A vent on energy prices but new renewable tariffs worth knowing…

IMAGE: Jennifer Newton met with Greg Barker Minister for Energy and Climate Change.

We know from recent news that energy prices are set to rise again and that all householders should be proactive in continually changing suppliers for a better deal. However, jumping on the energy band wagon, opposition leader Ed Miliband promised to freeze energy prices for 20 months if Labour made it into power – is it enough? No. ??For anyone not on mains gas and relying on oil, LPG or electricity for heating – bills are eye watering high.

But get this… In his previous role when Labour were in power, Ed Miliband had the role of Secretary of State for Energy and Climate Change. ?When he was in this role tariffs were set too high for those installing Solar PV – this was the tariff homeowners were paid for making electricity from their roof. The tariff was 41.3p per kWh from launch date and so lucrative that energy companies like British Gas had a sales force in place instantly to convince homeowners to sign up to the ‘rent a roof’ scheme. It meant energy companies would install the panels for free – the benefit to the householder was free electricity by day (when the sun shines) without paying the £10,000+ these panels on average would cost.

However, homeowners who agreed to this signed over the rights to the feed-in tariff to the company installing the solar panels. Everybody happy? Not quite. Those who signed up year one will keep that tariff for 25 years. But with the success of the scheme in years one and two the tariff rate paid was continually dropped and for those joining now it is only14.9p per kWh. None of the energy companies at this rate have continued the ‘rent a roof’ scheme – these large energy companies aren’t silly when it comes to making profits. At the very least, homeowners still need to be encouraged to switch to renewable energy – especially those not on mains gas.

The good news is the government has a new tariff scheme for householders generating energy. Greg Barker, the current Minister of State for Energy and Climate Change, advises that the following technologies for heating and / or hot water will from Spring 2014 be paid to householders for how much energy they produce under the Renewable Heating Incentive (RHI). The tariffs are rewarding – Air Source Heat Pumps 7.3p/kwh; Ground Source Heat Pumps 18.8p/kwh; Solar Thermal (which provides hot water) 19.2p/kwh or a Biomass boiler 12.2p/kwh.

But what do these figures mean and how much can be earned? As a guide, the Energy Saving Trust advises the income could be as high as £1,350 a year for houses suited to the installation of an Air Source Heat Pump. This means the cost of the installation would be paid off within 4-6 years depending on the size of pump you go for. The Government’s intention is that RHI remains open to new installations until at least 2020. But as we know from Solar PV those who benefited most from the feed-in-tariff were those that took advantage of it in year one before the tariff dropped in following years. Recent history proves just a delay of a year could be costly as who knows if RHI tariffs will remain at the current level?