Happy Birthday RHI

This is a blog by planning expert Mitch Cooke. Mitch is Founder of environmental planning consultancy Greengage Environmental LLP. He previously led the environmental planning teams for WSP and WYG.

The Renewable Heat Incentive opened to applications on 28 November 2011. It pays businesses and public sector bodies a subsidy for each unit of heat generated using renewables such as biomass boilers and heat pumps.

The incentive was introduced to ensure the UK gets 12 per cent of its heat from renewables by 2020, up from 2.2 per cent in 2011 (This level is needed to meet EU targets). However, the renewable heat generated in the scheme’s first year amounts to less than one thousandth of a per cent of UK annual heat demand.

It seems that the take-up is far lower than expected. Almost 1,500 additional installations will now be needed per month to reach the government’s target for 123,000 businesses and public sector bodies to be using renewable heat by 2020.

Ofgem data shows just a disappointing 586 installations are now claiming the RHI and these total just 143 megawatts peak capacity. Unsurprisingly 524 of these are biomass boilers, which produced 99 per cent of heat under the scheme. Only £2million in subsidy has so far been paid out.

Although still far below expectations, the figures do improve when you look at applications rather than claimants. Ofgem had received 1,107 applications for accreditation including those approved, by the end of October.

However, in my view, the difficult first year can be attributed to confusion over metering requirements and the government introducing cost-control measures that made some investors wary of committing to projects.

I believe the main barriers to growth are business and public sector fears that the government will cut the subsidies available with little notice – a consequence of the highly publicised government slashing of Feed-in Tariffs for solar power over the past year.

I think that similar cuts are unlikely in the case of the RHI, as the Department of Energy and Climate Change (DECC) has established a cost control system under which subsidies will gradually fall as uptake increases.

A domestic version of the RHI is due to launch next year.