The Chancellor George Osborne presented the much anticipated Government’s spending review, which fixes spending budgets for each Government department up to 2014-15.
To meet the 2020 15% renewable energy target, the Department of Energy and Climate Change (DECC) need to develop new ways of generating renewable energy in all sectors, increasing the amount of heat generated from renewable sources from the current 1% to 12% by 2020. Part of this plan was the introduction of the Renewable Heat Incentive (RHI) which rewarded people for installing renewable devices, such as ground source heat pumps to generate heat.
The RHI was announced by the last Government and there was concern as to whether the scheme would go ahead under the new Government and whether it would survive the spending review.
This doubt has lead to customers holding off on purchases, understandably wishing to know whether this incentive would proceed or not.
The Chancellor confirmed yesterday that the Renewable Heat Incentive (RHI) will be launched in June 2011. £860 million funding, over the spending review period, will be provided from DECC’s own budget and not through the levy on energy companies as originally planned by Labour. This figure is a 20% decrease over the funding levels proposed in the original consultation released earlier in the year.
DECC says this will drive a more-than-tenfold increase of renewable heat over the coming decade, "shifting renewable heat from a fringe industry firmly into the mainstream".
Simon Lomax Managing Director of Kensa Engineering, a UK manufacturer of ground source heat pumps says "This is great news for the renewable industry and Kensa Engineering, it removes the doubt that has existed in the market whether this incentive will go ahead or not and hopefully the hiatus that has resulted from this doubt. However DECC doesn’t say that it will accept Labours original proposals as outlined in the consultation document and we understand that DECC will be consulting with stakeholders very shortly with a policy statement being produced at the end of November. We fully expect the RHI to be launched in a different form from the consultation and as they say the devil is in the detail".
