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UK Domestic Renewable Heat Update – March 2015

The latest data available for the Domestic Renewable Heat Incentive covers the period from the launch of the scheme on April 9th 2014 to the end of February 2015. The Domestic Renewable Heat Incentive (Domestic RHI) is a UK Government scheme to encourage the use of renewable heating technologies. Under the scheme, householders receive quarterly payments for a period of 7 years based on the amount of renewable heat their system produces. The latest figures show the rate of growth for UK renewable heat installations recovering in February.

Like most of us, the domestic renewable heat market was a bit sluggish in January after the excesses of Christmas. Biomass slumped in January after a rush to install before end of year and beat declining tariffs. Biomass installs are back on the increase in February but the big performer this month is air source heat pumps which had a record month.

Key Points From February 2014

Legacy Applications Continue to Dominate
The Domestic RHI has had 28,168 applications. Legacy applications account for 70.81% (19,945) of applications to date. Only 29.19% (8,223) of applications are for “new” installations, ie those that took place since the launch of the scheme. It is new applications that give us an indication of current activity in the renewable heat market and that we consider mostly in this update.

Rate of Growth Recovers After a Slow January
The number of installations applied for under the Domestic RHI increased month on month for the 8 months from the start of the scheme to December 2014. January 2015 was the first month where new installations fell, and they fell dramatically. New installations recovered in February with biomass starting to pull out of its January slump while both heat pump technologies had record months.

February was a record month for new air source heat pump installations under the Domestic RHI. There were 402 applications for new air source heat pump installations in February making it the largest technology this month and beating its previous best month of 384 installations in November. Air source installations had taken a bit of a dip in December and January from the highs of November so this return to growth is good news.

Biomass Recovers After January Slump

Last month’s update saw a big hangover month for biomass in January with only 201 applications for new biomass installations. Seasonality combined with a drop in tariffs and a huge contraction of demand into the end of 2014 led to quite a slowdown for biomass. February saw something of a recovery with 254 installs representing a 26% increase on January numbers and bringing monthly installations back to the level of September 2014.

Ground Source Growth Accelerates

With a longer lead time than other technologies, Ground source heat pumps started very slowly under the Domestic RHI but has grown slowly and consistently since the launch of the scheme. At this stage, ground source heat pumps is the only technology that has increased the number of new installs every single month. February’s 127 installations also make it the first month that Ground Source has not been the smallest technology under the scheme. This is good news for ground source heat pumps but perhaps not so great for solar thermal.

Solar Thermal Installation Numbers Return to Growth

After falling for 4 months in a row, the number of new solar thermal installations was up slightly in February. For the first time since the launch of the scheme however, new solar thermal installation numbers have fallen behing ground source heat pumps and are the lowest of the technologies covered by the scheme.

New Applications by Installed Technology

New applications are for systems installed since the launch of the scheme on 9th April 2014.

Total Applications by Installed Technology

Total applications include both new applications and legacy applications.

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