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Micropower response to RHI

After collaborating closely with DECC on the details of the Renewable Heat Incentive, the Micropower Council’s Dave Sowden shares his views on the scheme with H&V News.

The coming year carries a great deal of promise for the renewable heat industry, he says.

The long-awaited Renewable Heat Incentive will be launched – though not in its final form – and some 25,000 households across Britain are expected to benefit in the next twelve months.

In May, we published a position paper looking at RHI Premium Payments for the residential sector. There is a lot to consider, and a lot to learn from the experiences of other industries.

The first phase of the RHI gives the industry an opportunity to create a much wider market. But that opportunity could be jeopardised if the eligibility criteria for RHI Premium Payments are too stringent.

Whilst it is essential that the Premium Payments are only paid for high quality installations, restrictions on the location, nature, energy efficiency and current heating system of the property all risk placing limits on the market and preventing keen householders from taking up the technologies that they wish to use.

There is, of course, a balance to be struck. If the market is opened too widely, there is a risk that the available funding for RHI Premium Payments will be used up too quickly and that potential customers will miss out. How can we manage expectations and demand?

The easiest way is to allow for a review point within phase one of the RHI. At this point, levels of demand could be examined, and additional eligibility criteria introduced.

However, there is a clear lesson that must be learned from the unexpected review of Feed-in Tariffs.

An industry and its customers do not respond well to surprises; there is a danger of consumer backlash if they fear that incentives will no longer be provided, a reduction of confidence in the market and the concern that product and installation companies will go out of business.

We cannot afford to take this risk with the renewable heat industry. There has been an open and honest dialogue between policy makers and industry thus far, so let’s continue.

If we plan for a review of the RHI, perhaps triggered at the point when 50% of the Premium Payment funding has been allocated and with a clear set of expectations about how criteria might be changed, we can ensure that the industry can plan for change.

This is a watershed moment for the renewable heat industry, a chance to demonstrate what different technologies can achieve and to raise consumers’ consciousness of renewable heat. Industry and Government, working openly and honestly, can create a dynamic market which will provide high quality installations that build customer confidence and deliver vital carbon emissions reductions.

Some of these issues will be debated at Microgeneration UK 2011