Investors go cold on renewable heat

WHEN IT COMES to the UK’s green energy policies, renewable heat has often been referred to as the “sleeping giant”. The Renewable Heat Incentive (RHI) was supposed to awaken it.

 

But, according to the Department of Energy and Climate Change, less than a fifth of the total £133m RHI budget for 2012-13 is likely to be paid out. A general malaise in the market, loss of investor confidence and low returns for some of the tariffs have all been blamed. Solar thermal panels and ground source heat pumps are proving particularly unpopular, but take-up of biomass boilers has also been slower than expected.

 

With a target of having 12% of all heating coming from renewable sources by the end of the decade, from 1% in 2011, the sector desperately needs another boost. The ministry has said it will consult on the tariffs “within a matter of weeks”, with any necessary changes likely to come into force by this time next year. The climate change minister, Greg Barker, has says he is “absolutely determined” to drive take-up of renewable heat. There won’t necessarily be higher tariffs across the board, but he is certain there will be “improvements in the scheme”.

 

A 12% return was felt to be adequate incentive, but in reality returns vary depending on the technology and what it is replacing. RHI returns were set purposefully higher than feed-in tariffs given that heat “needs a kick-start”, the ministry said when the scheme was launched. It is now looking for a bigger boot.

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