Renewable Heat Incentive

Report urges overhaul of Renewable Heat Incentive and uptake of “imaginative options” The CBI is urging the government to develop a clear strategy to reduce carbon emissions from heat, including encouraging the use of surplus industrial heat to warm homes. At its energy conference in London today, the CBI launched The Heat is on: Delivering an integrated heat policy , a report which says cutting emissions from heat is crucial to meeting legally-binding carbon reduction targets by 2050 and mitigating rising energy costs. “Heating for domestic homes and industry accounts for almost half of all energy used in the UK, and cutting emissions here could take us a long way towards reaching our carbon targets,” said Dr Neil Bentley, CBI director for business environment. In the report, the CBI warns that existing heat policy is fragmented and complex, and calls on the government to review the Renewable Heat Incentive (RHI), which will subsidise homeowners and businesses that want to install low-carbon heat technologies.

In its current form the RHI will offer a subsidy to a range of renewable heat technologies, such as solar panels, air- and ground-source heat pumps and renewable combined heat and power (CHP). But, as planned, the CBI says the RHI runs three risks. First, large amounts of subsidy could be directed towards expensive technologies in cases where cheaper alternative technologies could be used.

Second, the cost of funding the RHI could fall disproportionately on industrial gas users. Lastly, the scheme will not encourage imaginative options to make better use of existing heat generation, such as district and community heating schemes that use surplus industrial heat to warm domestic homes and businesses. “Some renewable heat technologies such as solar panels won’t always offer good value for money, so the RHI must have inbuilt limits on how much can be spent on individual technologies,” argues Bentley. “One of the most cost-effective ways of reducing heat emissions is by insulating homes and businesses, and this should be the first step for anyone seeking to improve energy efficiency,” he added. The report urges the government to think outside the box. “Linking surplus heat from industrial sites into local homes through district heating schemes could be an efficient and cost-effective way to reduce heat emissions, but existing government policy won’t encourage this sort of innovation,” said Bentley.

Among the measures the CBI’s report is calling for are: • An early review of the of the RHI with a presumption that support levels will decrease as needed to ensure the total subsidy cost does not escalate disproportionately • The government to encourage better energy management in buildings by creating a one-stop advice service • More resources put into heat-mapping to uncover where there is surplus heat and where demand is high enough to facilitate the development of district heating networks • The public estate, including schools and hospitals, should commit to procure heat and cooling services from district heating networks • The government should consider pump-priming support for the infrastructure to enable waste heat from industrial processes to be linked to district heating • DECC and Treasury should consider opening up the competition for carbon capture and storage (CCS) to industrial projects. The original plans to fund the RHI by a levy on fossil fuel users should be reviewed, says the report