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Solar thermal and other questions: what we do and don't know about the Renewable Heat Incentive

Posted by Cathy Debenham on 4 November 2010 at 11:17 am

This is an extract from a blog by Dave Sowden, chief executive of the Micropower Council on the renewable heat incentive:

We do know:

  • DECC has secured Treasury approval for the overall spending envelope for the RHI up to and including 2014/15 – £860m in total;
  • these funds are 20% lower by 2014/15 than mooted in the RHI consultation in February;
  • DECC believes it can still deliver the heat proportion of the legally binding renewables target, even once this reduction has been applied;
  • it is to be implemented in June 2011;
  • it won’t be funded through a levy on fossil fuels (they couldn’t resist the swipe at the previous government on that one – see the DECC press release);
  • decisions on the key parameters, including tariff levels are to be taken by the end of the year.

We don't know:

  • tariff levels for each technology;
  • assumed rates of return underpinning the setting of the tariff levels, or even if rate of return will still be the main starting point for calculating tariff levels;
  • what, if any “cost control” measures might be applied to deal with the risk of runaway costs (perish the thought a policy might be too “successful”!)

A wake up for solar thermal 

BUT (there’s always one, isn’t there?) the small scale technologies, especially solar thermal, are still in for a challenging few weeks, and there is no room for complacency. The modelling in support of the RHI consultation revealed that solar thermal could deliver just 3% of the overall renewable heat supplied, but at 12% of the overall cost. The subsidy cost was revealed to be £172/MWh of renewable heat generated, more than twice as expensive as the next in line (Ground Source Heat Pumps – £75/MWh). Add to this the knowledge that the Treasury believes solar thermal carries a unique “runaway cost” risk due to relatively low non-financial barriers, it’s fair to say “a challenging few weeks” lie ahead for the solar thermal lobby.

Read the full article here.

Picture by Patrick Hoesly

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