OFTEC, the trade organisation for oil fired heating and cooking installers, announced that it is moving into the renewables market in September.
Heat Pumps Today editor, Will Hawkins, interviewed its Director General, Jeremy Hawksley, and Communications Manager, Malcolm Farrow.
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.
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.
What brought around your change of tack?
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.
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?
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.
But, of course, moving into renewables for an installer is pretty solid investment as well. Do you think that is going to be a challenge to interest your members?
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.
Is it purely the registration you are doing? Or, will you be helping them with training and skills as well.
The time it takes to administer an MCS installation is a common complaint from installers. Is that something you hear from your members?
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.
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?
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.
It is a challenging market in the UK. Are your members getting asked quite a lot for renewables from their existing customers?
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.
Is most of your members’ business primarily domestic?
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.