Check against delivery
I am delighted to be speaking here today at the Ground Source Heat Pump Association’s fourth technical seminar with so many esteemed representatives from across industry and academia… and not just from the UK!
I’m always keen to see the progress that other countries are making on renewable energy so it’s good to see delegates from Sweden, Italy and the USA here today.
There are 3 key messages in my speech today:
Firstly, I want to reiterate our genuine commitment to renewable heat and GSHP’s as part of the UK’s low carbon energy mix.
Secondly, I want to look at what we can do to stimulate more growth in the GSHP industry, placing renewable heat at the heart of the UK’s drive for green growth and jobs.
And thirdly, I want to talk about how we convince, let’s face it, a sometimes sceptical audience that heat pumps can be cost effective and deliver real carbon savings - as I believe they can.
To begin with though, I wanted to set a little bit of political context.
Since day one of coming into government, we have known that for millions of hardworking people the daily cost of living is one of the greatest worries that they face.
And I don’t need to tell you that right now delivering a better deal for energy consumers is our highest priority. The Chancellor will be talking more about this later this morning.
While it is right that we are looking at how to reduce the cost of energy on consumer bills we all know that the best way to bring down prices is to help people to save energy, ensure fair tariffs and encourage competition.
That is exactly what this Government is doing.
We are working to deliver the Prime Minister’s pledge to ensure that consumers are on the cheapest tariff to suit their needs.
We are backing reforms to make sure that more electricity trading takes place on the open market.
We are putting in place an annual review of the state of competition in the electricity market.
And we are providing bankable certainty for new investors through our energy market reforms which are set to unlock £110 billion of low carbon investment.
To complement EMR, we also we need an explosion in consumer choice.
I have spoken in the past of my vision of an energy sector of the big 60,000 that rise to challenge the Big 6 energy companies.
A vision where companies, communities, public sector and third sector organisations grab the opportunity to generate their own energy and start to export their excess on a competitive, commercial basis.
This is an ambition that happily unites the drive to get a better deal for hard pressed consumers with ambitions for a greener, more local energy sector.
I want to see GSHP’s and renewable heat at the heart of this.
Large scale GSHP’s can work well in community heat networks and DECC’s new Heat Network Delivery Unit has started working with many Local Authorities to get these projects off the drawing board.
We also need a long-term approach – and it’s important here to stress the strategic value of heat pumps.
When I published the “Future of Heating: Meeting the Challenge” document in March this year, it predicted large scale deployment of both air and ground source heat pumps by 2050, as well as a greater role for heat networks.
The CCC’s 4th Carbon Budget called for 6.8 million heat pumps by 2030 – this may be seen by some as a stretch – but I still expect heat pumps to play a major role in achieving heat’s contribution to the 2020 renewable energy target
That’s why it’s important to “prime the pump” now to get the GSHP industry back into a growth.
Which brings me to my second point…
We have registered over 3,500 applications for the RHI so far, with the 2,700 accredited applications representing 547 MW of installed capacity and half a terawatt hour of renewable heat already paid for.
But I think it’s fair to say that the last few years have been pretty tough in the UK GSHP sector.
Many of you here can no doubt attest to that – deployment to date in the RHI has been disappointing – I want this to change!
Based on feedback from the industry we looked again at our cost data for GSHP systems and came to the conclusion that the tariff for GSHP’s in the RHI needed to be substantially increased.
I was very pleased to be able to announce yesterday that, as part of a package of measures to improve the RHI, tariffs for GSHPs are changing for the better.
Eligible GSHP systems of any size will now be able to claim a tariff equivalent to 7.2p/kWh total heat output.
As I indicated earlier in the year these new tariffs will be available to any qualifying system installed since January 21st.
I hope this will give a timely boost to the industry and help stimulate the growth we need in the marketplace.
I also recognise that deep geothermal heat could have an important role in delivering our low carbon future and that it’s important to differentiate between these types of systems and conventional GSHPs.
