The news that the RHI is to be governed and possibly suspended by budget limitations has been met with dismay by industry.
Greg Barker MP, minister of state at the department of energy and climate change (DECC), has stated that RHI payments will be limited to £70m this financial year. It will suspend the subsidy for the rest of the financial year if it forecasts that the budget will be exceeded. This decision will be triggered if 97% of the budget is used up.
Renewable heat installers will be given one week’s notice of the suspension.
Neil Lawson, head of renewable heat at Ardenham Energy, said: "No business can operate sustainably under these conditions. These proposals will stop the development of a specialist renewable heating sector in its tracks. The only way that businesses will be able to survive a peremptory suspension of the RHI will be to ensure that RHI-based work is only ever a minority of their work stream.
"At the moment there has been reduced take up of RHI in the commercial property sector because applying for the funding was so difficult. That now seems to be easing and many more projects are coming through. But there is also a potential backlog of domestic RHI qualifying installations to July 2009, so we can expect an unrealistic peak in applications the day the domestic scheme launches. As soon as that scheme is launched the floodgates will open.
"Consequently, I can't see how customer expectations can be managed…These are artificial mechanisms conceptualised in an ivory tower. The Treasury is seeking to control a budget at all costs and DECC is responding with a tsunami of destruction throughout the RHI industry.
"It's time to go back to the drawing board and start from the basics with a simple scheme. The current plans are overly complicated and unworkable.
"We urge DECC to keep on talking to the industry and to fight the imposition of these arbitrary budget caps. The introduction of the RHI was a world first. The eyes of the world are fixed on UK plc to see if we can create a thriving green economy, so we all need to make the RHI a success, not only for business and the benefit of all building owners, but for the original goal of carbon reduction."
A DECC spokesperson said: “The point of cost control is that we have learnt lessons – we want to take sensible action. We are not anywhere near spending the £70m budget. It’s a precautionary measure, not a knee jerk reaction. We are looking at using the rest of the budget for renewable heat projects.”
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