The Renewable Heat Incentive was set up in 2011 to boost rates of renewable and low-carbon heating in Great Britain but it has failed to meet its objectives or provide value for money for the £23 billion expected total cost to taxpayers.
Wildly over-optimistic take-up forecasts
As we found with Green Deal, the Department’s forecasts of take-up were wildly over-optimistic. Over nearly 4 years, only 60,000 renewable appliances were installed under the Domestic RHI, compared to 6.2m gas boilers.
Gas boilers are usually replaced when they break down or when consumers extend or remodel their house. The Department does not appear to have considered the reasons for consumer heat choices or developed an inclusive and flexible heat strategy.
An effective heat strategy needs to join up policy across heat networks; energy efficiency; heat decarbonisation research and development; product quality and building regulations. It maybe that for many homes and families heat pumps or biomass boilers are not the answer and other alternatives should be considered by the Department.
High upfront costs limit scheme
The RHI simply does not work for households and businesses unable to pay the high upfront costs of renewable and low-carbon heating equipment—particularly as gas and oil boilers are cheaper and remain popular heating choices across the country.
As a result, the Department has had to cut back its expectations of how much renewable heat will be produced by the scheme by almost two-thirds, and of the reductions in carbon emissions due to the scheme by almost half. This means other policies are having to work harder to enable the government to meet its legal obligations.
Poor air quality is a significant threat to the health of the nation, and some RHI funded installations contribute to air pollution. Yet the Department still does not have a robust system in place to monitor this impact.
No estimate of the amount of money overpaid to participants
Current rates of non-compliance among scheme participants are too high and despite well-publicised problems with other, similar schemes, the Department has no estimate of the amount of money overpaid to participants who have manipulated the scheme’s rules.
The Department is now rethinking its future policy framework to support low-carbon heating. In the remaining three years of the current RHI, it must learn as much as possible and ensure it does not repeat the same mistakes in the future.