The Department of Energy and Climate Change (DECC) has proposed to remove solar thermal’s eligibility for subsidy support under the renewable heat incentive (RHI) from next year.
DECC has been working on proposals to overhaul the RHI since chancellor George Osborne’s Autumn Statement in November, during which he pledged additional funding for the mechanism.
The department has this afternoon given its first insight into what a future RHI could look like, and solar thermal stands to be removed from the mechanism from the 2017 delivery year onwards.
Solar thermal installations currently receive a tariff of 19.51p/kWh and represent around 17% of total accreditations.
DECC’s reasoning behind the proposed cuts is a combination of its status as the “least cost-effective” of the four eligible technologies and purported question marks over its additionality.
DECC cited evidence from “around half” of applicants who said they would have installed the technology without the tariff.
“Taken together, these two factors suggest that solar thermal represents poor value for money for taxpayers. In addition, we judge solar thermal to be a mature technology with a well-established global supply chain.
“It is not clear that ongoing RHI support will serve to build this supply chain in the way that it can for other less mature technologies in the UK like heat pumps,” the consultation states.
Solar Trade Association chief executive Paul Barwell expressed incredulity at the decision, stating that it did not make “any sense”.
“The government acknowledges the many benefits of solar thermal, yet proposes singling it out for the removal of financial support. With UK renewable heat deployment falling desperately behind target, government should be full square behind this technology as part of a strategic plan to permanently bring down heating costs for British families.”
“Discriminating against this globally important technology in the UK would send a terrible message to householders, and it would have very serious ramifications for the British solar thermal sector. Manufacturers of solar thermal equipment, including cylinder manufacturers as well as installers, risk a full scale winding-up of their sector. We are urging government to think again, particularly since sales enquiries are on the rise,” he said.
The consultation will remain open until 11:45pm 27 April 2016.
This article has been amended from its original version to include commentary from Paul Barwell.