New government energy saving incentives
Plans for the government’s ‘Green New Deal’ are well underway with the first Green Deals scheduled to appear in autumn 2012. So why is it necessary and what does it mean for us?
Over a quarter of the UK’s carbon emissions come from domestic energy use. Up-grading our housing stock will be essential if we are to meet our 2050 carbon reduction targets. With some of the oldest housing stock in Europe, it is quite a challenge to improve the energy efficiency of our homes and buildings without some help and incentives.
The Green New Deal will provide up-front finance (from private firms) for energy saving measures such as insulation to home-owners, private land-lords and small businesses. The cost for building improvements will be paid back through instalments added onto energy bills. The idea is that the consumer will not have to bear the direct costs of the improvements but can benefit from them by saving money on energy bills. The ‘golden rule’ of the scheme is that the savings in energy bills should always equal or exceed the cost of the improvements so the consumer is always better off.
Since it may take some time to pay back the cost of improvements, there will be some interest applied. The details of the level of interest are yet to be announced. Extra help will be available for those most in need such as the vulnerable, low income households and hard to treat homes.
The consumer only pays back the cost of the improvements whilst benefiting from them, i.e. if you move house, the new inhabitant will continue with the payments. This will be agreed with the sale/ rental of the property.
What about renewables? The government have implied that at the moment, the Green New Deal will not cover the costs of renewable technologies as there are other schemes covering these such as Feed in tariffs and Renewable Heat Incentives. The scheme may extend to renewables in the future, in circumstances where the energy savings would be greater than the upfront cost.
The details of the scheme are yet to be finalised but the current summary report by the Department for Energy and Climate Change can be found online at: http://www.decc.gov.uk/assets/decc/legislation/energybill/1010-green-deal-summary-proposals.pdf.
Renewable Heat Incentives (RHIs)
Heating accounts for 47% of carbon emissions in the UK. There is a great need for more of our heat to be generated via renewable sources such as ground source heat pumps, biomass boilers and solar water heating. The government is committed to the ambition that by 2020, 12 per cent of heating can come from renewable sources.
RHIs will start to appear sometime in 2011.The RHI scheme will pay consumers who install an approved renewable heat technology. At the start of the scheme, only installers of non-domestic heating, i.e. everything from large-scale industrial heating to small business and community heating projects will benefit. They will receive a tariff payment every quarter for 20 years. Up to 7 or 8 pence per kilowatt produced will be paid, depending on the type of technology.
The Government will also introduce Renewable Heat Premium Payments for the domestic sector. These will be direct payments to subsidise the cost of installing qualifying renewable heating systems to homes. The government aims to launch these payments in July 2011 and will announce further details in May 2011. In 2012, the government aims to introduce quarterly tariff payments for domestic installations as well.
Further information is available on the Department for Energy and Climate Change website: www.decc.gov.uk/rhi.
The government has also set up an online portal: Community Energy Online, to promote community energy schemes. Anyone interested in setting up a scheme should find valuable information and guidance here: http://ceo.decc.gov.uk/. Contact Forum 21 for more information, on 01984 634 242.