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Government announces plans for the future of green heat

Posted by Anna Carlini on 15 May 2020 at 4:21 pm

An eagerly awaited consultation on the decarbonisation of heat has produced proposals with significant implications for the domestic green heat sector. Ongoing until July, the consultation has produced encouraging information on the replacement of the Renewable Heat Incentive and has revealed plans of government support for installing low carbon heat technologies in domestic settings. These schemes will not only boost the green heat industry in the UK, but help the country achieve our committment to reaching net zero carbon emissions by 2050.

With the current Renewable Heat Incentive (RHI) scheduled to end in 2021, it has been unclear how the government would encourage the uptake of renewable heating, considered one of the biggest barriers to achieving our climate targets. After the government’s announcement that gas will be banned from new builds from 2025, the intent to move away from fossil fuel heating was extremely clear, but the exact approach of how this would take place was not. Therefore these poposals which clearly set out the plan for decarbonising heat have been welcomed by industry and gives some clarity and reassurance in very uncertain times.

Two aspects of the proposals are particularly significant for households and domestic installers. This includes clarification on the existing RHI scheme, which will ultimately be phased out after 2022, and the plans for a Clean Heat Grant, which could replace the RHI and help reduce the barrier of upfront costs to renewable heating mechanisms.

The Renewable Heat Incentive

The existing Renewable Heat Incentive is a financial scheme to encourage the deployment of renewable heating systems. It works through quarterly payments to applicants and is eligible for technologies such as heat pumps, biomass boilers, methane gas and solar water heaters. The RHI was due to close for new applicants in March 2021 and the consultation has revealed that it will close on this date for non-domestic applicants as scheduled. However, it has also stated that this scheme will be extended until March 2022 for domestic applicants, to ensure a smooth transition to the new grant scheme, the Clean Heat Grant.

The Clean Heat Grant

One of the most significant announcements to come from the consultation is that of the Clean Heat Grant. This scheme would offer financial support towards the upfront cost of a low carbon technology. Rather than the tariff system of the RHI, the Clean Heat Grant will be a capital grant paid for through exchequer funding. The grant itself will be up to £4,000 for each household or business installing an eligible green heating system up to 45kW. It is scheduled to begin in 2022, with funding initially committed for two years.

The scheme will be heavily aimed towards heat pumps, but in limited circumstances will also include funding for biomass boilers, despite previous expectations.

This scheme could provide a huge boost to the heat pump industry in particular and make the possibility of retrofitting cleaner heating far more affordable. It is after all the upfront cost which proves a barrier to the popularity of this technology.

This long awaited clarity for the domestic sector on the future of green heat beyond the RHI has come at a crucial time in an uncertain world. The Clean Heat Grant will help boost confidence in renewable heating technologies and their supply chains, making low-carbon heating the way of the future. What’s more, in the light of the recent disruption to the UK economy in the wake of COVID-19, the green heating industry could be a pathway to a positive recovery. Investing in green heat will create jobs whilst simultaneously reducing the country’s emissions and improving air quality and health. It looks like decarbonised heat is set to play a big role in achieving a sucessful green recovery.

Read the proposals published by the consultation here: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/881622/future-support-for-low-carbon-heat-consultation.pdf


Sources

https://www.businessgreen.com/news/4014545/government-reveals-plans-accelerate-low-carbon-heating-rollout?mc_cid=92fd026e5a&mc_eid=2072e9a532

https://theenergyst.com/beis-touts-4k-grant-for-heat-pumps-plus-green-gas-subsidies/

 

If you have a question about anything in the above blog, please ask it in the comments section below.

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Comments

15 comments - read them below or add one

situationist

situationistComment left on: 25 November 2020 at 4:41 pm

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GroloseComment left on: 17 October 2020 at 1:56 pm

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OlafAppletonComment left on: 22 September 2020 at 7:42 am

Government should appreciate this. They are doing their best in this regard. Greenheat should be treated according to the plan and get top linkedin profile writers to make your work amazing. Yougen is a very nice forum to discuss such issues. Thanks for sharing this with us.

