28 Jul 2010

Renewable Heat Incentive: the chaos continues

I have already blogged extensively about the Renwable Heat Incentive (the RHI), and the problematic nature of this proposed subsidy for heat pumps, biomass boilers and hot water solar panels. It was launched back in February 2010 as a “consultation document” but, in truth, it was rather more than this because it gave details not only of the projected subsidies available but also of a timetable. It stated that it would come into effect in April 2011 and that anyone installing renewable heat equipment after July 2009 would qualify for the incentive. That sounds like a a detailed proposal to me. The document called for responses by April. That deadline has long since passed and there has been no word since then about what will happen next.

A change of government in May hasn’t helped, particularly as spending cuts now seem to be the order of the day. Potential customers are all delaying orders until the position of the RHI becomes clear. Manufacturers and installers are now having to lay off staff because the market has dried up because of the confusion. All that is needed is some guidance from central government to relieve the situation.

So yesterday, Chris Huhne, the Energy Secretary, gets up in parliament and delivers his first annual energy statement. Everyone connected to this small industry is holding their breath for news of the RHI. And this is what he says. “In the heating sector, I can confirm our strong commitment to action on renewable heat. The Government is considering responses to the Renewable Heat Incentive consultation and will set out detailed options following the Spending Review.”

Groans all round. That could mean anything. It certainly doesn’t sound like anything soonish. My guess is that we now won’t see any response to the RHI Consultation until sometime in 2011. By which time this small industry will be a whole lot smaller.


  1. It might be heretical to say, but would it be so bad if those vendors that rely on subsidies to make their equipment seem cost effective were to have a hard time?

    In the solar arena, there are a few suppliers who have avoided the full accreditation route and offer systems at prices that are significantly lower than 'government approved' equivalents - and at no apparent detriment to their quality or efficiency.

    It was a strong criticism of the RHI that the proposed subsidies only encouraged the same quango and increased cost approach to delivering working systems. The end user and installers end up paying more to be part of a cosy club. Yet most solar equipment has recognised quality marks, and installation could be checked by building control - avoiding yet another layer of pointless and expensive government.

    Agreed, the new government could make their position clearer, sooner - but the original RHI was not a particularly good solution and there is no real reason for renewable equipment to cost so much that it can only be justified by a very heavy subsidy.

    I'd much prefer the government work on encouraging research and good business practises to get technology to market at sensible prices, than to prop up an industry that lives only for subsidies.

  2. Very much agree Lock Farm. With the last government though, the increase in quangos and bureaucracy was not seen as a bad thing, it was a good part of what they meant by 'green jobs'. They did not appear to be overly concerned with exactly how much the scheme helped the environment as long as they could show that government had expanded to embrace Renewable Heat. Box ticked.

    This lot seem in two minds. On the one hand they don't want to pass up an opportunity to appear jolly green (like that odd decision on electric cars). On the other hand the RHI looks like a good way to spend a lot of money achieving very little and so a good candidate for the chop.

    I would also speculate that there is a big debate/split amongst the LibCons about how to approach/pay for and secure energy supply in general - perhaps this is why the RHI was kicked into the long grass.

  3. Frankly, it would have been better if it had been kicked into the long grass. Then, at least, people could get on with their decision making. As it stands, the whole thing has gone into limbo.

  4. AnonymousJuly 29, 2010

    Well, lib/lab/con are all parties that believe in big rather than small goverment.

    And generally fucking things up is what big goverment does best.

    Don't hold your breath.

  5. Yeah they would be better just announcing that there will be no subsidies rather than messing about and making people wait. Sounds like Chris Huhne isn't going to be making the decision on this, it will be the treasury.

  6. Could we get the right result for the wrong reasons?

    Nothing in the central RHI proposals does much to help climate change. Biomass emits more CO2 (and lots of other noxious air pollution) than gas and so do most heat pumps (running on a lot of coal-fired plant at the winter peak).

    The trick will be justifying a sea change in policy and resisting the huge lobby that has grown up behind heat pumps (launched decades before condensing boilers, and still less common, for sound technical and economic reasons).

    Whatever will Prof McKay have to say?

  7. The thing D McKay has to learn is that demand reduction is feasible and hopeful and costs far less than the hopeless task (as his book makes clear) of replacing supply with new sources. The fact that his book concentrated on the latter rather than the former is why the govt hired him as advisor. Govts still don't begin to understand that "Saving fuel is cheaper than buying fuel: energy efficiency costs less than the fuel it saves" http://www.rmi.org/rmi/Climate-+Eight+Convenient+Truths