The renewable heat market has side stepped over the last 4 years, with new installations likely to only reach ~22,000 units in 2014. Despite the domestic RHI coming into the microgen arena this April, no significant boost of installations has been observed.
Why is the renewable heat market not growing?
Our research in the Microgen Insight Service shows – despite much potential to grow sales – the renewable heating market faces many barriers, including;
Customer awareness of the RHI is low (13%) and appeal is not significant (appealing to around one-in-three people) – our research shows that many homeowners find the RHI complex.
High upfront cost remains the largest barrier to a higher uptake of microgen – yet there has been no movement from suppliers to reduce this barrier to date.
Expensive DNO connections can block microgen-ready customers from installing ASHPs and PV.
There is no consistent message from industry – the boiler market is strong and it appears that whilst boilers are still selling like hot cakes, very few big manufacturers are committed to push their renewable alternatives.
Securing funding is challenging, especially in social housing (a key microgen customer segment). And, cash flow problems due to changes with the benefits system are driving them towards like for like boiler replacements rather than microgen.
What will 2015 look like?
We didn’t expect 2014 to be a big year for the RHI due to the long lead times for renewable heating technologies, as well as the many other barriers outlined above. But we are optimistic that the domestic RHI will have an impact in 2015. However, the extent of this impact does depend on the industry becoming more energised. We are already seeing lots of movement in 2014 with a whole host of innovative products becoming widely available (i.e. hybrids and m-CHP), novel business strategies being employed, and financial propositions being considered and offered to home owners. Yes, the microgen market is still very much comprised entirely of ‘early adopters’, however everything is in place for the critical mass to tip the balance.
