Government Hints at Extension of Renewable Heat Incentive

Energy and Clean Growth minister Kwasi Kwarteng has suggested that the government will continue to support low-carbon heat after the Renewable Heat Incentive expires next March.

The Renewable Heat Incentive (RHI) gives homeowners and businesses payments for the use of renewable heat technologies, including heat pumps and biomass stoves. It’s intended to promote the uptake of these low-carbon heat technologies as an alternative to gas boilers and reduce the carbon footprint of the UK’s building stock, which today accounts for 40% of the nation’s greenhouse gas emissions.

The RHI is scheduled to close to new installations in March 2021, although households signed up to the scheme will continue to receive payments until the end of their seven-year agreements.

Kwarteng has hinted that the RHI will be extended beyond that closure date. Fielding questions about MPs during a House of Commons debate on energy efficiency measures and net-zero buildings last week, he said the government is “absolutely committed to seeing how we can support the RHI beyond the date on which it expires.”

Earlier in February, in another Commons debate, he said the government is “considering a full range of options for successor arrangements to the RHI, in line with the Government’s commitment to achieving net zero.”

Since its implementation in November 2011, the RHI has supported the installation of over 900 MW of heat-generating capacity in around 76,000 homes and 5,200 MW of capacity in just under 20,000 businesses. The government claims it each enlisted household has saved 5.2 tonnes of carbon a year, while receiving average annual payments of £2,800 and also reducing their energy bills.

However, the RHI has been criticised for falling short of targets. The Committee on Climate Change (CCC) has suggested that for the UK to meet its decarbonisation targets, 15 million households—more than half—need to be fitted with heat pumps by 2035. Currently, just 8 to 10% of UK households have low-carbon heating technologies, below the 12%, the government had targeted for the end of 2020. 

Meanwhile, the Public Accounts Committee (PAC) in 2018 argued that the £23 billion the government will spend on the RHI has failed to deliver value for money, with the RHI then on track to install just one-fifth of the 513,000 new heating systems it was forecast to deliver. The select committee suggested that some beneficiaries of the RHI had ‘gamed’ the system, manipulating the scheme’s rules to receive large subsidies.