I don´t know the deal they have, but even if Red Bull is paying Renault for the engines, they get part of that money back through the Infiniti sponsorship and even then, I doubt that Renault is charging the full cost of their operation. You can bet that Red Bull is expending less in engines than Mercedes or Ferrari.
A Renault engine contract for an F1 ream is about 18,000,000 pounds per season. Renault is the most expensive of the three (no idea what Honda's deal is).
Even at 18 million £, it's cheap compared to what Mercedes and Ferrari are spending in engines. And as Red Bull is the "works" Renault team, they get the same preferential treatment. The Renault engine is bad? Oh, well, it's called racing, some win, others loose, just ask Ron Dennis.
Red Bull has openly slated Renault since the begining of 2014, and the introduction of the hybrid formula. Weeks after week, Horner and Marko have opened up to the media, giving interviews to criticise their engine supplier, which had just powered them to 4 WDCs and 4 WCCS, no less. In fact, the engine was so bad in 2014, that Ricciardo won 3 GPs with it. Wins haven't happened in 2015 -yet, but RB and TR have regularly been in the points, nevertheless, with an engine that wasn't up to it according to the Red Bull management. The relations have soured to the point that Renault lost interest with Red Bull and hinted it may go alone in future, whilst, face with the prospect of having no engine, Mateschitz threatened to pull out of F1. Is the Renault engine really bad? It's probably not as good as Mercedes - the benchmark, or Ferrari, but it's certainly a lot better, so far, than Honda. RB and TR had a relatively good season midfield, mostly TR with its young drivers. So, I don't see what Marko and others are complaining about. Maybe they expected to sail to win 2 more titles last year? In any case, if Red Bull is left high and dry, it won't have my sympathy ...
The article I quoted stipulates that Honda's compressor is a lot smaller than their rivals compressors and needs to be spun up to 130,000rpm in order to develop the same power and heat as their rivals, who's compressors spin at less than 120,000rpm. Their problem is, when they try to spin it up to 130,000rpm, the compressor either destroys itself or the ERS system next to it. According to the article, they are now trying to redesign their compressor to allow it to spin at the required 130,000rpm+ speeds. They're not looking to generate more heat than their rivals, they're merely looking to match the heat generation of the rivals, so the insulation shouldn't really be an issue at all. As for the bearings, spinning at 130,000rpm should not be beyond the bearings capabilities providing the lubrication requirements are being met, and nowhere does the article state that the compressor failures are due to bearing failures (By the same token it doesn't specify which component does fail in the compressor). When it comes to Honda looking to create new, exotic and previously unknown materials for their compressor components as you claim, Article 5.18 of the 2015 F1 Technical Regulations states: 5.18 Materials and construction Pressure charging and exhaust systems : 5.18.1 All components of the power unit exhaust system, (from the engine exhaust flange up to and including turbine housing or waste-gate exit housing) that are in contact with the main exhaust gas flow must be manufactured from a Cobalt, Iron or Nickel based alloy. Any gaskets or seals are excluded from this restriction. 5.18.2 Any rotating and reciprocating component in the compressor (from compressor inlet to compressor outlet) must be manufactured from an aluminium, titanium or iron based alloy. 5.18.3 Static components that are neither in the exhaust system nor in the compressor line must be manufactured from iron based alloys, aluminium alloys or titanium alloys. 5.18.4 The compressor housing (from compressor inlet to compressor outlet) must be manufactured from aluminium or magnesium based alloys. 5.18.5 Measures must be taken to ensure that in the event of failure of the turbine wheel any resulting significant debris is contained within the car. Whilst Article 15.1 states: ARTICLE 15 : CAR CONSTRUCTION 15.1 Permitted materials : 15.1.1 The following is the list of permitted materials. These are the only materials permitted to be used in the construction of the Formula One Car provided only that in all cases the material is available on a non-exclusive basis and under normal commercial terms to all competitors. Permitted materials : 1) Aluminium alloys. 2) Silicon carbide particulate reinforced aluminium alloy matrix composites. 3) Steel alloys. 4) Cobalt alloys. 5) Copper alloys containing ≤ 2.5% by weight of Beryllium. 6) Titanium alloys (but not for use in fasteners with <15mm diameter male thread). 7) Magnesium alloys. 8) Nickel based alloys containing 50% < Ni < 69%. 9) Tungsten alloy. 10) Thermoplastics : monolithic, particulate filled, short fibre reinforced. 11) Thermosets : monolithic, particulate filled, short fibre reinforced. 12) Carbon fibres manufactured from polyacrylonitrile (PAN) precursor. (*) 13) Carbon fibres manufactured from polyacrylonitrile (PAN) precursor which have : - A tensile modulus ≤ 550GPa. - A density ≤ 1.92 g/cm3. - Unidirectional or planar reinforcement within their pre-impregnated form, not including three dimensional weaves or stitched fabrics (but three dimensional preforms and fibre reinforcement using Z-pinning technology are permitted). - No carbon nanotubes incorporated within the fibre or its matrix. - A permitted matrix, not including a carbon matrix. 14) Aramid fibres. 15) Poly(p-phenylene benzobisoxazole) fibres (e.g. Zylon). 16) Polyethylene fibres. 17) Polypropylene fibres. 18) E and S Glass fibres. 19) Sandwich panel cores: Aluminium, Nomex, polymer foams, syntactic foams, balsa wood, carbon foam. 20) The matrix system utilised in all pre-impregnated materials must be epoxy, cyanate ester, phenolic, bismaleimide, polyurethane, polyester or polyimide based. (*) 21) The matrix system utilised in all pre-impregnated materials must be epoxy, cyanate ester or bismaleimide based. 22) Monolithic ceramics. [Materials marked (*) are permitted only for parts classified as either front, rear or side impact structures, side intrusion panels or suspension members as regulated by Articles 15.4.3, 15.5.3, 15.4.6, 15.4.7 and 10.3 of the Technical Regulations respectively.] Exceptions : 1) All electrical components (e.g. control boxes, wiring looms, sensors). 2) All seals & rubbers (e.g. rubber boots, o-rings, gaskets, any fluid seals, bump rubbers). 3) Fluids (e.g. water, oils). 4) Tyres. 5) Coatings and platings (e.g. DLC, nitriding, chroming). 6) Paint. 7) Adhesives. 8) Thermal insulation (e.g. felts, gold tape, heat shields). 9) All currently regulated materials (e.g. fuel bladder, headrest, extinguishant, padding, plank). 10) Brake and clutch friction materials. 11) All parts of power units homologated according to Appendix 4 of the Sporting Regulations. 15.1.2 No parts of the car may be made from metallic materials which have a specific modulus of elasticity greater than 40GPa / (g/cm3). Tests to establish conformity will be carried out in accordance with FIA Test Procedure 03/03, a copy of which may be found in the Appendix to the Technical Regulations. Based on these regulations, Honda inventing and developing previously unknown, exotic materials to build their compressors with would instantly fall foul of Article 15.1.1, let alone Article 5.18!
Just mixing aluminum with less than 2% of other materials, can drastically change its properties. The word "alloy" allows much to be researched.