Ministers boost renewable subsidy budget by £10m

The government has boosted its budget to support uptake of renewable heat technologies in people’s homes by £10m.

The Department for Energy and Climate Change has upped the budget for the Renewable Heat Premium Payment, which subsidises the installation of renewable heat systems, from £15m in the 2012-13 financial year to £25m.

Energy minister Greg Barker said: “Generating heat from renewables will not just cut carbon emissions, it will also help create a market in developing, selling and installing kit like solar thermal panels or heat pumps.”

However, the current phase of the scheme, which ends on 31 March, is currently nearly £10m underspent. This budget would normally go back into central government funds but DECC has negotiated an uplift in next year’s budget of the same sum.

David Frise, head of sustainability at the Building and Engineering Services Association, said consumer confidence in the scheme had been hurt by the long running and high profile uncertainty over solar power feed-in-tariff.

He said “The scheme has failed really because there’s very little take up. That’s not surprising because the public think of [solar power] feed-in-tariff and renewable heat in the same breath.”

He added that many others were waiting for more details on how the Renewable Heat Incentive, which will pay home owners for the heat they generate, would work before switching to a renewable heat source in their homes. But the government has now delayed this until mid-2013.

The government also announced plans to introduce a trigger mechanism for the commercial RHI, which has been in operation since November, which could see the scheme close to new entrants for the rest of the financial year if 80% of the budget was already allocated.

Firms would be given up to one month’s notice of the suspension under the proposals, which would only apply for the coming financial year. More detailed cost control mechanisms will be consulted on later this year.

Barker said: “Putting in place cost control measures for the Renewable Heat Incentive is the prudent thing to do, given this is millions of pounds of taxpayers’ money at stake and taking on board the lessons learned from the feed-in-tariff scheme.”

However, the commercial RHI has already seen very slow take-up with just 10 schemes accredited in the first three months of the scheme.