The Chancellor of the Exchequer today confirmed within the Spending Review that the £860m Renewable Heat Incentive, the first of its kind in the world, will go ahead next year.
However, it will now be funded from the public purse and reduced in scope by 20%. At the same time, the Government has made it clear that it is prepared to reduce the Feed-In Tariffs rates ahead of the scheduled review in 2013 if there is higher than expected uptake.
Philip Wolfe, chairman of Ownergy and architect of the Feed-In Tariffs and Renewable Heat Incentive schemes in his former role as Director-General of the Renewable Energy Association, commented: "Though the go ahead for the Renewable Heat Incentive is welcome, the announcement today still leaves the industry in limbo as the Government has not said how it will make 20% savings on the scheme.
This must be the first time a green incentive has been cut before it was even introduced! This would not have been necessary if the Government had adopted the more progressive approach of funding the RHI from the sales of unsustainable fossil heating fuels.
"The onus is now on the Government to publish the long-delayed response to the consultation as soon as possible. Failure to do so will extend the downturn prompted when the Government axed the grants for renewable heat installations in May. This is proving damaging to the industry, to job creation and to the prospects of meeting our binding renewable energy targets.
"Today’s reprieve of the Feed-In Tariffs was also less than whole-hearted. The veiled threat that the Government is prepared to make earlier than planned cuts without stating the criteria or timetable may still undermine investor confidence. Projects can take years from feasibility to completion. The Government cannot be allowed to arbitrarily lower tariff rates at any point without specifying the mechanism by which this would be done.
"The Government has left industry with the burden of promoting the scheme . Surely it cannot now threaten to curtail it, if we make it a success."
