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Published: 16/03/2020

2020 Budget promises renewable heating benefits

Newly-appointed Chancellor of the Exchequer Rishi Sunak, recently delivered the UK Government’s 2020 Budget, including his plan for the energy sector to Parliament, which stressed the importance of tackling CO2 emissions and achieving zero carbon in the UK.

With industry majors being positive about the government’s plans on meeting the target of 175 GW of installed clean energy capacity by 2022, Budget 2020 was rather a much-awaited affair for the renewable energy industry. A series of commitments were made to deliver green growth and reduce emissions from homes and buildings as part of transition away from fossil fuel heating to net-zero.

The Commitments:

  • Current Renewable Heat Incentive extended until 31st March 2022 for heat pumps, biomass and solar thermal installation.
  • New Low Carbon Support Scheme to follow the RHI in 2022 until 2024, offering £100 million of grant-funding for households and small businesses to install low carbon heating technology, including heat pumps to replace fossil fuel heating.
  • Introduction of Tariff Guarantees for non-domestic RHI funding.
  • Equal gas and electricity rates – Continuing to remove incentives to choose gas over electricity, the Government is raising the rate on gas under the Climate Change Levy (CCL) whilst freezing the rates on electricity. Inevitably gas prices will increase making conventional gas central heating systems more expensive to run, accelerating renewable heating solutions. Heat Pumps and other renewable heating solutions will be a cheaper heating option for the homeowner.
  • Skills and Training – New £2.5 billion National Skills Fund to improve the technical skills of adults across the country.

What does this mean for installers?

The budget today indicates that heat decarbonisation is a key priority for the UK Government, and starts to address the upfront investment required to encourage the uptake of low carbon heat. The Government’s ambition to phase out high carbon fossil fuels has been reinforced today and the budget takes a step towards the Future Homes Standard due to come into play in 2025. The National Skills Fund is yet to be fleshed out but hopefully will help train and upskill individuals over the course of their lifetimes, all the while helping the low carbon heat sector transition to a green economy.