CRISIS? what CRISIS?
Posted by Carbon Zero Consulting on 07/0711 at 09:45 AM
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The rash of ground source installation company failures continues!
There is a cold wind blowing out in the ground source installation sector. Some big names have bitten the dust recently and many smaller operators are disappearing off the radar.
Those managing to keep going are losing money, or at best breaking even or being propped up by major investors - for now.
Good riddance to some of those companies - BUT, equally, the industry has lost many excellent operators with years of expertise vital to a formative industry.
What is going on? Heres a few factors that are contributing - please respond if you disagree or want to add more!
1. The economy in general is not conducive to domestic spending on expensive ground source systems
2. Commercial building is just starting to reappear from a major slump
3. The RHI has become the 'poor relation' of FITs. It has been delayed, chopped, changed and delayed again. This has eroded confidence in domestic RHI. For many potential customers, the vague promise of 'a few pence per kWh at the end of 2012' is insignificant compared to ground source capital cost or the quick win with PV.
4. Why has the government favoured FITs? The UK is a heat dominated society, RHI should have greater importance
5. Rumour has it that the RHI will not support installation in new build homes. Another major blow to heat pump sales!
6. Gas has gone up - but it is still very cheap compared to ground source capital costs
7. Uncertainty over government RHI support for Air source. Will they or won't they?!
8. 'Cowboy' operators; A job can be won by undersizing systems to reduce material costs. 6 months later the system fails but the installer has long since got his money!
9. The knock-on effect of 8. above is that project costs are driven down to a level where competent operators cannot afford to take on a project - or if they so; the project loses money.