DECC unveils new plans for renewable heat scheme

The UK Government has today set out renewable heat scheme plans for commercial, industrial and community organisations. The new updates include a fixed budget for each year of the Renewable […]

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By Priyanka Shrestha

The UK Government has today set out renewable heat scheme plans for commercial, industrial and community organisations.

The new updates include a fixed budget for each year of the Renewable Heat Incentive (RHI) to ensure the scheme remains “financially sustainable” and offers good value for money to the taxpayer. DECC said the RHI is designed to “revolutionise” the way homes and businesses across the nation are heated, cut carbon emissions and help the UK meet its renewables targets.

The Government also intends to introduce an approach similar to the Feed-in Tariffs scheme, which would involve payments falling by 5% to new applicants if the number of installations exceeds the Government’s target.

Energy and Climate Change Minister Greg Barker (pictured) said: “I am fully committed to ensuring our Renewable Heat Incentive helps as many organisations as possible get on board with a range of exciting sources of renewable heat and at the same time stays within its means. That’s why we are introducing a new, flexible way to control spending, alongside some further improvements to the scheme.

“This is however just the first step on our journey to safeguard longevity, provide certainty to industry and sustain growth under this scheme. We are also continuing to explore whether the tariffs we offer are set at the best levels to encourage further uptake, looking at how we can open up the scheme to new technologies and considering the right approach to encourage householders to invest in renewable heat.”

DECC said the new policy also aims to provide certainty for investment through reviews of the RHI currently proposed for 2014 and 2017. However, although the Anaerobic Digestion and Biogas Association (ADBA) welcomed the announcement, it said the new proposals don’t give developers the certainty they need.

Charlotte Morton, Chief Executive at ADBA said: “With tariff degression in place, preliminary accreditation is important and it is disappointing that it has not been brought in at this point. Further scheme reviews are a clear risk to certainty and we believe the RHI instead needs to be given the chance to bed down so that developers can get projects off the ground.”

The Combined Heat and Power Association agreed and warned investors will need more certainty. Dr Tim Rotheray, Head of Policy said: “Investors need to know now that the RHI payments will be there when they complete the project. If the RHI fails to incentivise large-scale renewable heat schemes, it will only make meeting the 2020 renewable heat target more difficult for Government and more expensive for taxpayers.”

The RHI scheme was launched in November 2011 and more than 1,300 applications have been received to date. According to DECC, £24million worth of RHI payments are expected to be paid out this financial year.