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Delay to green heating scheme

Q1 2013

A programme offering payments to householders who install renewable heat technologies has been delayed again.

A programme offering payments to householders who install renewable heat technologies has been delayed again.

The government has announced that the Domestic Renewable Heat Incentive (RHI) will now start in spring next year, with details of tariffs and how it will work to be released in the summer.

Ministers had penciled in the summer as the start date for the scheme, although this is no longer the case.

But despite the push back, Energy and Climate Change Minister Greg Barker said the Coalition remains "committed to introducing an incentive scheme for householders".

The Renewable Heat Premium Payment (RHPP) scheme, which was due to end this month, is to be extended to cover the gap. It will now offer money off the cost of renewable heating kit such as biomass boilers, solar thermal panels and heat pumps until March 2014.

Michael Verity, head of Strutt & Parker's Resources and Energy team said: "Yesterday's announcement of further delay to the launch of the RHI scheme will have negative long term implications for renewable heat. Not only will those who have already adopted technologies, in anticipation of a scheme that was originally due to take effect from July 2009, be disappointed but those who were considering projects for this year, with the expectation of the scheme being launched shortly following the recent consultation, being left unsure of whether or not to proceed.

"This further uncertainty is unhelpful to a new industry and this may lead users to shun renewable technology which, despite rising fossil fuel prices, still struggles to compete on price without support for the majority of heat users.

"The industry has been calling for more transparency and clarity on issues like RHI for some time and it becomes increasingly more difficult to encourage energy users to adopt renewable technologies when the policies surrounding their implementation and the financial benefits remain unclear."

At the same time as the RHI announcement, the government unveiled a new national heat strategy to run alongside the non-domestic RHI.

The plan closely follows in the footsteps of last year's strategic framework document, which is designed to expand the use of low carbon heating in UK homes and businesses.

It includes a £9 million package to help local authorities get heat network schemes up and running, as well as a framework that outlines the idea for a new advisory body called the Heat Networks Delivery Unit to sit within the Department of Energy and Climate Change (DECC). Mr Verity says that this is a welcome measure as heat networks will be an important way to distribute renewable heat in the future; it is a new way of heating property in the UK but well established on the continent.