A Commentary on the Renewable Heat Incentive

A few days ago the Minster of State for Climate Change, Mr Greg Barker, made an announcement on the Renewable Heat Incentive. I was going to write about it, but instead of an essay, I thought that I would add a commentary on the Minister’s statement. I have therefore set out the statement and my comments, and I hope that the Minister can find time to read them and take account of them.

“The Renewable Heat Incentive (RHI) is the first of its kind in the world and provides long term support for renewable heat technologies such as heat pumps, biomass boilers and solar thermal panels.”

The Renewable Heat Incentive may be the first of its kind but like nuclear fusion exists as a concept, when it comes to its application on residential homes, which is the major part of the of where the emissions are created and where the incentive is needed.

“On 26 March 2012 I reaffirmed Government’s commitment to growing the UK market for renewable heat technologies by announcing further support for the domestic sector under a second phase of the Renewable Heat Premium Payment Scheme (RHPP).”

Weasel words indeed. The alleged reaffirmation comprised merely of saying that the residential RHI would come into full operation now three years after this “world’s first” incentive was announced (instead of two years), on uncertain terms.

 “At the same time I set out our delivery timetable for providing longer term support for  households,”

Not quite true, Mr Barker. You did not set out the delivery timetable but extended it!

“expanding the non-domestic scheme and transparent plans for staying within our budget for this year.” 

There was no expansion of significance and the public and solar thermal industry still do not know what the actual yearly incentive will be! That is lack of clarity, not transparency.

“I am pleased to report that we are on track to meet the RHI delivery timetable and have met our first milestone.”

I do not understand what milestone has been met. Can Mr Barker explain what it is because as far as I can see he has simply pushed the milestone further down the road and then run backwards.

“In March we consulted on a mechanism for more effectively managing the RHI budget in the short term.  Today, I am pleased to publish our response which will ensure we have a stand-by budget management mechanism in place this summer, enabling the sustainability of the scheme by allowing us to keep within the budgetary limits set by the Comprehensive Spending Review (CSR).  Further, I can confirm that we are on track to consult on longer term proposals in July 2012 as planned.”

This is re-arranging the deckchairs stuff. The mechanism to ensure that the RHI will be kept within budget will be in place (a) nine months before the RHI for residential homes will take effect and (b) for the rest of the RHI at a time when there is not much take up of the RHI. Over spend is not a present worry. The lack of incentive being predictable and available now is by far the most important issue.

To ensure the supply chain can be maintained with the available funds in this spending review period, we have set an upper limit of £70m for 2012/13.  However, it is important to note that the funding amounts announced in the spending review for 2013/14 and 2014/15 are unchanged. 

The supply chain in the solar thermal industry lost faith with anything that DECC published some time ago. The supply chain has had any certainty while there is uncertainty as to what incentive the supply chain cannot plan. On a small business level, a qualified installer will have had to renew his or her MCPS qualification for two consecutive years without having any business income from that qualification.

The upper limit of £70m ensures that the 2013/14 budget of £251m would be enough to pay for existing installations and new installations, were the 2012/13 limit to be reached.  A higher limit for 2012/13 would leave insufficient funds available in the following year for new installations and therefore could be very damaging to the renewable heat industry.

Agreed but by then will there be a solar thermal industry left in the UK to damage?

In the event of having to use the stand-by mechanism, a notice period of one week would allow for a much higher trigger point for suspension of the scheme (£67.9m, 97% of the £70m limit) compared with one months’ notice (£56m, 80% of the £70m limit) and would also reduce the chances of scheme suspension being triggered unnecessarily.

Probably the least important thing about the RHI.

We recognise the need to provide comprehensive information on current and forecast scheme expenditure and make it publically available.  To do this we will provide a weekly information update on our website, tracking our committed expenditure. If required we will also provide an estimated date of suspension prior to the formal notice period, in the event of an unexpected surge in uptake such that suspension is likely to be triggered.

This will be helpful if the world’s first renewable heat incentive is ever fully implemented.

I would like to thank all those people who helped us develop these plans.  I can confirm that after careful consideration, should we need to use the stand-by mechanism, this will be done when the spend in 2012/13 is forecast to reach £67.9m with a formal notification period of one week.  Given current uptake figures, we do not currently envisage having to use this mechanism. 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.

There is no sign that they have learnt from previous errors, but are repeating them.

Government remains committed to the deployment of renewable heat and as such we are continuously looking at innovative ways of supporting it across all sectors.

I simply do not believe this.

Warmth in a Changing Climate: more thinking required

I have always wondered why a think tank is so named. Is it supposed to be like a military tank, that trundles through battlefields and cities firing shells or a fish tank in which in a special environment sheltered for the protection of the thinkers the thinkers can operate. Perhaps it is a water tank, with thinkers encapsulated inside, shielded, but that cannot be it.

Risks in Green Investments

These days only the very wealthy have any money and they are hanging onto their dollars until that old eagle grins. Because these are difficult times business people and investors are looking for risk free investment, and although no investment is ever risk free, they are seeking to mitigate risk by whatever means they can. In fact, “de-risking” a project tends for most investors to be a condition precedent before lending or investing. The old “risk reward” mantra looks very old fashioned now.

