REA: Government urged to reallocate £100 million to heat decarbonisation projects and save 31,000 tonnes of CO2

• REA have urged the government to reallocate some unspent budget as the Non-Domestic Renewable Heat Incentive (ND RHI) comes to an end
• Say that a straightforward budget change would help deliver large-scale heat decarbonisation projects, but government inaction is putting them at risk
• £100 million of unspent budget could kickstart nearly 20 shovel-ready projects and save more than 31,000 tonnes of CO2 per annum

The Association for Renewable Energy and Clean Technology (REA) have today urged government to reallocate some of the £100 million of unspent budget to save more than 31,000 tonnes of CO2 per annum.

With the Non-Domestic Heat Incentive (ND RHI) set to close next week, the REA are calling for the reallocation of some unspent budget to help support 19 shovel-ready projects which could deploy in excess of 78 MWth of renewable heat capacity, delivering carbon savings of more than 31,000 tonnes of CO2 per annum.

The most recent budget updates for the RHI, which also includes the Domestic RHI (due to close in March 2022), indicate that it still has in excess of £100 million of unspent budget. The change would ensure that these projects can immediately start to deploy using existing money already allocated to the scheme.

The REA says that Government inaction before the scheme closes on 31^st March 2021 would represent a missed opportunity, adding that it would harm the UK’s heat decarbonising agenda and the green recovery if this straightforward change isn’t made.

Dr Nina Skorupska CBE, Chief Executive of the Association for Renewable Energy and Clean Technology (REA), said:

‘Our members, and the broader low-carbon heat industry have 19 large-scale projects that are ready to be built over the next two years. Their delivery would help contribute to the Government’s heat decarbonisation agenda, as well as support the UK’s Green Recovery.

“Supporting these projects requires no new budget, yet Government inaction has put their future at risk. A straightforward change to the Renewable Heat Incentive (RHI) would ensure these projects are delivered using existing money allocated to the scheme, especially given their remains no comparative scheme to replace the non-domestic RHI to support commercial heat decarbonisation.

“The discussions on this change have coincided with the Government’s announcement of significant new funding for the oil and gas industry’s transition to clean energy. We must support all parts of our economy in our drive to Net Zero, but not pursuing these low-carbon heat projects is another missed opportunity from the Government.”

Notes to editors:

Under the ND RHI, larger-scale projects can apply for Tariff Guarantees to enable them to secure a tariff now and commission by March 2022. The budget for Tariff Guarantees is capped by technology, as well as by year of commissioning, and is only a part of the total RHI budget, which is expected to be underspent.

The budget pot for ‘Other TG Supported Tech’, which includes biomass heat installations, and ‘Biomethane’ have become fully allocated before the end of the scheme on March 31st. As a result, 19 biomass projects and 2 Biomethane projects are shovel ready and still trying to be supported by the scheme. There is precedent to increase the technology-specific budgets for Tariff Guarantees, with heat pumps receiving an increase in the budget as of 1st February 2021. The status of the TG Budget can be seen here: https://www.ofgem.gov.uk/publications-and-updates/tariff-guarantee-applications

The latest figures for the underspend of the whole RHI budget can be seen here: https://www.gov.uk/government/publications/rhi-mechanism-for-budget-management-estimated-commitments

Figures on potential carbon savings, shovel ready capacity and jobs based on seven projects relating REA members that are in queue. Total figures could be higher given a further 14 projects whose details are not available.