The Daily Mail produced a report yesterday saying that fuel bills will continue to increase by a predicted 5-10 in the run up to Christmas. This pushes the average heating bill up to nearly £1600 per household, a doubling of prices in the last 7 years.
The top 6 Energy companies have all reported an increase in profits, but where does that leave people facing another winter when the last one does not seem to have finished.
Wiltshire has a large rural economy where both the housing stock is not very efficient (ie leaks heat) and heating bills can be further increased with the use of oil and LPG as alternatives to gas where the homes are off the gas grid.
As with other areas of the UK there are many job losses, Wiltshire Council have recently announced 340 jobs will have to go as part of the government’s austerity measures. This is on top of the 600 jobs already axed.
If you want to reduce your heating bills you have 2 options.
Firstly you can reduce the amount of fuel you use. This could be through increasing the insulation in a home or improving your windows. The “flagship” government scheme to do this is called the Green Deal and the MP for Devizes, Claire Perry, is an ambassador for this scheme.
In towns like Marlborough and Devizes and rural areas that surround the housing stock is often pre 1930’s and the insulation requirements to improve these homes can cost £10,000 per home. Even getting Green Deal surveys to find out what the best measures are are difficult to finance.
The Green Deal applies to those homes where improvement costs follow a golden rule, where the reduced fuel bills will pay for the improvements. Home owners can apply for finance so that they have no upfront costs. Part of the difficulty here is that the proposed financial costs are 7%, more than the costs associated with a mortgage and certainly commercial. If the costs outweigh the benefits then the Green Deal does not apply. There are questions around “hard to heat” homes and if you are a person in fuel poverty living in an older property – what options are open to you?
Secondly you could install a heating system that costs less to run.
In 2009 the then government announced the Renewable Heat Incentive (RHI). This was to be applied to homes throughout the UK and enable home owners to install renewable technologies that have a higher installation cost, but lower running costs. This could be solar thermal, wood pellets, log boilers, or air source heat pumps.
The domestic RHI has been delayed. The hope is that the government will introduce this and announce the final measures at the end of the summer. This incentive would pay for the installation and enable the home to benefit from lower heating costs. For those in fuel poverty the issue is the upfront costs of installation are much higher than conventional heating, and it is not clear yet how this scheme will link with the Green Deal and hard to heat homes. This makes decision making very hard for many.
There is some good news, but it may take a little work.
The Renewable Heat Incentive was introduced for “non domestic” schemes a little over a year ago. Qualifying schemes can included business buildings, charities, local government or even district heating.
District heating is defined as “more than one dwelling” and can count as 2 properties that are registered as such e.g. they have different addresses and are registered as different properties with respect to rates. For instance this would qualify for a flat above a news agent where the flat has a different address to the newsagent. It would not qualify for a home where the owner runs a business from a shed in the garden where the business does not pay business rates.
So small groups of homes can get together and use one boiler to heat their homes and share in the reduced cost of heating. Equally this could apply to business units in rural areas, bed and breakfasts, or community groups with guide huts, social centers, football/rugby/cricket pavilions or churches.
There are funding options available. With the quarterly payment from the RHI of 8.3p per kW hour projects can break even in 4 to 5 years. This means that a commercial loan can be used to pay for the installation with the Renewable Heat Incentive payments being used to pay the loan repayments.
For instance a 50kW biomass boiler could produce an income of £5200 per annum for 20 years.
A 50kW biomass boiler could cost between £20 and £25k to install and commission
The project breaks even in year 5 and there are then 15 years of income.
There are also community businesses that have emerged with the objective of being able to help their local population invest in renewable installations. For the right projects they can part fund of fully fund an installation and then be repaid with the RHI payments.
So there may be practical help for community groups or even 2 neighbours to take advantage of renewable heating. This can reduce heating bills and long term be an investment. In itself it is not the whole solution to fuel poverty, but it may be a start whilst the government gets the other schemes going properly.
Renewable Living are based in Wiltshire and install a range of renewable heating equipment. They do support local groups that are seeking to reduce carbon emissions and reduce fuel poverty.