What Which? has to say about solar panels

The consumer organisation “Which?” claims that it has no bias and no hidden agenda; I disagree. Its agenda is to worship at the altar of consumerism. For this organisation the consumer is all important – more important than the damage that reckless and overwhelming consumerism brings. There are endless comparisons about product value from a monetary value. Other values which are more important – environmental, sustainability and ethical seem to play little part in “Which?” reports.

A very short guide to home renewable energy

Are you thinking of installing some kind of renewable energy for your home? If so, I offer this guide. 

These are the main ways of generating energy from renewable sources. All of them have their pluses and minuses. None of these forms of energy supply 100% of the energy that you need at all times, and they do need back up. All forms suffer from some kind of intermittency. That should not stop you considering one of these which will give you clean energy some of the time.

The Energy Review

In May last year Alistair Darling, then Secretary of State for Trade put his name to a document published by his Department which comprised three hundred and forty three pages; it was the Energy White Paper. 

You will find that “solar” within the context of a heat creating technology occurs only two times, and once of those times is in a footnote. It was a depressing indictment of the Government’s thinking and competence.  

Heat is responsible for over a third of our country’s energy usage and water heating around 24% of an average homes’ energy use and carbon output. The Energy Review should have been renamed “the Electricity Review” and Energy Policy “Electricity Policy”. The Government had no heat policy and therefore no energy policy under Mr Darling’s stewardship. 

This is serious because of all the renewable technologies, renewable heat technology is the most mature and predictable and the only technology that enables the renewable energy created to be stored economically. Heat is important; in our country people still die of hypothermia: I know of no case of anyone dieing because they could not turn on their television. 

Mr Darling is now promoted to Chancellor of the Exchequer where he is bringing his talents to looking after the nations’ money and saving the Northern Rock Bank. I think he can do less damage there.

In the European Union the leading solar thermal country in terms of per capita installations is Cyprus. You might expect that. After Cyprus comes Austria and Germany. Austria is the EU’s leading exporter of solar thermal technology and Germany is the EU’s biggest market. Recently France, Spain and Portugal have increased demand for solar thermal by tax rebates, regulations and subsidies respectively.

The UK has the lowest solar thermal operating capacity in the entire EU, but clearly the UK government thinks it knows better than its European partners. Even the USA projects a 50% increase in solar thermal take up next year.

The Energy White Paper indicated a lack of clear thinking, in its failure to suggest measures on the scale that are needed. The energy utilities cannot be relied on to take up measures that are contrary to their core business and interests. Individuals are very keen to help but they have no real guidance, no real support.

At Genersys I find consumers very interested in solar water and space heating, where on an individual house basis they can save around half a tonne of carbon dioxide emissions for a solar water heating system if they are on the gas network but around twice that figure if they are not on the gas network. 

You cannot of course, and I do not suggest that one can build an energy policy solely around renewable heat but it is a critical component in any sensible energy policy and as such a component that is missing today. In this country our engineers are as competent as those of our European partners, our population as aware of global warming.

The reason why solar thermal in the UK is still a tiny industry is simply that we do not have the right policies in place to encourage its take up.  An energy policy that will provide us with secure energy, some degree of energy independence and which will address the real problem of climate change needs real measures that will see things like solar panels on every roof, not lengthy and expensively produced documents of pious hope.

The Climate Change Bill

Hilary Benn, the Environment Secretary, has announced that the Government will amend its draft Climate Change Bill.The Bill originally set out legally binding targets for reducing carbon dioxide emissions in the UK by at least 60 per cent by 2050 and 26 to 32 per cent by 2020 based on a new system of “carbon budgets” set at least fifteen years ahead. It also proposed the creation of a new independent, expert Committee on Climate Change to advise on the best way to achieve these targets.  The latest draft requires this Committee to look at the “implications” of including other greenhouse gases and emissions from international aviation and shipping in the UK’s targets as part of this review. The bill envisages that the Government must seek the Committee’s advice but not, of course, be bound by it. The Government will, however, have to explain its reasons to parliament for not following the Committee’s advice to parliament and report every five years.

O dear! Legally binding targets! A five year reporting cycle. Another quangos. More money on administration and nothing on measures. If we don’t meet these targets in thirteen years’ time and thirty three years’ time so what? There are no sanctions if the Government fail to meet legally binding targets. They won’t round up the Environment Secretary and throw him in jail. I suppose that someone will apologise, blaming past governments for the mess that we will be in, as the weather becomes more extreme, energy more expensive and economies decline, pretty much as predicted by Sir Nicholas Stern. We already have a legally binding target to abolish fuel poverty in vulnerable households by 2010 and in all households by 2016. We have no chance of meeting these targets, so how can we meet our carbon dioxide emission targets?Mr Benn thinks that targets will give the UK “greater clout at the international negotiating table”. He misleads himself. While we in the United Kingdom play around with statutory targets, trade and cap schemes, carbon casinos where you lay down bets in emissions and could win big prizes, much of the rest of the world realises that it is measures, not words, that reduces carbon emissions.  There are plans and statutory schemes in many countries that provide real measures, particularly for the generation of green energy through thermal solar and other renewable technologies. In these cases, conditions are created to incentivise these technologies. Here in the United Kingdom less is spent on thermal solar incentives than 650 members of parliament run up on their expenses in eleven days, yes eleven days! When Mr Benn sits at the international negotiating table he won’t, on the basis of this draft bill, have clout. He will have something, but it won’t be clout or respect for the UK’s climate change policy.