UPDATED: Air Source Heat Pumps/Air Con - Full Info & Guide, is it cheaper to run than mains gas?

albyota

From what the original RHI consulation document says, the RHI would be paid on a deemed tariff,(a SAP report required) i.e. if a 4 bed detached house has very good insulation (roof and cavity) and double glazing, only requires 16,500 kWh/yr for space heating and hot water, (every house gets the same amount for hot water, 3742kWh/yr corresponding to an occupancy rate of 2.9), then you would be paid 16,500 x 7.5p, or 4.5p or whatever the rate is to be, if you use more....tough, if you use less....bonus.
However, we now have to wait till October 2012 before it is paid, although the government is paying £850 in July this year to people who are prepared to have their system monitored, they will still be eligible for the RHI as well.

Edale

Cardew wrote: »

You have paid £5k more than for a new oil CH system. Given you could invest that £5k in a long term investment at 5%, that would produce £250 a year(£200 after tax) – how long do you envisage it will take before you have recouped that £5k?

For a rough calculation I used the following figures:
heat requirement 25000KWH
price of oil 55p per litre
kwh per litre of oil 10.2
price of electricity 8.2p per kwh
efficiency of new boiler 85%
COP of ASHP 2.2

This gives an annual cost for oil at £1585 against the ASHP cost of £931, a difference of £654. The only debt I have is our mortgage at 2.39% and we fully subscribe to ISAs each year anyway so the opportunity rate I used was 3% so £150. This means £500 per year saving which is 10 years. I was happy at this figure but expected the RHI to make it the 'no brainer' from a financial point of view. The risk with this argument is that oil comes down (I was paying 27p per litre a couple of years ago) and electricity goes up but on the other side I think the COP may be better than 2.2. I am also concerned how it will perform if we have the cold weather we had in January.

I do agree with you that you need to carefully consider having one fitted and not believe the COPs that most sellers of these qoute, if I had been on mains gas then I would not have even thought about having one.

Time will tell and it is a lot of money to risk when there seem to be some shocking stories of badly performing systems. Make sure you are confident the company who installs it knows what they are doing.

Edale

albyota wrote: »

However, we now have to wait till October 2012 before it is paid, although as a gesture of good will for ASHP's, the government is paying £850 in July this year to people who are purchasing now and owners of systems installed since July 09.

The way I read it is that the RHI premium is to be paid to new installations going forward and more details would be announced in May for the scheme to start in July. Do you know something different? It would make sense at least to say anyone installing from now will be eligible otherwise the ASHP industry will grind to a halt for 2-4 months.

StuHolmes

Edale wrote: »

The way I read it is that the RHI premium is to be paid to new installations going forward and more details would be announced in May for the scheme to start in July. Do you know something different? It would make sense at least to say anyone installing from now will be eligible otherwise the ASHP industry will grind to a halt for 2-4 months.

I read it the same way as you Edale. I can't see them paying the premium to everyone who has installed since July 2009, I think that is just the RHI tariff from 2012 onwards.

peat

Cardew, the Tier system is designed to discourage the deliberate squandering of power as the tier 2 rate is less than the cost of fuel. What could be encourageed is the deliberate oversizing of equipment in order to maximise tier 1 payments - unless this can be requlated throough the MCS certification system necessary for power units less than 45kW

albyota

From DECC

RHI premium payment: households

• RHI tariff payments will start for homes alongside the Green Deal from 2012 to allow a more whole-house approach to heat production and energy saving.
• In the meantime, up to 25,000 installations from July will be supported by a “RHI Premium Payment” to help people cover the purchase price of green heating systems. Those taking up the Premium will then be eligible for a RHI tariff from October next year when the Green Deal begins, as will anyone else who has had eligible equipment installed from July 2009.
• For new build homes, an RHI tariff will be considered for the 2012 phase
• The “RHI Premium Payment” will be worth around £15m and will ensure there is a fair spread of technologies across all regions of Great Britain. The installed technologies will be monitored to enable government, manufacturers, installers and consumers to better understand how to make sure householders get the most out of them.
• There will be clear eligibility criteria in order to qualify for a Premium payment, including:
  • a well insulated home based on its energy performance certificate;
  • agreeing to give feedback on how the equipment performs
• A key focus of this initial phase will be on people living off the gas grid, where fossil fuels like heating oil are both more expensive and have a higher carbon content.
• We plan to publish details of the “RHI Premium Payment” and how this will apply in May this year. We will consult on the RHI tariffs that will apply from October 2012 later in the year.

albyota

I agree it is a bit sketchy as to which July they are refering to, unless I'm reading it wrong.

3. Table highlighting likely levels of support for RHI Premium Payments:
Solar Thermal - £300/unit
Air Source Heat Pumps - £850/unit
Biomass boilers - £950/unit
Ground Source Heat Pumps - £1250/unit

albyota

Edale wrote: »

The way I read it is that the RHI premium is to be paid to new installations going forward and more details would be announced in May for the scheme to start in July. Do you know something different? It would make sense at least to say anyone installing from now will be eligible otherwise the ASHP industry will grind to a halt for 2-4 months.

Mmm, I think I have read it wrong, I think you and stuholmes are correct, the RHI premium is for installations from July 2011 in return for monitoring equipment to be fitted and/or feedback on running cost and performance, data to be collected to assist in further EST/DECC trials.

Some people are putting on hold their installations waiting for the RHI rates to be confirmed, this will just mean they will continue to pay more and more for the oil or LPG they continue to use, the savings stack up without the RHI.

Edale

albyota wrote: »

Some people are putting on hold their installations waiting for the RHI rates to be confirmed, this will just mean they will continue to pay more and more for the oil or LPG they continue to use, the savings stack up without the RHI.

Well looking at how mine is performing so far I have to agree it will be considerably cheaper to run than my previous old oil boiler and I am sure it will also be a lot cheaper than the most efficient new oil boiler available. The problem lies in the capital expense of the systems being so much higher which excludes many people from making the decision. At least the RHI would have gone some way to justifying this additional expense even if the money had to be borrowed. I don't understand why the systems cost so much apart from the fact that they do not have the economies of scale compared with the gas/oil boiler manufacturers. This could change if the take up of heat pumps increases and if this is the case installing one today might cost an awful lot more than if you waited a couple of years. This to me is what the RHI is for - to support those that are prepared to invest in the technology in the early stages when the cost is highest.

Unfortunately I think DECC have got nervous about ASHP installations being made just to get the incentive, certainly this could be the case on commercial installations where it is relatively easy to install air source heat pumps with a large capacity able to generate large RHI payments. As a tax payer I am pleased they are being cautious with our taxes but think the ASHP industry need to get their case over well as to why they should be included and get DECC to clarify the situation regarding the RHI premium payment, why would anyone have one fitted at the moment until details of this are published in May?

albyota

Edale wrote: »

Well looking at how mine is performing so far I have to agree it will be considerably cheaper to run than my previous old oil boiler and I am sure it will also be a lot cheaper than the most efficient new oil boiler available........................

...................As a tax payer I am pleased they are being cautious with our taxes but think the ASHP industry need to get their case over well as to why they should be included and get DECC to clarify the situation regarding the RHI premium payment, why would anyone have one fitted at the moment until details of this are published in May?

Absolutely agree, the heat pump industry needs to be policed better by the MCS, probably with 3 or 6 monthly inspections of randomly chosen installations to start with, and innitially, a deposit of say, £3k, if any evidence of cowboy operations they should be removed from the scheme and lose their deposit. The industry will get worse if plumbers merchants continue to box shift heat pumps to tom, !!!!!! or harry who have not been trained how to size and specify or install heat pumps.