Government delays domestic Renewable Heat Incentive

Published:  02 April, 2012

The government has announced it will delay the introduction of the domestic Renewable Heat Incentive, but extend the current RHPP scheme.

Originally, the domestic RHI was due to be introduced in October 2012 alongside the Green Deal, but it will now be introduced from Summer 2012.

Greg Barker, Minister of State for Energy & Climate Change, said government "remains committed to the deployment of renewable heat", and that DECC would consult on how we can support renewable heating for households in the longer term in September 2012, and we will set out a firmer timetable for delivering this support at that point and anticipate that this will be from Summer 2013.

The Renewable Heat Premium Payment (RHPP) has provided support to the domestic sector since August 2011. A second phase of this scheme, worth £25 million (£10 million more than the first phase), will provide support for the installation of renewable heat technologies in the household sector.

The support will consist of a new voucher scheme for domestic households and a new social landlords’ competition building on the experiences of Phase 1 of the RHPP.

To ensure the success of the non-domestic scheme (that launched in November 2011), DECC said it will prioritise the delivery of a cost control regime that incorporates lessons from other schemes and meets previous commitments. To do this, a package of policy options are being developed that include modified pre-accreditation, degression and reviews. A consultation will take place in July 2012, with a view to laying Regulations in November and for the policy to be implemented by the end of the current financial year.

This consultation will also include amendments to the existing scheme covering air quality and biomass sustainability issues, as outlined in the original RHI Policy document. Cost control measures can only apply to new entrants, so installations already receiving the RHI will continue to receive their current tariff (adjusted for RPI) for the full 20 year duration.

Simon Osborne, spokesperson for Baxi, said: “RHPP has always been seen as a precursor to domestic RHI, so as the government pushes back the latter, we are glad that a new RHPP will bridge the gap. Ideally both schemes need to work together in order to encourage individual installers, as well as homeowners, to start thinking about renewables. RHPP will definitely support early adopters, but might have a limited scope if accompanying tariff payments are not announced soon. If installers are going to invest in training on renewables, then they need to know what the potential market is going to be – and this will be determined, to a large extent, by domestic RHI.

“Customers in off-gas areas definitely have the most to gain under RHPP and we are pleased to see continued support for biomass and heat pumps. By introducing new elements that will cover larger projects, in social housing for example, there is a massive opportunity to impact fuel switching and alleviate fuel poverty.”

BEAMA has welcomesd the Renewable Heat Premium Payment (RHPP) extension, but called the delay to the RHI "disappointing news". 

Kelly Butler, BEAMA’s marketing director said: “It has been clear that the introduction of the RHI in 2012 was not going to happen and we have briefed our heat pump manufacturers along these lines for some months now. But the good news is that government remains committed to Renewable Heat so we should be pleased and confident for the future. 

"However, what the Minister and officials have to better understand is that industry needs to budget just the same as DECC and Treasury, so we now want to see some early signals of some firm dates for introduction so we do not end up in an industry endlessly waiting for a government scheme.  If the Government wants to meet its 4th Carbon budget targets then 600,000 heat pumps need to be installed by 2020 and this will take firm policy direction and early action.”

OFTEC has expressed dismay at the announcement. In a letter to Greg Barker, OFTEC has asked for reassurance that oil heating consumers would not be disadvantaged by the decision to postpone phase two of the RHI until 2013, and in the interim to extend the Renewable Heat Premium Payment Scheme (RHPP).

OFTEC Director General Jeremy Hawksley said “The RHPP does not currently address the needs of the majority of oil heating consumers who live in older properties in rural areas. Renewable technologies such as air and ground source heat pumps are simply not suitable for the majority of those homes; they cannot provide sufficient heat and they are very expensive. Instead we should be looking to convert those households to bio-liquids which is a lower carbon fuel.”

OFTEC estimates the UK could save up to 2 million tonnes of carbon emissions per year by switching oil households over to bio-liquids.

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