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Renewable Heat Incentive (RHI): a new era beckons?

BSRIA and the Sustainable Energy Association broadly welcome amendments such as new heat pump tariffs, but questions remain over the long-term future of the scheme

BSRIA has broadly welcomed a raft of changes being introduced to the government’s Renewable Heat Incentive (RHI) programme that are intended to improve the attractiveness of technologies such as biomass, heat pump and solar-powered devices.

Initiatives such as increasing tariffs to encourage the take up of heat pumps are being introduced to the programme as part of proposed changes. Other amendments include providing greater clarity on the expected return on investment for larger-scale heating projects using renewable power.

However, some industry bodies have warned that a longer-term plan was still needed to give clarity on how funding initiatives currently supported through the RHI may continue beyond 2021.

RHI was established by the UK government to offer financial incentives for domestic and business properties to switch to heating systems powered by renewable energy in order to help meet national strategies to curb carbon emissions.

A series of amendments have already been introduced to RHI following a consultation process that ran between March and April 2016. The first package of amendments that included commitments to encourage greater heat pump uptake and improve the effectiveness of the scheme for larger plant sizes are now in place. Additional amendments are expected later this year, pending parliamentary approval, as part of an ongoing package of roll-outs.

BSRIA has said that the full package reforms will ensure ensure better value for money and consumer protections, while also addressing “loopholes” in earlier iterations.

The organisation also welcomed measures to try and support growth in the heating supply chain for renewable solutions in a way that would be sustainable without need for government support.

Long-term sustainability

BSRIA senior market intelligence analyst Socrates Christidis said the revised RHI was expected to better focus on ensuring a more sustainable long-term strategy for the decarbonisation of heating.

Mr Christidis said, “The aim of the RHI is to incentivise the cost-effective generation of renewable heat in order to contribute to meeting carbon budgets and generate renewable energy to help meet the UK’s 2020 renewable energy target. These are crucial strategic and policy issues which BSRIA endorses and works hard to achieve.”

“However, the current market for renewable heat is a relatively small chunk of the heating market as a whole and these technologies are largely unable to compete on cost with conventional heating options. As such, it is vital that a platform for raising consumer awareness is created and efforts are made by all those in the supply chain.”

Lesley Rudd, chief executive of the Sustainable Energy Association, noted that the packages of amendments to the RHI scheme had taken a long-time to implement following a 2016 government consultation around the future for RHI.

Ms Rudd said the changes to RHI were originally intended to be introduced as a single amendment. However, the decision was taken to implement amendments in multiple packages as a result of political changes over the last year that slowed down the legislative process for enacting some key changes required to reform RHI.

Ms Rudd said the introduction of a so-called ‘assignment of rights’ estension to the domestic RHI scheme, set to come into effect later this year, would be a particularly positive introduction. The introduction is intended to overcome barriers in obtaining funding for lower income homes that may wish to introduce renewable heating technologies.

She acknowledged that the use of public money to support the RHI necessitated some checks and balances and oversight of the scheme. However, Ms Rudd said this creates additional cost and challenges for renewable technologies over more commonly deployed heating solutions.

Ms Rudd added, “It is still so much easier to install a gas boiler. And there should be focus on minimising the barriers for renewable heating.” 

Future certainty

With RHI funding guaranteed up to 2021 at present, the Sustainable Energy Association said a pressing challenge for the heating industry would now be to identify a successor initiative to help support the decarbonisation of heating products and systems and incentivise use of renewables.

Is it possible to make any future funding support for renewable heat more effective?

Ms Rudd replied, “Possibly, but it takes time to assess and a lot of evidence so we need to see the impact of the latest reforms first .”

She added that it was vital to establish as quickly as possible whether RHI would continue, or what may follow in its place to support longer-term planning and designing of renewable heat systems.

Ms Rudd said that the government had committed to focusing on decarbonising heating for systems not on the gas grid as a possible “quick win” to meet government carbon targets.

She was also encouraged by the government’s Clean Growth Strategy published last year that sets out a broad long-term roadmap on how to achieve more significant carbon reductions from heating and energy needs, despite describing some of the current commitments as “a bit thin” in terms of policy detail.

Ms Rudd, said, “There are lots of gaps to be filled in, but we do view [the Clean Growth Strategy] as a positive step.”

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