21 Oct 2010

Whither the Green Incentives?

So yesterday, George Osborne, the Chancellor, made his long awaited pronouncements on public spending. Of particular interest to this blog was the fate of the various green incentives, notably the Feed-in Tariff (FiT), the Renewable Heat Incentive (RHI) and the Green Deal. This is what he actually said:

The aim of all these investments is for Britain to be a leader of the new green economy. Creating jobs, saving energy costs, reducing carbon emissions. We will also introduce incentives to help families reduce their bills. We will introduce a funded Renewable Heat Incentive. Our Green Deal will encourage home energy efficiency at no upfront cost to homeowners and allow us to phase out the Warm Front programme.

The big news here is that the RHI survives. There has been feverish speculation that it was about to be ditched. There is more detail on the DECC website where we learn that:

£860 million funding for the Renewable Heat Incentive which will be introduced from 2011-12. This will drive a more-than-tenfold increase of renewable heat over the coming decade, shifting renewable heat from a fringe industry firmly into the mainstream. The Government will not be taking forward the previous administration’s plans of funding this scheme through an overly complex Renewable Heat levy.

It's all still rather delphic. Is the £860million a one-off? It sounds like a lot, but it's just 60,000 ground source heat pumps or biomass boilers, hardly enough to render them "mainstream." If commercial power plants get stuck in, the money will be gone in the blink of an eye. How will it be distributed? Who will qualify? What will the subsidies be worth? Until the details are published, we are not much the wiser. But it should at least be good news for all those heat pump suppliers whose order books have dried up this year because of the uncertainty over whether the RHI would survive in any fashion. Now they can say, "You will probably qualify for a subsidy but we can't say how much!" Great.

There is also more detail on FiTs

Feed-In Tariffs will be refocused on the most cost-effective technologies saving £40 million in 2014-15. The changes will be implemented at the first scheduled review of tariffs unless higher than expected deployment requires an early review.

It suggests that those who are currently signing up for the tariffs will be secure in the knowledge that the deal they are now getting will be good for many years. The statement that FiTs will be refocused on cost-effective technologies suggests, to me, that the very generous subsidies to solar PV will be greatly reduced, because it is by far the most expensive of the technologies covered.

As for the Green Deal? Nothing new here. We know it's coming, but what form it takes we have, as yet, no idea.

So the time for speculation is not past. I would be surprised if the RHI details will be available for many months yet. The FiT deal wasn't published until just before the FiT went live in April 2010, so I would expect those awaiting news of the critical levels of subsidy on the RHI to have wait a while longer yet. Not great news if you are still trying to decide how best to heat your home.

1 comment:

  1. Good news the RHI survives but it does appear George Osborne has just talked generally and will leave it for the head of that department to flesh out the details. For such huge cuts elsewhere to me it is a bit surprising spending here wasn't significantly reduced.