The government’s controversial consultation on reforms to the Renewable Heat Incentive (RHI) closed this week amid claims its proposals are “counterproductive, and will significantly impact the industry.”
The consultation to outline plans for a “reformed and refocused” RHI scheme was published in early March and included a number of radical alterations to the renewable heat support scheme. These included stripping back support for biomass systems, which have been by far the most popular technology under the RHI, by up to 98% in the non-domestic scheme.
The Department of Energy and Climate Change (DECC) is also planning to introduce a budget cap across both the domestic and non-domestic schemes, with the option of closing the latter as a cost-controlling measure.
If implemented, Scottish Renewables has claimed these changes will have severe consequences on the renewable heat sector across the UK, cutting deployment and damaging further growth.
Stephanie Clark, policy manager for Scottish Renewables, said: “Changes proposed in the RHI consultation will limit opportunities across the board. They will also disproportionately impact the public sector, which has been the driving force behind a number of renewable heat projects in Scotland.
“While we broadly support the aims of this consultation to help build sustainable markets and support the right renewable heating technologies for the right uses, we feel that a number of the proposals are counterproductive and will significantly impact the industry.”
The consultation also included plans to cut solar thermal systems from the scheme in a further example of the government removing any available support from solar technologies. If approved, the long established heat technology would be removed from the scheme in early 2017.
Mike Landy, head of policy at the Solar Trade Association (STA), said: “Everyone gets the sense of using heat from the sun to meet our hot water needs. So it’s hard to understand why the government is proposing to remove solar thermal from the country’s toolkit to fight climate change, especially when the UK is also struggling to meet its renewable heat target.”
“Recent months have shown renewed market interest in solar thermal from consumers, so we call on the government to reinvigorate its support, not cut it off. Otherwise the country risks losing a strategically important option to reduce emissions and our reliance on fossil fuels.”
The STA says analysis conducted earlier this year has shown that there has been an 88% increase in solar thermal sales enquiries compared to the same period in 2015 for the first few months of this year.
It argues that the government’s proposals are contradictory, seeking to extend renewable heat to less-able-to-pay homes but removing what it claims is the best technology for those households.
This view is supported by Scottish Renewables, which claims solar thermal technology has been widely adopted by housing associations to tackle fuel poverty.
Clark added: “The particular strengths of solar thermal panels – which are now at risk of having their support removed – include negligible running costs, and that they can be added to existing heating systems. They also work effectively in built-up urban areas and on smaller roofs, broadening the opportunities for homes to invest in renewables.”
DECC’s rationale behind the decision to axe solar thermal from the scheme rests in the department’s belief that the technology does not provide value for money, as it has one of the highest tariffs under the RHI but suffers from low deployment.
It added that it had received feedback from the market that many would have invested in the tech without any subsidy at all. However this reasoning has also fallen under some scrutiny.
Speaking to Clean Energy News when the consultation was launched, BEAMA’s deputy chief executive and marketing director Kelly Butler said: “If the evidence is correct in the consultation, where half of the people who took it up said they would have bought it anyway, then there's an argument not to have subsidy.
“But I think the question is: is that just too clean a sweep to say they'll be no subsidy for everybody? What about the other half that took it up? What marks them out as different and what can we do to increase that half to a bigger chunk of the population?
“I think it might be too much of a simplistic view to take away solar thermal support…it may be too premature and maybe not enough work has been done to look at it.”
Butler also criticised the proposal to set the schemes’ budget cap based on market intelligence that will not be published by DECC. He said: “That really concerns me because I'm not entirely convinced about officials’ commercial judgement -or the ability to have that judgement because they've not worked in the sector – and the transparency of that market intelligence.
Tinkering with the RHI in 2017 – the year of implementation for many of these proposals – could impact the UK’s ability to meet its renewable heat targets in 2020, which the government is believed to fall short of.
The UK government has an ambition to meet 12% of heat from low-carbon sources in 2020. The current figure sits at 4.5%, with the Committee on Climate Change saying in June 2015 that the target “no longer looks achievable.”
This was followed by energy secretary Amber Rudd admitting in November to the Energy and Climate Change select committee that the UK is currently on course to miss its 2020 ambition.
Stephanie Clark commented: “As things stand, both the UK and Scottish Governments are likely to miss their renewable energy targets. We urgently need a strategic heat policy which includes support for a range and mix of technologies.”
The STA expects a final decision on reforms to the RHI to be made in July.