OFTEC (Oil Firing Technical Association) claims that renewables could add around £200 to annual fuel bills.
Its warning follows the publication of a new report which claims that renewable heating solutions are not yet economically viable. Published by independent think-tank Civitas, the paper entitled 'Are green times just around the corner?' asks whether a low carbon economy can sustain contemporary standards of living, and argues that it can only do this if the cost of renewables falls to make them competitive with fossil fuels. It estimates that moving to renewables will actually add £200 to a household's annual heating bills, which could result in the first decline in living standards for hundreds of years, as more people fall into fuel poverty.
Britain's current energy consumption from renewables is around 6%, but must rise to 15% by 2020. According to the report, the cost of the Renewables Obligation will need to rise to around £16 billion by 2020 to meet these targets. Assuming 26 million households means the cost works out at £600 per household, with one-third of the cost hitting customers directly through their electricity bills, and the remainder of the cost affecting industrial and commercial customers. Furthermore, the report suggests that subsidies to renewables are counterproductive as they discourage invention and innovation.
OFTEC director general, Jeremy Hawksley, said 'Many homes in rural areas which currently rely on oil are unsuitable for renewables without major renovations to the fabric of the building, or replacement of the entire heating system. Although government strategy is targeting off gas areas, those households would be better off upgrading their existing boilers to high efficiency condensing ones. The effect of subsidies for renewables will in effect be to make them do nothing.'
With around two million homes in the UK and Ireland currently using oil, OFTEC has vigorously campaigned for the subsidies for bio-liquids as an easy way to switch to a lower carbon fuel, rather than complete system replacement. In contrast, government strategy for decarbonising rural homes is by encouraging the installation of heat pumps, OFTEC says. Heat pumps are not a straight swap for oil and usually require significant additional home improvements such as insulation, larger radiators or under floor heating. Unless the system is correctly designed the heat pump's coefficient of performance is unlikely to be optimal, and there are many well documented cases where the householder's electricity bill has sky rocketed after their installation.
An independent report commissioned by OFTEC revealed the high cost of renewable installations compared to oil. Evidence that OFTEC gave to the House of Commons Energy Select Committee showed that if heat pumps are deployed into rural homes rather than bio-liquids there will be a net increase in carbon emissions up to 2021.
Oil boiler sales increased by 22% in the first quarter of this year, compared to the same three months in 2012. OFTEC says this underlines the continued consumer confidence in oil as a reliable heating technology and adds credence to its strategy. The association believes that the way forward to improve energy efficiency and lower carbon footprints for rural homes is to incentivise householders to upgrade to a high efficiency condensing oil boiler and switch to liquid bio-fuel.
