RHI critical to UK decarbonisation, DECC research proves

The Renewable Heat Incentive (RHI) has been critical to decarbonising the UK's heat sector, reports from the Department of Energy and Climate Change (DECC) have found.

Several reports released by DECC yesterday (11 February) evaluated both the domestic and non-domestic RHI schemes, concluding that, after positive feedback, more than 800MW of additional capacity could potentially be added each year.

Energy Minister Lord Bourne said: “Reforming how we use energy for heating is critical to achieving secure, affordable and clean energy for families and businesses across the country. That is why the government will be pushing a more cost effective, targeted Renewable Heat Incentive scheme for the next five years.”

The RHI scheme provides a 20-year subsidy to eligible, non-domestic renewable heat generators and producers of biomethane for injection based in Britain. By providing a long-term financial incentive, the objective of the non-domestic RHI is to significantly increase the proportion of heat generated from renewable sources.

Chancellor George Osborne announced a reform of the RHI scheme – which would see funding cut by £700m in his Spending Review last autumn.

Room for improvement

Commenting on DECC’s findings, the Renewable Energy Association’s (REA’s) policy analyst Frank Aaskov said: “The reports show that consumers and businesses are in general very satisfied with their renewable heat installations, and 88% would recommend their renewable heat technology to others.

“There are always room for improvement, both in the RHI and within the sector, but it is clear that biomass and wood heating is a modern and mature technology that has huge potential for growth. We hope this is reflected in the Government’s reform of the RHI, when the consultation is launched later this quarter.”

Data from DECC’s reports shows that two-thirds of respondents would not have installed renewable heat technology if RHI wasn’t in place. The report also urges the Government to support the decarbonisation of the heat sector by introducing a range of technologies.

Despite the continued support for RHI, the report highlights the room for significant growth in biomass and wood heating. If the UK were to explore these options, more cost reductions in biomass would be needed.

As capacity grows, the reports suggest that costs to introduce new innovations would tumble. Overall costs – including lifetime fuel costs – are forecast to fall by more than 30% as the UK market continues to prosper. Installation costs are also expected to fall between 9% and 11% if the Government backs mass-market development.

RHI reform

During last year’s Autumn Statement and Spending Review, Osborne announced that the RHI would have its funding increased to £1.15bn in 2021 “to ensure that the UK continues to make progress towards its climate goals.” However, this actually means that spending on the RHI scheme will be around £690m lower than what was originally forecast by the Office for Budget Responsibility (OBR).

The UK still needs 20TWh more renewable heat by 2020, to meet the Government’s 12% target.

Matt Mace

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