That is why I also announced yesterday that we will be introducing a dedicated tariff of 5p per kilowatt hour of heat generated from deep geothermal installations.
I hope to see numerous deep geothermal heat projects come to fruition in the next few years –
GT Energy are already pressing ahead with their exciting Manchester city centre project.
EGS and Cluff Geothermal are also actively pursuing heat projects.
I also announced increased support for renewable CHP, large biomass boilers, solar-thermal and biogas combustion as well as new support for air-water heat pumps and commercial and industrial energy from waste.
I want to see real growth across the renewable heat industry and these improvements will really make a difference.
But we don’t just want to see GSHP systems being installed in businesses and the public sector;
we want homeowners and social landlords to benefit from the RHI too.
We’ve already supported over seventeen and half thousand domestic renewable heat installations through the RHPP scheme and I was very proud to announce details of the domestic RHI in July.
As part of that announcement we set a tariff of 18.8p per kilowatt hour of heat for GSHPs and I hope that will help this innovative technology really capture the imagination of the British public.
I want heat pumps to be seen as a realistic and effective option for many kinds of homes – not just for the grand designs out there…
I’m looking forward to seeing these changes make a real difference to the sector, and for new and exciting projects to come forward.
Projects like the glasshouse heating scheme that Lincolnshire Herbs are investing over a million pounds in – when completed next year this will be one of the largest GSHP systems in the UK.
Projects like the innovative “river source” heat pump, officially unveiled recently by my colleague the Rt Hon Ed Davey, the Secretary of State, at a large residential development in his Kingston constituency.
I know that Ed was impressed and wants to see more of this type of system along the Thames!
And projects like those being rolled out by Sainsbury’s at many of their stores – another multi-million pound investment in GSHP technology!
And that brings me on to my third point this morning…
It is particularly important that the industry continues to demonstrate the effectiveness and efficiency of heat pumps to the wider market.
As you well know field trials in the past have shown mixed results so it’s more vital than ever that we ensure appropriate standards of design and installation to give maximum benefit to the consumer.
The Secretary of State announced a few weeks ago that we are making £500,000 available to fund training vouchers for heating engineers looking to make the move into renewable heat – we’ve had a great response to this scheme so far, with more than 750 engineers expressing an interest already!
I also confirmed yesterday that heat pumps in the non-domestic RHI will need to be designed to meet a minimum Seasonal Performance Factor of 2.5, with metering to monitor in situ performance to be included as part of the policy.
You’ll be hearing more about metering and the technical fixes we’re introducing later, but of course this SPF of 2.5 should be seen as a minimum acceptable level of performance, rather than a target – we know that an SPF of over 4 is possible.
Some of you here will be familiar with the Oxford University Earth Sciences project. This GHSP system was not running at all well at first – the University could easily have been convinced that heat pumps were a poor investment.
Luckily they were prepared to invest some time to figure out what was going wrong.
Along with the consultants Hoare Lea and the installer GI Energy…
(Chris Davidson of GI is here today I’m sure – he can tell you more over coffee!)
…they went back and made the system work. It’s now exceeding its design performance. This shows what can be done and with new tariffs in place, now is the time for GSHP industry to show what it can do to deliver.
And while you’re doing that, we will continue to look at what we can do to improve the RHI.
We have committed to looking at providing extra financial incentives for renewable heat networks via the RHI, as part of the 2014 review.
And to help set the scope of the review more widely, we are about to exploit the power of the social media by launching an on-line discussion about priorities for the review.
We will continue working to unleash unprecedented competition and consumer choice in a way that allows us to affordably meet our vital, legally binding climate change targets.
It requires vision, ambition and a coherent strategy to deliver it.
And Government must continue to be a genuine partner with industry.
The prize is growth. Green growth.
The prize is local jobs and SMEs supply chains to help the UK to compete in the global race.
The prize is a better deal and peace of mind for worried consumers, a cleaner, greener, safer environment and energy security for decades to come.