Government planning to replace RHI with Clean Heat Grant
The UK Government has outlined its intentions to replace the Renewable Heat Incentive (RHI) with a new Clean Heat Grant that will aim to help households and businesses decarbonise through technology and push the nation towards its net-zero target for 2050.
The Government announced on Tuesday (28 April) that the non-domestic RHI scheme would close for new applicants from April 2021. As promised in the Budget, however, the RHI for households and organisations has been extended to March 2022.
A consultation had been launched to formalise the replacement scheme for the RHI. The Government is proposing a Clean Heat Grant that would commence in 2022, offering funding support of up to £4,000 for each household or business that integrates heating technologies such as heat pumps. An eligible list of technologies applicable for funding support will also be outlined.
The Government is also proposing a new Green Gas Support Scheme to increase the percentage of biomethane available on the gas grid. However, the Government is no longer considering banning biomass boilers in urban areas from securing financial grants. There had been some concerns that the systems were worsening air pollution.
The Government intends to use the consultation to outline the support mechanisms required by business to decarbonise the UK’s commercial and domestic building stock, which accounts for approximately 40% of the UK's carbon emissions.
The RHI was put in place by the Government as a means to convert 12% of UK homes to renewable heat by the end of 2020. Current trajectories suggest it will reach 8-10%. While Government figures claim that the RHI has delivered payments of £2,800 annually to those signed up, all while saving 5.2 tonnes of carbon annually, it has been criticised for failing to provide financial value. In 2018, the Public Accounts Committee (PAC) concluded that the RHI had failed to provide value for money for the £23bn it was set to cost taxpayers.
The Committee on Climate Change has suggested that the UK would require 15 million homes to be fitted with heat pumps or hybrid heat pumps by 2035.
Last year, the Science and Technology Committee’s ‘Clean Growth: Technologies for meeting the UK’s emissions reduction targets’ report outlined a lack of replacements for the RHI as one of the 10 major shortfalls of Government efforts to date to reach net-zero emissions by 2050.
Commenting on the consultation, Frank Gordon, head of policy at the REA said: “Overall, these are mixed announcements for the renewable heat industry. On the one hand, they have provided much-welcomed clarity on the completion of projects currently underway, the prospect of new projects and the Government’s commitment to green gas. This is a step in the right direction for the sector, providing the certainty needed to increase investor confidence and deploy much needed renewable heat technology.
“On the other hand, we were disappointed by the lack of extension for new Non-Domestic RHI projects and the implications the cap on the future grant scheme will have. Both of which could result in business’s being unable to finish their projects or continue to operate at a time when the industry needs to be bolstered to achieve our legally binding Net-Zero targets.”