The Assignment of Rights (AoR) was fully introduced by the UK government in June 2018. Put simply, the AoR is an evolution of the Domestic Renewable Heat Incentive (RHI) scheme. It connects approved private investors and property owners in a regulated environment, to cover the costs of installing a renewable heating system.

The property owner repays this financial help over time by redirecting their RHI payments to the investor. The investor cannot “own” the system, and both parties must adhere to obligations for the duration of the agreement. Applicants to the AoR must qualify for the Domestic RHI scheme, and can select a specific nominated investor as part of the application process.

Investors need to join RECC or HIES, and the contracts which are drawn up between applicants and investors must be approved by the relevant body. As I outlined in a detailed guide to the AoR for investors, there are a number of elements to consider in these agreements, from purchase and installation of the equipment itself to ongoing maintenance costs.

Will the AoR work?

An initiative like the AoR is well overdue. As outlined by the government itself, the uptake in renewable heating has been hampered by the high costs of installation, in combination with less-than-guaranteed tariffs. As a result, the UK is shockingly short of official targets.

The ambition was 513,000 installations by 2020, set as part of the RHI forecasting. However, by the end of 2017, just over 78,000 installations had been completed. Predictions show a 78% shortfall by this 2020 target, with total renewable heat production targets reduced by 65% and total carbon emissions reductions targets (since RHI began) reduced by 44%.

Something had to be done, and AoR is touted as a potential saviour. However, many critics argue that these aims were wildly optimistic in the first place and cannot be used as a true yardstick.

The initial impact assessment for AoR highlighted its potential to unlock funding for families with low credit ratings. This is critical, considering that some households get loans, only to fail in RHI qualification - thereby dangerously removing their ability to cover loan repayments.

A huge positive factor is that the AoR option will be tightly controlled, regulated, and tied to RHI. It means that industry stakeholders can provide a full-service solution, with seamless transition to renewable heat for British homeowners. Package deals are attractive for everyone involved.

However, concerns have been raised. Most notably, if an installer also operates as an investor, they may have a direct incentive to install cheaper technology - without negatively impacting their RHI payment rates. Over time, this would reduce quality and reliability across the UK. It is up to industry professionals to maintain integrity, but the authorities must monitor this threat.

The Green Deal failed for a number of reasons: notably because the interest rate was too high, setup fees were extortionate, the application process was tiresome, and the regulations were too complex. These lessons must be learned, and the conclusions must be applied.

Conclusion

The AoR is a worthwhile initiative, and it will certainly have an impact. That said, due to original unrealistic targets, we cannot expect this to be a magic bullet. The introduction of the AoR won’t drive us to the uptake that was predicted at the outset of the RHI, that’s for sure.

The Assignment of Rights has solid potential. Collaborative promotion between government and private stakeholders must get the message across to a broader audience to boost uptake and get us on the path to zero-carbon heat in the UK.