NIBE Energy Systems welcomes the Government’s new consultation on the future support for low carbon heat beyond the Renewable Heat Incentive (RHI) published yesterday. The consultation sets out proposals for a new Clean Heat Grant to support heat pumps through an upfront capital grant. The proposed policies support the government’s aim to phase out high carbon fossil fuels in off grid areas, tackling the barrier of higher upfront costs faced by some consumers.
The grant itself will be targeted towards households and small non-domestic buildings and will commence in April 2022 running for at least 2 years. It will focus on the deployment of heat pumps, however in some cases will also support the installation of biomass. The proposed funding mechanism is a positive improvement on the current RHI scheme as the payment is made upfront rather than using a tariff system, likely to make it a more attractive proposition for many households.
The Department for Business, Energy and Industrial Strategy is proposing a technology-neutral, flat-rate grant of £4,000 for all technologies eligible under the Clean Heat Grant. The grant will be made available for air source heat pumps (ASHPs), ground source heat pumps (GSHPs) and water source heat pumps (WSHPs). Both high and low temperature systems are expected to be eligible, however hybrids will not. As is the case with the RHI currently, there will be restrictions on eligibility for new build developments.
Alongside the development of the Clean Heat Grant, the Government has committed to extending the RHI to 2022 for domestic premises. The scheme will remain open and will continue in its current form. In light of delays caused by COVID-19, the Government is also proposing to extend the commissioning deadline for projects currently holding a tariff guarantee and introduce a further allocation of tariff guarantees for the non-domestic scheme with a flexible commissioning date. This new allocation of tariff guarantees will require evidence of financial close prior to the closure of the NDRHI to new applicants on 31 March 2021.These provisions will help to ensure a smooth transition between the two schemes and provide certainty for larger renewable heat schemes.
Phil Hurley, Managing Director at NIBE Energy Systems said, “Decarbonising heat is one of the biggest challenges the UK faces. The publication of the Low Carbon Heat Grant consultation provides some certainty for the sector and will help households make the transition to a renewable low carbon heat source over the coming years.
The introduction of a grant scheme is something NIBE has been advocating for several years however I do not feel that the scheme alone is sufficient to drive widespread adoption. It must be combined with a strong regulatory framework and the introduction of measures to encourage wider uptake. The impact assessment estimates that the grant will lead to 21,700 ASHPs and 2,600 GSHPs being installed over the 2 years however, the Committee on Climate Change in the Fifth Carbon Budget central scenario state that 2.3 million homes should have heat pumps by 2030. It is clear that more is needed to deliver the phase out of fossil fuels and meet our net zero commitments. I therefore look forward to continuing to work with government and industry partners on the development of this policy and the wider policy framework. I urge everyone in the sector to respond to this important consultation.”
Consultation on future support for low carbon heat. Closing date 7th July 2020. Available online: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/881622/future-support-for-low-carbon-heat-consultation.pdf
Notice outlining the governments intention to make changes to the Domestic Renewable Heat Incentive Scheme. Comments requested by 19th May 2020. Available online: https://www.gov.uk/government/publications/changes-to-the-renewable-heat-incentive-rhi-schemes
Consultation to prepare for the formal closure of the non-domestic Renewable Heat Incentive (NDRHI) scheme to new applicants. Closing date 7th July. Available online: https://www.gov.uk/government/consultations/non-domestic-renewable-heat-incentive-ensuring-a-sustainable-scheme
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