Government unveils plans to replace Renewable Heat Incentive

The Government is set to replace the Renewable Heat Incentive with the Clean Heat Grant as the UK moves towards decarbonisation.

The Department for Business, Energy and Industrial Strategy (BEIS) has launched the ‘Future support for low carbon heat’ consultation, detailing its proposals for support mechanisms following the closure of both the domestic and non-domestic RHI.

It confirmed the non-domestic RHI is to close to new applicants on 31 March 2021. However, the RHI for households is not going to close to new applicants until 31 March 2022.

The Clean Heat Grant replaces the RHI’s tariff-based support in favour of a £4,000 grant, set at a flat rate over scaling with system size or changing across technology types. 

This will “put the onus on the market” to find which technology is the most cost-effective for each property, BEIS said, adding that it expects that for the majority of applicants this will be air-source heat pumps.

The aim of the scheme is to help grow confidence in the technologies and supply chains and help address the barrier of upfront costs.

However, BEIS outlined that it has the right to review the grant levels in response to unforeseen market changes or “if uptake falls substantially outside the expected range”.

Funding for the Clean Heat Grant has been committed for two years to March 2024, after which the scheme will close to new applications.

The Government is also proposing a new Green Gas Support Scheme to increase the percentage of biomethane available on the gas grid. However, the Government isno longer considering banning biomass boilers in urban areas from securing financial grants. There had been some concerns that the systems were worsening air pollution.

Frank Gordon, head of policy for the Renewable Energy Association, described the announcements as a mixed bag.

“On the one hand, they have provided much welcomed clarity on the completion of projects currently underway, the prospect of new projects and the Government’s commitment to green gas. 

“This is a step in the right direction for the sector, providing the certainty needed to increase investor confidence and deploy much needed renewable heat technology,” Gordon said, but added that not extending the non-domestic RHI and the “implications the cap on the future grant scheme will have” were disappointing.”

The ‘Future support for low carbon heat’ consultation closes on 7 July 2020. 

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