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Spreading the word about the value of heat pumps

Eight companies in the UK heat pump sector have jointly set out a vision for how industry and Government can achieve a radical decarbonising of residential heating in the UK by 2030. They have called for fundamental regulatory reform to enable 6.8m heat pumps by 2030
Leading heat pump manufacturers and installers have expressed strong support for the role identified for heat pumps in the Government's Carbon Plan and Heat Strategy as a key technology that will enable decarbonisation of heat supply to individual buildings and limit consumer fuel bills.

To this end, this group of companies (Mitsubishi Electric, Daikin, Kingspan, NIBE, Vaillant, EDF Energy, British Gas and e-on) believes that goals set out by the Committee on Climate Change in the 4th Carbon Budget - namely the deployment of around 2.6 million domestic heat pumps by 2025, rising to 6.8 million by 2030 - are both essential and realistic.

Currently, fewer than 15,000 domestic heat pumps are installed annually. Meeting the ambitious objectives of the 4th Carbon budget will be a challenge requiring considerable investment to develop the necessary infrastructure, technology improvements, supply chains and skills base.

A report from Ecuity Consulting LLP (http://sdrv.ms/JBVgLW) argues that a long term regulatory strategy must be in place, alongside necessary investment, to encourage timely heat pump uptake. Scale deployment will drive down capital costs to enable heat pumps to compete with conventional, carbon intensive heating options and transform them from a niche technology to a genuine mass market product.

The current regulatory environment remains a source of uncertainty for the heat pump sector. The eight heat pump developers aspire to work with Government to develop a solid regulatory plan that will allow the sector to move beyond subsidy by the end of this decade.

· According to the report, elements of this regulatory plan may include:

· Looking into innovative solutions to link the Green Deal with the Renewable Heat Incentive (RHI) so as to address the barrier to consumers of lack of up-front capital.

· Reviewing the case for raising the noise threshold for air source heat pumps under Permitted Development Rights from 42 to 45dB to limit installation complexity.

· Reviewing specified default efficiency values for air source heat pumps under and recognition of hybrid heat pump solutions the Standard Assessment Procedure (SAP) to reflect the performance of new products.

· Setting a tariff duration of less than 10 years under RHI Phase 2 for the domestic sector, to combine cost effectiveness with adequate consumer incentive. Maintaining the principles already established for the RHI in the commercial sector of delivering an attractive return on the additional (over and above a fossil fuel alternative) cost required to encourage the installation of renewable technologies.

The report contains the results of detailed modelling of RHI possibilities for different tariff and duration options.

· Using the Building Regulations, in retrofit as well as in new build, to push the decarbonising of residential heating systems to new limits towards the end of the decade without the fiscal burden that accompanies incentive schemes. That would allow a range of low carbon heating technologies to compete fairly and would move the UK's heating stock beyond today's default option of high efficiency gas boilers. A similar change in the Building Regulations in 2005, successfully transformed the residential heat market by outlawing lower efficiency systems.

Angus Wilby, head of Energy Services at EDF Energy, says: 'We strongly support the deployment of domestic heat pumps, which can help consumers reduce carbon and save money on energy bills. We're also pleased to be able to work with a diverse and knowledgeable mix of companies to help reach Government's ambitions for heat pumps.

'EDF Energy has been working with partners to develop and market heat pumps for some time now and agrees with Ecuity's findings that a long-term strategy and policy framework must be in place to encourage more people to access heat pumps and enjoy the low carbon benefits.'

Tony Staniforth, specification sales director of Kingspan Renewables, adds: 'Kingspan Renewables is proud to be among the leading industry figures involved in the development of this report. We remain convinced of the unique capabilities of air source heat pumps, and are confident that with the right regulatory framework this technology will play a vital role in realising a truly zero carbon future in the UK.'

Green facts and figures

· The Carbon Plan published in December 2011, sets out the Government's plans for achieving the emissions reductions committed to in the first four carbon budgets.

· There is currently uncertainty as to whether and how the Green Deal, a financial mechanism that eliminates the need to pay upfront for energy efficiency measures, and the RHI can be combined. If a link between the two schemes is not established, then most low carbon microgeneration technologies, including heat pumps and hybrid heat pump systems, will not be eligible for Green Deal finance.

· Permitted Development Rights remove the requirement to submit a planning application to the local planning authority for developments meeting specified conditions, saving costs and time. Although a noise threshold of 45dB for ASHPs was recommended by Government in 2008, the Department of Communities and Local Government extended Permitted Rights to include ASHPs with a substantially lower threshold of 42dB in 2011. The noise limit of 42dB places ASHPs at significant disadvantage as most ASHP products would need to be installed several metres away from the nearest dwelling to allow eligibility.

· RHI Phase 2 for the domestic sector is the main financing tool to drive domestic heat pump uptake towards the end of this decade. DECC has announced that it expects to publish a consultation on RHI Phase 2 in September 2012 with a view of launching the scheme in the summer of 2013. RHI format and specifically subsidy duration is a salient issue that could determine the success of the scheme. Subsidy duration is crucial as it is bound to affect overall budgetary effectiveness as well as initial tariff levels and, hence, consumer appeal.
10 December 2012

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