The residential market for low-carbon heating products in the UK is expected to grow from 30,000 installations in 2014 to 90,000 installations by 2017.
According to research from Delta-ee, important drivers contributing to the growth of low-carbon heat include:
- new products entering the market - for example, hybrid heat pumps and fuel cell micro-CHP becoming available;
- innovation of customer propositions - for example, new financing schemes to remove the high up-front cost;
- expectations of rising energy prices to 2020 and beyond;
- cost reductions arising from economies of scale in manufacturing and a more competitive installer market; and
- the ability of local authorities to specify microgeneration in new-build developments.
A key driver for growth is expected to be the domestic Renewable Heat Incentive (RHI), introduced in spring 2014.
However, problems Delta-ee identified with the RHI include that it:
- does not address the high up-front cost barrier of low carbon heat systems - a critical factor to customers;
- is administratively complex;
- has not been well-marketed; and
- does not address the issue of local electricity grid connection, which can be a significant additional cost for heat pumps.
Delta-ee Microgen Insight Service manager Steven Ashurst said: “It’s still early days for the low-carbon heat market in the UK, but by 2017 we expect it to capture around one installation in 20.”