The Renewable Heat Incentive (RHI) will now be up and running for domestic properties in spring 2014, the Department of Energy and Climate Change (DECC) said.
Industry had been hoping to get the RHI off the ground for householders this summer, as the scheme has been in place for non-domestic properties for over a year. The domestic scheme had initially been mooted for autumn 2011, before a consultation in September pushed it back to summer 2013.
The delay has knocked the confidence of heat sector, and caused further doubt about the government’s commitment to renewable heat, according to industry insiders.
“The early feedback is that the market is bitterly disappointed with this delay,” said Dave Sowden, chief executive of the Micropower Council. “Today’s announcement is forcing industry to question whether the coalition is serious about promoting domestic renewable heat during this Parliament.”
However, Greg Barker, climate change minister, insisted that the RHI remained a “key part” of its carbon cutting approach. “We remain committed to introducing an incentive scheme for householders,” he said.
By way of compensation for the delay, DECC is extending the Renewable Heat Premium Payment (RHPP), which had been due to close this week, for another year. First launched in July 2011, the RHPP offers money off renewable heating kit such as biomass boilers, solar thermal panels and heat pumps.
Registering its dismay at the delay to the RHI, the solar industry called on Barker to double the payments on offer under the RHPP for solar thermal to show commitment and support to the heat sector.
“We need a boost for our UK manufacturers and installers so that we have a strong supply chain ready for the introduction of the RHI next year,” said Paul Barwell, chief executive of the Solar Trade Association (STA). “Increasing the solar thermal RHPP from £300 to £600 would not cost any more as install rates have halved since the peak in 2010.”
A government review of tariff levels is on-going, and will see the finalised list of domestic tariff levels - and technologies eligible - published this summer. Meanwhile, the government is also looking at proposals to increase tariff levels for a number of technologies in the non-domestic RHI including biomass over 1MW, ground source heat pumps, combined heat and power and biogas, DECC said.
Biomass producers welcomed the review of tariff levels in the RHI, which many in the industry believe have been too low to incentivise uptake. Tim Minett, chief executive of biomass supplier CPL distribution said: “The scheme clearly isn’t working as intended and uptake has been extremely disappointing to date. The primary reason for this has been the level of tariff offered to people who adopt these low-carbon technologies. Bluntly, the tariffs have been too low to provide an incentive, and the upshot is we are nowhere near the levels of uptake predicted.”
He also cautiously welcomed the delay to the domestic RHI until “lessons can be applied” from the non-domestic scheme. But he added: “This absolutely must be the final delay as businesses have invested between £150m and £200m in the emerging British biomass supply chain and, while we remain patient, every delay increases the hurdles for business and steepens the uptake curve necessary to hit the UK’s targets.”