Creature comforts

Consumers want warm, undisrupted homes. Liz Lainé says bear that in mind when marketing the RHI, because subsidy alone will fail.

Following the turbulent start to the feed-in tariff (FIT) scheme, the government is going back to the drawing board for the domestic version of the Renewable Heat Incentive (RHI). It is right to do so, particularly because heating is the housing stock’s biggest challenge: renewable heating technologies are virtually unknown to consumers and the disruption to people’s homes and habits can be significant.

The Consumer Focus publication Keeping FIT brings together research by the Energy Savings Trust (EST) on consumer awareness and Consumer Focus research on consumer experience. Its findings, along with the recent FIT reviews, are a useful guide to what, and what should not, drive the redesign of the RHI.

First, there are the positives:

· the private sector can, and does, respond to government backing for domestic-level measures;

· consumers respond to the combination of public sector policy and private sector marketing, and uptake is not limited to “green” consumers;

· consumers are clearly satisfied with their installed systems;

· increased uptake delivers not only jobs but also cost-savings that can, in turn, drive down the level of tariff required to incentivise investment.

The generally positive customer experience appears to be reflected in high levels of interest among these consumers in an incentive for renewable heating. Just over two-thirds of consumers who have taken up the FIT are “very” or “quite” interested in the RHI.

However, the market for renewable heat technologies is very different to that faced by the technologies supported by the FIT. First, it appeals to different consumers – in particular, those off the mains gas supply (43 per cent are “very interested”, compared with 30 per cent of connected customers).

Second, consumer knowledge of renewable heat technologies is more limited. Keeping FIT examines how far the UK population is along the consumer journey for different renewable technologies, from little or no knowledge through to “installed”. The chart shows that consumers are much more comfortable with solar technologies, with only 10 per cent of all consumers considering renewable space heating systems.

From this challenging starting point, how can government and industry grow the renewable heat market to the scale needed to deliver the nation’s renewable energy targets?

The two main deterrents to consumers considering renewable heating systems are disruption in the home and the fear that the level of heat will be insufficient. This is a very significant difference from electricity generation. Widespread uptake will not happen through subsidy alone – industry must develop offers for consumers that address their concerns about disruption and comfort.

Other barriers are the same for heat as electricity: consumers must be open to new technology, and also have the motivation, upfront cash and space to install systems. Keeping FIT told us about the early adopters in this sector. People who have installed PV are likely to be older or retired professionals. They are likely to be living in large detached homes, often in rural areas, and demonstrate a high level of concern about the environment and rising energy prices, and they have often installed energy efficiency measures in their homes.

Delivering measures to this group will help the development of the supply chain, and must foster positive word of mouth to engage a wider audience. Indeed, word of mouth has been a powerful element in the rise of the FIT. Two-thirds of consumers who have installed microgeneration systems are “very likely” to encourage their family and friends to do the same; after online sources, the recommendation of family, friends and neighbours is the most common approach to identifying potential installers; and nearly a quarter of respondents cited a personal recommendation as a reason for choosing an installer.

Consumers also say that seeing systems elsewhere raises their interest in renewable technologies. This could be on a local community project, a neighbour’s house, on exemplar homes or even on TV shows. But is seeing a system enough to overcome their concerns about cost and comfort levels? Probably not. The scenario must be relevant to the consumer, in terms of the property in which it is housed and its affordability. Consumers also want to know if it has worked, and need to hear feedback from the resident that has lived with the system, which is why Consumer Focus supports calls for government to fund the development of exemplar homes across the country as part of its £200 million fund to encourage uptake of the Green Deal.

Finally, timing is everything. Even if they have the money, the space and the motivation to “go renewable”, consumers rightly lack urgency: why change a heating system that is working perfectly well? Marketing must be targeted at the right time and in the right place. Marketing messages are better focused on those consumers for whom a new heating system is relevant – those moving home, those building a home or those who need to replace their heating system.

Research into the Pay As You Save programme, the precursor to the Green Deal, has shown that life events also have a role:

· having children raises awareness of comfort levels through the home, including that “cold back bedroom”;

· children leaving home often triggers a rethink about how a home is used, and therefore heated;

· retirement means more time spent at home, and using the home in different ways.

In summary, consumers will be ready for renewable heating systems only when it is relevant to them. Early adopters may be willing to take risks, and put on a few extra jumpers or pay a few more pounds if something goes wrong, but this will not deliver the uptake needed by government and wanted by industry.

Renewable heat installers must therefore not only stamp out any mis-selling, and the accompanying negative publicity, but deliver reliable systems at the right price. The aim must not be to sell a system to a consumer, but to deliver a system that will encourage that consumer to “sell” renewable heating to their friends and family networks. This goes beyond reliability in terms of nuts and bolts: disruption must be minimal, controls must be intuitive and understood by residents; systems must be correctly sized; and energy efficiency measures installed to keep the heat in and costs down. It is affordability, low hassle and comfort that will sell these systems to consumers who are fearful of rising fossil fuel prices, not the RHI alone.

Liz Lainé is low carbon homes policy manager at Consumer Focus

This article first appeared in Utility Week’s print edition of 30 March 2012.

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