rate of £4,000. Far less than the current subsidy scheme, but still helpful when looking at low capital cost air source heat pumps.
When will the CHG be available?
At present no definitive date has been provided but it is assumed to come into effect during early 2022 as the RHI is phased out.
As an installer and indeed part of the wider renewable industry, the widespread reaction to this new ‘incentive’ has not been positive for the following reasons;
- The range costs of a ground source heat pump system vary from £20k-£40k and for air source heat pump system, it is £8-£20k, the reason for the wide-ranging variation is quality of equipment, installation standards, and on-going efficiency.
- Based on the above it would seem the CHG will provide 10% and 25% respectively at the top end of the market. Far less than the current RHI scheme. But awards companies delivering lower-cost solutions by making them too competitive in cost.
- The mechanism for claiming the grant will be through the installer, so the installer passes on the grant as a ‘discount’ and the system owner provides them with a voucher to claim back from the government. We see this as being fraught with danger as companies are likely to provide low-cost and inefficient solutions in order to claim the grant voucher. This will lead to higher running costs for the end-user.
- The grant is only available for installations under 45kW, meaning there will be no assistance for the larger producers of carbon emissions, where the cost of switching from fossil fuels is high.
- The overall budget for the CHG is £100 million and it is designed to last two years. Dividing the size of the ‘pot’ by £4,000 (the value to each household) you can see that the CHG is only able to directly assist with installing 25,000 installations.
In almost direct contrast to the above, The Committee on Climate Change has stated that the UK requires 15 million homes to be fitted with heat pumps or sustainable bi-valent systems by 2035.
In our opinion, not enough is being done by Government to support renewable energy, bring down installation costs or indeed stop subsidising fossil fuel systems, making renewables more competitive. For the government to reach targets as suggested by the CCC we would need to see much higher costs for fossil fuels, directives for local planning authorities to include 100% renewable energy on developments and much greater funding capacity to encourage the switch to renewables. Otherwise, the future looks rather dim for the renewable energy industry and the fight against climate change.
There is still time to enjoy the current Renewable Heat Incentive for domestic projects. If you would like to find out more, contact us on 01293 821 345.