OFTEC, the trade organisation for oil fired heating and cooking installers, announced that it is moving into the renewables market in September.
OFTEC has around 7,800 members on their 'Competent Person' scheme. Their customers are often homeowners with properties off the gas grid using oil to heat their homes. The trade body is encouraging its members to register for the Microgeneration Certification Scheme (MCS) through them for installing air source heat pumps and solar thermal solutions.
Heat Pumps Today editor, Will Hawkins, interviewed its Director General, Jeremy Hawksley, and Communications Manager, Malcolm Farrow.
Air source heat pumps and solar thermal are the first ones we have done. And, we are now open for business and we able to register people for those technologies.
WH: What brought around your change of tack?
JH: I think the history of this is slightly convoluted in that we were always very supportive of the principle behind the renewable heat incentive and spent a lot of time and money trying to persuade DECC that we should have what we call a 'bio-liquid' available which would be part-biofuel, part-kerosene fuel. But, we failed to get that recognised as a renewable technology.
OFTEC recognises the need to decarbonise heating in the off-grid areas. We are very keen to be involved in that. What we now see, with or without the RHI, is that people in rural areas will be looking seriously at renewable heating when they come to renew their old boiler.
Quite a lot of them may actually go for a 'hybrid option' where you keep your oil but put in an air source heat pump next to it. The air source heat pump keeps the house warm for, perhaps, three-quarters of the year. And, the oil boiler is there as a back-up. Our technicians need to qualified under MCS to install air source heat pumps. And solar thermal which can be a very useful add on.
WH: With the fluctuating oil price in the market at the moment, is that creating problems, from making homeowners moving into a 'renewable heat only' solution?
JH: I think the OFTEC perspective is that we are very sceptical that the 'renewable only' solution is appropriate for any off gas homes unless you are going to be able to throw a lot of money at it.
That's why I use the word 'wealthier people'. Let's go back to the question of price, the average price in October for kerosene in the UK was 49.6p per litre. That was the average. It varied between regions. In February 2013, the average price was 62.8p. So, we have lost 21% of the cost of oil in that period.
But, the interesting thing that we have seen is that gas and electricity prices have just kept on going up and up and up. They tend not to come down when delivered through the six big utility companies.
The price of heating oil does follow the price of the crude oil and the exchange rate very accurately. It is one of the reasons why I think people are going to be a bit a cautious about moving onto the 100% air source heat pump solution.
MF: The point about the condition of the rural housing stock as well, and probably a lot of people have moved to a fully renewable system will mean, the need to make significant improvements to the house. That is a major disincentive for people at the moment. I think that is something which the government needs to look at.
JH: We think it will be. To be honest, the last year is that the anecdotal evidence that we have is that the installers out there have been very disillusioned with MCS. Many of them did register early but they just have not had any business and that may be partly because of the delayed introduction of the RHI.
But, I hope our proposition is a very sensible one, particularly for our people who are already registered with us. We are trying to go into this market with competitive pricing. Our charge for just one technology, like air source heat pumps, to be registered with MCS is just now £475 per year of which we are giving £110 straight to MCS. I hope that will be attractive to our existing registrants.
WH: Is it purely the registration you are doing? Or, will you be helping them with training and skills as well.
JH: One of our inspectors will inspect their business. Once they are registered with us, we can then offer them up training through our centres. I hope in time, we will have several hundred, if not several thousand, people qualified to install renewables .
WH: The time it takes to administer an MCS installation is a common complaint from installers. Is that something you hear from your members?
MF: You are absolutely right. I had an interesting conversation with a member in Cornwall, an installer who does oil and renewables. He echoed what you are saying that the paperwork and bureaucracy involved with completing RHI and the MCS forms is a real problem for installers. We share those concerns with it and, now that we are involved with it we can add our voice to cause to try to improve the situation for installers. I think it is a real barrier for getting people into renewables.
JH: Another point, is that we are also offering people to be registered with us as air source heat pump installers without MCS. That is to cater for the for wealthy people in country areas who don't want the RHI but are nevertheless installing air source heat pumps.
We recognise that there is a market there and that will obviously be at a lower fee than we charge for the MCS.
WH: The other side of the air source heat pump market has been strongly driven until recently by social housing projects. Is that a field of the market your installers will be moving into?
JH: Some of our installers will be doing social housing work already for oil. For many rural councils this may be an attractive option. However, the majority of our people are doing private work. Not necessarily for rich people but anybody who is on oil.
But one cautionary tale I would put here about social housing associations going into this area is the cost to the consumer of running a 100% air source heat pump system. The only statistics showing how much it actually costs to run a house on different fuels are the Sutherland tables.
The figures for October 2014 show an air source heat pump running through radiators costing £1514 a year, and an oil condensing boiler is costing £1146 a year for a three bedroom house. There is quite a differential emerging here. And, when you are talking about social housing you are talking about people on low incomes. I think we have got to be careful that they are not imposing higher costs on their tenants.
WH: It is a challenging market in the UK. Are your members getting asked quite a lot for renewables from their existing customers?
MF: We have detected a north/south divide. There is more interest coming from the south reflecting the wealth, in reality. Installers are always interested in an opportunity for good business. We would like to see it become easier for installers to get involved in the RHI. At the moment, it is quite difficult for small businesses to get involved. I expect they are getting some enquiries because there are some savvy customers are interested in what they can do to improve energy efficiency.
JH: The other point I would make is that we have this group of 7,800 technicians. They are the main source of advice for the domestic householder and they go and visit an oil boiler at least once a year. Oil boilers really do need to be serviced. So, if those people are able to offer these other options, even if they are hybrids, that's a powerful marketing tool for air source heat pumps.
WH: Is most of your members' business primarily domestic?
JH: Most of our people are installing into the domestic market up to 45kW. Quite a lot of them are also doing one-off jobs up to about 100kW, such as churches, church halls, small rural schools. And again, quite a few those could have a heat pump application which might be interesting to them.
We do want to get across the message that we are moving into renewables registration. Despite the fact that we don't know where the market is going, we think that a lot of our members are going to need to have these renewable qualifications. And, we are keen not only to recruit our own people but to put other people onto our register because a) we are cost competitive and b) we want lots of heating engineers to be in renewables.