Merlin HymanMerlin Hyman, CEO at Regen highlights the biggest changes that will result from the replacement of the Renewable Heat Incentive and why it is being welcomed as a sign that Zero Carbon Policy is continuing to progress.

The government announcements this week on the proposals for replacing the Renewable Heat Incentive are welcome sign that zero carbon policy is continuing to progress. We should recognise that the proposals will have involved lots of hard work by officials at a challenging time.

The first part of the proposals is an announcement to address delays in projects caused by coronavirus – the government will:

  • Extend the domestic Renewable Heat Incentive scheme until 31 March 2022
  • Introduce a third allocation of flexible tariff guarantees under the non-domestic Renewable Heat Incentive scheme
  • Extend the commissioning deadlines for projects currently holding a Tariff Guarantee until at least mid-March 2021

This is in response to concerns that Regen and others have been raising about project delays leading to companies missing key deadlines in the RHI with significant impacts on the returns. Early feedback from the market has been mixed with those installing larger projects welcoming the announcements and those supply heat pumps to new housing developments expressing concerns.

The main part of the consultation is proposing:

  • Replacement of the RHI with a Clean Heat Grant targeted at biomass boilers and heat pumps in domestic and non-domestic installations with a capacity up to and including 45kW. This is proposed to be set at £4,000 flat rate for all eligible technologies.
  • A Green Gas Support scheme using a tariff approach (for 15 years) to support biomethane production from AD plants.

There has already been some reaction to the Clean Heat Grant which have focused in particular on:

  • Is the grant high enough? In the context of plummeting oil price there are questions as to how successful the grant will be at encouraging installations. It also seems likely to favour air source heat pumps as the cheapest technology, perhaps failing to recognise the benefits of ground source heat pumps.
  • Is the £100 million budget enough? Simple maths suggests this will pay for 25,000 installations – a small inroad into the 26 million households in the country.

One possible impact of the coronavirus crisis is to raise our ambition as to the changes we can make as a society. These proposals are welcome but the work to decarbonise heat is still at an early stage and government has not yet grappled with the big decisions on energy efficiency and the balance of electrification and green gas. Regen’s recent paper on decarbonising heat attempts set out some of the key questions we need to address in the forthcoming government strategy on heat and energy efficiency.

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