Findings of RHI interim cost control consultation announced

Monday 11th June 2012

The Department of Energy and Climate Change (DECC) have today revealed the findings of the Renewable Heat Incentive (RHI) interim cost control consultation, which will see the year one RHI budget reduced and the trigger point notice period set at one week.

The consultation, which ran for a month from 26th March to 23rd April 2012, proposed an interim cost control measure for the RHI. It also sought views on a one month trigger period, which would be given prior to temporarily suspending the scheme until the next financial year if it is projected to exceed the budget.

The most notable outcome of the consultation is that an upper limit of 70 million has been set for the first year of the RHI scheme in 2012/13, which is almost half the initial proposed first year budget of 133 million.

DECC have taken the decision to reduce the RHI budget on the belief that a higher budget of 251 million in 2013/14 will be able to support new and existing Solar Thermal installations, should the 70 million budget be reached in the first year.

Greg Barker, Minister of State for Energy and Climate Change, explained the decision to lower the first year RHI budget:

"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".

Changes to the trigger point notice period were also announced, with DECC opting to implement a notice period of one week instead of the one month that was initially proposed. This will allow for a far higher trigger point, ensuring a maximum number of installations before the scheme reaches its budget and is temporarily suspended.

Greg Barker commented:

"We recognise the need to provide comprehensive information on current and forecast scheme expenditure and make it publicly available. To do this we will provide a weekly information update on our website, tracking our committed expenditure."

Current application levels for Solar Thermal are low in relation to the first year budget available, therefore it is unlikely that the interim cost control measure will need to be implemented if these levels continue. However, DECC are uncertain about how popular the RHI scheme will be and are taking precautions to avoid another Feed-in Tariff fiasco.

The domestic RHI is scheduled to launch in Summer 2013. A Renewable Heat Premium Payment of 300 is available now to all homeowners that wish to install Solar Thermals, to bridge the gap until the domestic RHI is launched. Read More about the Renewable Heat Premium Payment.

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