The Renewable Heat Incentive: Consultation on Proposed Reform

The Renewable Heat Incentive: Consultation on Proposed Reform

  • 24 Mar 0

Heating constitutes a major part of this challenge. Heat accounts for almost half of UK energy use and a third of UK carbon emissions. The UK will not meet its climate change commitments without a stronger long-term plan to move to low carbon heating and a mass roll out of low carbon heating technology is required from the 2020 onwards in order to meet decarbonisation targets.

The Renewable Heat Incentive (RHI) was introduced to support households, businesses, public bodies and charities in transitioning from conventional forms of heating to renewable alternatives. As at the end of 2015 58,691 renewable heat installations have been accredited onto the schemes – 45,111 onto the Domestic scheme and 13,580 onto the Non-Domestic scheme. In November 2015, the Government renewed its commitment to the transition to a low carbon economy by confirming a continued budget for the RHI. Alongside this, the Government is reforming the scheme to ensure it meets its objectives in a manner which is affordable, offers value for money, and promotes deployment of technologies that are likely to be strategically important in the long-term, contributes to the development of sustainable markets, promotes widespread access and incorporates a robust scheme design.

Delivering on these aims will require changes to the scheme and the deployment it supports. Until now, the non-domestic scheme has supported widespread deployment of smaller scale biomass systems, particularly in sectors such as agriculture and leisure. Some forms of support for biomass offer a relatively stronger value for money route to delivering renewable heat generation however, the schemes must also support the long-term decarbonisation of heating in the UK. This means giving appropriate support to other technologies which have an important role in that transition.

Overall, the Government expects these reforms to maximise the contribution the RHI will make to the decarbonisation of heating in the UK and to the 2020 renewable energy target. Its estimates that the scheme will support 23TWh of renewable heat generation in 2020-21, and could support between 27 and 40 MtCO2e of carbon abatement by 2027.

The Government is proposing that these changes are introduced in two stages. The first stage will be introduced from 1 April 2016 and will include changes to how the RHI’s budget is managed, with a new budget cap mechanism. The aim of this budget cap is to ensure the on-going affordability of the RHI schemes. It will allow the Secretary of State to suspend the schemes awaiting accreditation if spending on the RHI is at risk of exceeding its budget cap.

This consultation seeks views on the Government’s proposals for the second stage of reforms, which will be implemented from spring 2017. It is also seeking views on the operation of the budget cap mechanism going forward.

The consultation is seeking views on:

  • how the budget cap, effectively closing the scheme to new entrants, should be deployed and what notice period should potential applicants be given;
  • whether there are any potential heat uses that should be excluded from the scheme;
  • whether current auditing mechanisms should be increased;
  • what barriers exist with regard to installing heat pumps in the non-domestic sector;
  • whether support should be withdrawn for solar thermal systems;
  • any other relevant issues not raised in the consultation.

The deadline for response is 27 April 2016. We are formulating our response to the consultation and would welcome your feedback to incorporate into this.

To have your say, please email the compliance team at compliance@carbon2018.com or alternatively complete the contact form. To discuss this further please call Melanie Kendall-Reid on 01252 87 87 22.


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