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jakecurran

jakecurranComment left on: 21 September 2020 at 10:52 am

It is a financial scheme to encourage the deployment of renewable heating system.

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EvergreenpowerukComment left on: 11 August 2020 at 1:28 pm

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Bean Beanland

Bean BeanlandComment left on: 2 June 2020 at 1:26 pm

The announcements for Domestic low emissions heating systems are mediocre at best. One more year of the domestic RHI is fine, but it's a single year,most of which will now be spent playing catch up from COVID-19 related delays. The proposed Clean Heat Grant is completely inadequate in almost all respects. £50m per year for two years will support 12,500 installations a year. This is about one third of the current market, so will definitiely not encourage growth in the supply chain. The proposal that the grant is a flat rate of £4,000 per installation, regardless of technology or capacity, will clearly drive the bottom end off the market with the lowest (and potentially poorest quality) hardware. There is a massive difference in capital cost between a 5kW air-source heat pump and a 44kW ground-source heat pump. Under the current proposals, both would get £4,000 and yet the decarbonisation contribution from the ground-source would be many times greater.

The closure of the Non-Domestic scheme to all projects, except those qualifying for Tariff Guarantees (with a capacity above 100kW), with no visibility of a replacement will, again, stifle the supply chain and will not encourage new installers into the market. To add to this, by 2nd July, the large grund-source tariff will have been degressed (reduced) by an effective 28% since 31st March. This is a completely retrograde step given that the heat pump sector was just beginning to recover and make headway.

The sooner that we can get away from all subsidies, including the massive handouts to the fossil fuel sector, the better. The Treasury and No.10 Policy Unit needs to put in place a very long term energy strategy which will encourage private investment. Sticking plasters and routine changes to regulations and financial outcomes are just a disaster.

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ecojet

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ecojet

ecojetComment left on: 1 June 2020 at 1:28 pm

Thanks for the article Anna,

Any news on Solar Thermal that also reduces Space heating costs?  Went to great lengths to meet all RHI requirements only to have RHI turned down because our Solar Thermal actually helped heat the house through a thermal store rather than just used to heat shower water!  Even in the midst of a cold winter Solar Thermal can raise bottom of tank temps 20 or so degrees so boiler has less work to do.

We reduced our Fossil gas burn by 66% ! But no Govt help. Would probably not have invested (took out loan to fit system) without hope of RHI so doubly frustrating and expensive.

Still recommend Thermal storage as best option for multiple input and way better than our Solar PV in energy efficiency terms.

Kind regards,

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Jeff B

Jeff BComment left on: 22 May 2020 at 11:38 pm

Having received RHI payments towards a biomass boiler I understand that I can only have “one bite of the cherry”, so if I decided to change to an ASHP in the future I would have to 100% finance it myself. I wonder if I would be able to apply for the proposed £4000 grant though? The reasons I might like to change would be:

1. I am disappointed with the pellet boiler I have. It requires monthly servicing in order to keep it in first class running condition. I can manage this ok myself but if anything happened to me, my wife would not be able to cope with its complexity. In addition both the manufacturer and the installer have gone out of business, so regular supply of spare parts in the future is in doubt. Ironically the EPC rating for the house is worse with the wood pellet boiler than it was with the previous oil fired boiler! This is because, for the purposes of the EPC, the surveyor used a generic efficiency figure for the pellet boiler of 66%. In reality it is >93%, but it was never SEDBUK listed.

2. I have done a huge amount of work to insulate and draught-proof the house over the last few years, so the heating demand is falling. I regret that I did not consider this first – I would now strongly advise anyone to look at this aspect first before renewing their heating system. UFH will not be possible here but use of larger radiators is a distinct possibility, hence my interest in an ASHP.

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