The domestic Renewable Heat Incentive is the final piece in the jigsaw for the government's green home package - green businesses need to respond
There are few more effective ways to get someone to glaze over than to strike up a conversation about boilers. Although, in fairness, a discussion about insulation or double glazing may run it close. But the inherent challenge faced by those seeking to drive consumer demand for the various domestic energy efficiency measures now on offer need to be overcome, not least because some exciting developments are underway in the world of boilers.
Today has seen the long-awaited launch of the domestic element of the Renewable Heat Incentive (RHI) scheme, which will now offer households the opportunity to secure quarterly payments based on how much renewable heat they generate. There has been plenty of grumbling about the lengthy gestation for the scheme, while concerns remain about how effective the initiative will prove at ferreting out any rogue traders who seek to take advantage of increased demand for renewable heat systems. Others have highlighted the relatively high cost of carbon savings delivered by renewable heat systems compared to alternative technologies. But despite these reservations the scheme represents a significant boost to the green economy and could deliver a major breakthrough for the emerging green home market.
The merits of the scheme are two-fold. Firstly, as a world-first mechanism for driving adoption of renewable heat technologies it provides a boost to a much neglected clean tech area that will need to expand rapidly if the UK and other industrialised economies are to meet their long term carbon targets. Over 80 per cent of UK heating is provided by fossil fuels and in 2009 around 32 per cent of all greenhouse gas (GHG) emissions in the UK resulted from heat related activities. We already know how to decarbonise electricity supplies and the technologies required to do so are falling in price all the time. But there has been less progress in the development and adoption of renewable heat technologies, making the emergence of lower cost renewable heat systems a national priority.
The introduction of the RHI for both businesses and households promises to drive the market for heat pumps, biomass boilers, and solar thermal systems, fuelling technology innovation and driving down costs through economies of scale. The resulting emissions savings may be initially costly, but there is the potential for the UK to build a world-leading, potentially export-led, new clean tech market.
Secondly, the Domestic RHI forms the final piece in the puzzle, the final piece of lagging in the loft if you will, of the government's wider green homes strategy. Again, Ministers have faced plenty of justified criticism about the various delays and technical difficulties this strategy has endured through the controversial changes to the microgeneration feed-in tariff scheme, the cuts to the Energy Company Obligation (ECO) efficiency scheme, the watering down of green building standards, and the decidedly lukewarm reception for the Green Deal energy efficiency financing scheme. But the fact that each of these policies could and should be improved does not detract from the fact the UK now has a comprehensive and attractive package of measures to drive the transition towards greener and warmer homes.
The RHI means it makes financial sense for virtually everyone operating off-grid oil-fuelled heating to switch to renewable alternatives. The feed-in tariff and Domestic RHI means it makes financial sense for virtually everyone with south facing roofs or suitably located gardens to install solar PV, solar thermal, or micro-wind systems. The ECO and Green Deal means it makes sense for everyone to assess the energy efficiency of their home and undertake upgrades where appropriate. All of the policies means that it makes sense for anyone worried about rising energy costs or carbon emissions to see if their home is suitable for onsite power or heat generation.
There are valid questions about whether these schemes will disproportionately benefit the wealthy and middle class given the money and time needed to undertake such improvements. But the combination of grant funding and clever financing promises to deliver upgrades at no upfront cost across all social classes. Moreover, the scaling up of the green home market will benefit everyone in the long term as it cuts emissions, enhances energy security, and helps to bring down the costs of clean technologies to the point at which they come as standard in every home.
However, if the long-running travails of an insulation and energy efficiency sector that has always offered a product that makes financial sense are anything to go by, it is clear that being on the right side of return on investment calculations does not on its own create a market. The onus has to now be on the thousands of green businesses that provide Green Deal upgrades, heat pumps, solar panels, and biomass boilers to get out there and drive demand for the exciting technologies and services they offer. The introduction of the coalition government's last major green home policy means there is no longer any excuse.
To drive this market the clean tech sector needs to take a leaf out of the playbook of those industries that have created mass market demand for high value products - the auto sector, the IT and home entertainment industries, even the travel industry. They need to make their products attractive, effective, and, if possible, desirable. They need to target the early adopters and influencers who can create the initial market and force it into the mainstream (in short, and I know this may seem self-serving, they need to target the BusinessGreen audience). They need to use intelligent and proven advertising and marketing techniques to reach their target market. And then they need to deliver an exemplary product and service that quickly rides any cowboys out of the town and creates strong word of mouth demand.
Can this be done with energy efficient boilers and triple glazed windows? It is fair to say that even Don Draper would struggle to make them appear sexy. But as with any new product successful marketing is all about positioning. A modern, high tech, sustainable and warm home is better than a dated, functional, unsustainable and cold home. The studies showing how "contagious" solar panels spread through a neighbourhood prove there is huge pent up demand for clean technologies - clean technologies that polling reveals huge public support for. Even the dullest clean technology can be made exciting with the right messaging.
The UK's green businesses have an array of attractive, effective and desirable green products to offer, and the introduction of the RHI, feed-in tariff, and Green Deal means that in many cases they are now just as financially viable as they are technically viable. The green economy continues to face far more challenges and uncertainties than it should, and Ministers should be doing much more to drive the investment and business models we urgently need. But for the green home and office sector the policies are in place, the technologies are in place, the demand is there to be created - it is time to engage the consumer and start selling.