Tariff paying homes for renewable heat measures

The UK’s first scheme to pay households for heat they generate using microrenewables has been launched by energy supplier Good Energy.

Last year, the government said it would develop a scheme to pay households and firms a price per kilowatt hour for heat they generate using renewables (ENDS Report 406, p 39 ). The Energy Act gave the government the power to introduce this (ENDS Report 407, pp 52-53 ). However, the Department of Energy and Climate Change (DECC) has since said it does not intend to do so until April 2011.

The only financial support currently available to homes considering solar hot water heaters or biomass boilers is the government’s low-carbon buildings programme. This provides grants worth up to 30% of an installation’s cost, but it is due to close in May (ENDS Report 408, p 15 ).

It is into this vacuum that Good Energy has launched its scheme, called HotROCs - although the company’s principal motivation was a desire to expand into the gas market, according to chief executive Juliet Davenport.

Good Energy has long operated green electricity tariffs. These charge households a premium for the electricity they buy, with the money being used to pay owners of microrenewables for the electricity they produce. HotROCs operates on the same principle, and is funded by people who sign up to the firm’s dual-fuel tariff. They pay a premium of £75 per year on average.

Under HotROCs, Good Energy pays owners of solar hot water heaters 4p per kilowatt hour of heat. However, due to the high cost of heat meters, the firm simply estimates a household’s yearly generation. The average heater will supply 1,888kWh a year, it says, giving an annual payment of £75.52. But this will vary with location.

A solar water heater will save 325kg CO₂ a year if it displaces gas. Given that it costs about £3,700, HotROCs will give homes a payback period on their investment of 24 years. Ms Davenport admits this is a long time and says payment could change in future. "We could have put it higher already to get the payback down to 10 years, but what we’re trying to do is get an idea of the marketplace and what incentive is needed to get people signing up. The government is talking about a payment of 2-3p/kWh so we’re already above what it thinks is necessary."

The scheme will not be formally launched until April, but 30 homes are already being paid for their heat, says Ms Davenport, and another 400 are being approved. To qualify, households have to provide evidence that a qualified installer has put a solar thermal unit in their home, and give details such as whether it is south-facing.

Good Energy may extend the scheme to both ground-source heat pumps and biomass boilers. However, Ms Davenport is unsure whether a methodology could be developed to deem output for biomass boilers, as they are so dependent on users.

Ms Davenport says HotROCs will change once the government introduces its heat incentive - most likely by providing an extra payment to installations that need it. "We’ll always look to go beyond what the government does," she said, "and what it does is unlikely to be enough to stimulate take-up in all cases."