As part of its wider policy measures to reduce domestic greenhouse gas emissions (GHG) to meet UK, EU and Internationally agreed targets, the UK Government wishes to decarbonise heat generation in the UK, which is responsible for one third of UK GHG emissions.
Key findings include:
The market is expected to grow moderately over the period to 2020 without government intervention, to around 3.2 million operating units in the UK by 2020.
- Mean capital costs (excluding installation) for combined systems are around £224/kW.
Average annual maintenance costs are approximately £132 per unit per year, although this varies significantly depending on the size and nature of the system.
For the purposes of this study, RAAHPs should be modelled to have a Seasonal Performance Factor (SPF) in heating mode of between 2.5 and 3.2, with a mean of 2.8.
At this level of SPF, based on DECC’s long-run marginal grid factor of 0.3422 kg CO2e/kWh electric, RAAHPs can provide 40% carbon savings compared to condensing gas boilers and 60% savings compared to oil-fired boilers.
- Depending on the scenario, application of the RHI to RAAHPs could deliver annual CO2e savings between 2.7 to 61.4 million tonnes at the end of the 20-year support period. The costs would be between£15 million to £607 million per annum.
- There is a risk of RHI resulting in paying for heat from systems that would have been generated anyway.
There are several alternative policy mechanisms to the RHI (such as a revolving loan fund or additional taxation of kerosene used by the commercial sector) which may merit further investigation by DECC.
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