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Published: 08/12/2015

Future funding of the RHI confirmed

Following on from the Autumn Statement, the Department for Energy and Climate Change (DECC) has confirmed the future of the Renewable Heat Incentive (RHI) for another five years; funding has been confirmed to March 2021. The announcement offers the industry, and consumers, confidence in the future growth of the renewable heat technology market.

On Wednesday 25th November, the Government announced its future plans for energy efficiency, which includes an increase in funding for the RHI to £1.15 billion by the financial year 2020-21 (the equivalent of 500,000 more homes to be heated by renewable technology). Although funding overall is increasing, the scheme will be reformed to improve value for money. The announcement has allayed fears that the RHI could be scrapped completely as part of widespread cuts.

RHI to offer better value for money

The Treasury announced plans to make the RHI scheme deliver “better value for money”, with £700 million worth of savings to be made in the next five financial years. However, at this time, the DECC has not confirmed how these savings will be achieved. The Heat Pump Association believes the scheme will be modified, potentially to encourage assistance to the less well off and fuel poor.

Renewable Energy Association (REA) chief executive Nina Skorupska said: “Our members recognised the need to make savings and presented to Treasury and DECC how we could optimise the RHI budget. A £700m cut is large, but we look forward to working with the government on reforming this crucial area.”

It was also announced that the RHI will have a cap on its annual budget. The Heat Pump Association is pushing for a system that allows any applications that have failed due to the budget caps to be first in line when the scheme reopens.

HPA President, Mike Nankivell commented. “We had already learned that the RHI scheme would be reformed to deliver better value for money and we hope this signals that government may take on board some of the suggestions we, and others with interests in renewable heat technologies, have already made for future improvements to the scheme. We look forward to further constructive discussions between government and the renewable heat industry.”

How will the news affect consumers?

If you’re thinking about installing renewable heating in your home or business premises in the near future, you can be reassured that the RHI will remain very much like it is now for the next financial year (April 2016 to April 2017) and will remain open for new applications.

Great News!