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How Will the Changes to the Renewable Heat Incentive Affect the Retail Trade Energy Job Sector?

26 Oct 08:00 by Luke Hatkinson-Kent

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In a bid to encourage more homeowners to install green heating technologies within their property, the Renewable Heat Incentive (RHI) was introduced in spring 2017. However, important changes to the incentive took effect on the 20th September 2017.

There are currently two incentives – a domestic RHI and a non-domestic RHI. The changes introduced relate to the domestic incentive. Below, you will be able to find everything you need to know about the recent changes and how it might affect the retail trade energy sector.

Prices for greener heat systems set to rise

The main change in the RHI is an increase in the cost of annual running costs. This includes air-source heat pumps, ground-source heat pumps and wood-burning central heating systems (otherwise referred to as Biomass systems).

Cost increase examples have been provided based on a four-bedroom house with 250mm of solid wall, cavity wall and loft insulation. It suggests the cost of biomass systems will increase to around £1,190-£1,635, up from just £700-£1,195. That’s a pretty steep incline. Ground source heat pumps would see the smallest increase, rising to £2,380-£2,585 from £2,355-£2,555; although the cost of running them is obviously higher than the other systems, hence the smaller increase.

So, for homeowners and tenants, the cost of running these greener systems will be slightly higher. However, the government has specified the changes will help to provide the renewable energy sector with more certainty. This in turn, will help them provide more value to the consumer; especially in terms of consumer support. They will continue to receive payments towards the costs of the green technologies too.

What it means for the retail trade energy job sector

The changes do provide suppliers within the renewable energy sector assurance and certainty. However, for more traditional suppliers like British Gas, Eon and the rest of the competitors in the big six, the changes are a little worrying.

While the costs of running the greener systems is growing, expenditures are still made to consumers who install the technologies. There are also other changes which will make these ‘greener’ systems more attractive, including the fact home owners will no longer need to complete a Green Assessment before they can apply for the RHI payments.

So, the changes could potentially spell minor trouble for the retail energy job sector, if not for the high cost of installation. While homeowners will receive payments towards the cost of running the systems, they will still need to pay out for the technologies to be installed. This is not cheap, and will be inaccessible for some. Companies like Insulation Giant will offer the installation service at a rate that may not suit the average home owner at this time. Going forward, as the technology becomes more easily integrated into our daily lives, it’s true impact will become clearer.

Overall, the costs associated with greener renewable heat systems are tremendously high compared to traditional systems. So, providing a home has adequate insulation, traditional heating options would work out much cheaper.