RHI Leaves Fuel Poor In The Cold

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Ofgem Report Shows RHI Take Up Greatest In The South East

The first quarterly OFGEM review of homes installing renewable heating technologies under the government’s domestic Renewable Heat Incentive (RHI) scheme has revealed that the largest take up has been in the affluent south of England, underlining concerns that the RHI is only viable for wealthy homeowners.

Although the RHI is targeted towards off gas grid homes, the report shows that almost half (45.9%) of the households adopting the scheme are in the south of England – the part of the UK with the highest concentration of homes connected to mains gas. By contrast, in areas with a much higher percentage of off-gas grid homes, such as Wales and Scotland, far fewer homeowners have taken up the scheme – just 5.2% and 16.5% respectively of the overall total. The scheme does not apply to Northern Ireland, where a similarly named but differently configured scheme is expected to be announced shortly.

According to The Oil Firing Technical Association (OFTEC), the figures highlight the regressive nature of the RHI as it will only benefit the small minority who can afford the high upfront costs of between £9,000 and £14,000 to install renewable technologies. Under the scheme, payments to help cover the cost of renewable technologies can only be claimed once an installation has been made.

OFTEC Director General Jeremy Hawksley says, “It’s no surprise that the highest take up of the RHI has been in the most affluent parts of Britain. These homeowners can afford to change and, with interest rates remaining low, the RHI is little more than an alternative investment opportunity which adds even more value to their properties.

“But what about the large percentage of off gas grid homes who simply can’t afford to get started with the RHI? The government is pushing all off grid homeowners towards the RHI in order to reduce their carbon emissions but, for most, the high upfront cost effectively excludes them. With almost 30% of rural households in England and 47% in Wales currently living in fuel poverty, this approach makes no sense at all.”

A recent survey conducted by OFTEC and fuel distributor, Watson Petroleum, of 750 oil heated homes showed that just 4% would consider switching to an air source heat pump, while 73% would instead choose to upgrade to a new oil condensing boiler. According to OFTEC, the results underline the current lack of consumer interest in renewables as a viable, affordable way to cut carbon emissions. They also back up a previous report commissioned by HM Government last year, which examined the heating systems people would favour under RHI. Just 6% of those questioned would opt for renewable technologies; the majority (81%) would make no change to their current heating system.

As a more realistic alternative, OFTEC has been calling for the government to introduce a simple, all-inclusive boiler scrappage scheme. This would appeal to a far wider audience and therefore go much further than the costly and complex RHI in helping the government achieve its ambitious carbon reduction target of 80% less emissions by 2050. Upgrading to a new condensing boiler can reduce CO2 emissions by 20% and save the same amount in fuel costs. OFTEC argues that this more affordable approach would also be far more effective in addressing fuel poverty.

A similar scheme ran in 2010 which saw 120,000 old, inefficient boilers replaced and a means-tested scheme remains operational in Northern Ireland. The boiler upgrade option under the recently closed Green Deal Home Improvement Fund also proved popular. However, due to HM Government’s decision to discriminate against rural homeowners and householders, the scheme only applied to gas boilers, leaving some 850,000 oil using homes in Great Britain unable to benefit.

Jeremy Hawksley concludes, “The Government needs to drastically reconsider its approach to low carbon heat. Instead of pushing expensive, complicated schemes like RHI which will only appeal to the wealthy minority, it should look at where the real needs lie and introduce a realistic scheme, such as boiler scrappage, which would be feasible for the majority, even the fuel poor.”