What Happens to the RHI Beyond April 2016?

There have been rumblings in the renewable heat industry for some while, particularly following the Government’s cuts to the Feed in Tariff, a similar project that was designed to promote the uptake of renewable energy such as solar and wind. Uncertainty can effect an industry deeply and cause major problems, not only in the short term but for long term success.

The current RHI funding is due to run until April next year but what happens after that is largely a mystery. Not a good sign for an industry that is beginning to show real benefits across the board. Whilst the Government forge new links with China and sign some landmark deals, there are many smaller businesses throughout the UK who are unsure what the future holds.

What is the RHI?

The Renewable Heat Incentive is a subsidy, paid through our own utility bills, that provides an incentive for homes and business owners to install green heating such as biomass boilers and heat pumps. From reasonably high payments in the initial stages, with growing demand the tariffs have halved since the scheme began back in 2011. When the RHI was rolled out to domestic schemes over £20 million in payments resulted, something that Government feel they need to keep control of. There has always been a limited budget for the scheme and reductions in the tariffs were expected by businesses operating in the industry.

Biomass Plants in Wales

It’s not all bad news for renewables, however. A biomass power station is now going to be built in Anglesey following major investment from a Chinese company. Another is expected to be built in Port Talbot, providing a large number of jobs as well as a cleaner energy mix for the area. The area around the power stations will be used to produce aquaponics facilities to develop a prawn and shellfish farm while a hydroponics installation will be able to grow fruit and vegetable in the nearby water. It’s good news for a region that only a few years ago suffered from the loss of 400 jobs when the local aluminium plant was closed.

According to the BBC:

“The Anglesey biomass project pledges to deliver up to 500 jobs on the site of the former Anglesey Aluminium plant at Holyhead. It hopes to create 120 jobs directly in the energy plant and more than 300 jobs producing seafood, fruit and vegetables in the adjoining eco-businesses.”

Uncertainty in the Industry

With the wider biomass industry unsure of what next year will bring, the plants in Wales, whilst welcome, are a distraction from the core issues. It’s the future of the RHI that matters and many smaller suppliers and installers will undoubtedly begin to feel the pinch if the programme is not renewed in April next year.

That’s not just installers of home heating such as biomass but also heat pumps. Many of these companies offer a range of installations including solar panels and could face a double blow in the first half of 2016.

The Future of Innovation

Much has been made of the impact reductions in subsidies are going to have on many parts of the renewables industry and whether this is a huge backward step by the UK remains to be seen. The other side of the impact is on research and development.

If we are going to curtail the green agenda then what is the point of our universities working to bring on the current technology? Is there a point in increasing the efficiency of solar cells when we no longer have an industry to speak of and everyone is getting their energy from brand new nuclear plants? Whilst we remain on a tipping point with renewables the industry and the research is going to have difficulty moving forward. That includes the renewable heat sector who have yet to realise the full impact of a sector that is increasingly unsure of its place in the UK.

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