Renewable Heat Incentive could be suspended at short notice

The government’s Renewable Heat Incentive could be suspended at just one week’s notice to protect the limited budget for the scheme.


Details of how the Department of Energy and Climate Change intends to manage the RHI budget were published yesterday (11 June) and confirm that a limit of £70m has been set for 2012/13. In order to avoid any overspend affecting the increased budgets for subsequent years (£251m in 2013/14), the scheme will be suspended at just one week’s notice when a “trigger point” of 97% of the limit (£67.9m) is reached.


But uptake remains well below that cut-off, and the DECC predicted total RHI spending for 2012/13 would be around £42m.


“Given current uptake figures, we do not envisage having to use this mechanism,” a statement said. “However, we have learnt from our previous experiences and want to provide assurances to the market and the public that we are spending money on the RHI in a sustainable way.”


“The Treasury is seeking to control a budget at all costs and DECC is responding with a tsunami of destruction throughout the RHI industry. We urge DECC to keep on talking to the industry and to fight the imposition of these arbitrary budget caps.”
Neil Lawson

DECC will publish weekly updates on current and forecast RHI expenditure on its website (www.decc.gov.uk) and may also give an estimated date of suspension, if required, ahead of any formal suspension announcement.


But Neil Lawson, head of renewable heat at Ardenham Energy, was scathing of the budget control measures, which would prevent businesses from operating sustainably. “These proposals will stop the development of a specialist renewable heating sector in its tracks,” he said.


“The only way that businesses will be able to survive a peremptory suspension of the RHI will be to ensure that RHI-based work is only ever a minority of their work stream.”


While he acknowledged that the RHI had been slow to get going, more projects were now coming through and there was a potential backlog of qualifying domestic installations that dated back to July 2009. This could cause an unrealistic peak in applications when the domestic scheme was launched (possibly next summer), he said.


“The Treasury is seeking to control a budget at all costs and DECC is responding with a tsunami of destruction throughout the RHI industry. We urge DECC to keep on talking to the industry and to fight the imposition of these arbitrary budget caps.”

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