The impact of changes to RHI tariffs on the UK heat pump market
The latest Delta-ee podcast focuses on the impact of the latest changes to the RHI (Renewable Heat Incentive) tariffs and the impact they will have on the UK heat pump market.
Steven Ashurst, Senior Analyst and Micro-CHP Research Service Manager, and Lukas Bergmann, Senior Analyst and Heat Pump Research Service Manager, suggest the changes in tariff point towards a positive future for air source heat pumps.
While the initial tariff didn’t serve to grow installations as much as previously hoped, the increase to 10p per kWh for renewable heat has meant the ASHP proposition is improving significantly. Before the changes, payments with ASHP with an efficiency of 2.8 over the year resulted in an overall payment of around £6750, in a building that consumed 20,000 kWh per year. While that is already a significant payment, when stretched over 7 years it does not fully cover the cost of the installation.
Today’s tariff changes that significantly and the same installation, in a building with the same efficiency and usage, would receive approximately £9020 over 7 years (almost £1300 per year). This makes the whole proposition much more interesting to the consumer. Not only can we expect to the homeowner or other end-user to receive a significant proportion of their investment back, they will recoup their investment and then some. More importantly, they will benefit immediately from reduced running costs, the amount depending on the price structure of the energy market at that time.
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