Sound off: slow progress
Will the delay to the renewable heat incentive be a major setback for social landlords’ plans for renewable heat? Two experts give their views
Yes - John Swinney, strategy director, Carillion
Social housing has pushed hard to be at the forefront of the introduction of renewable technologies to its stock. Taken in the round, the sector lost out on solar photovoltaics and the feed-in tariff. This was largely the result of the procurement rigours social landlords have to follow, but also due to a lack of clarity between competing objectives: should we maximise the numbers, or seek the best financial offer?
The renewable heat incentive offers another opportunity to pump-prime renewable technologies. But there is every chance that, like the FIT, it will not meet social landlords’ expectations. The debate about the level of the incentive, how attractive it is as an investment and what the operating framework will look like continue, but the big problem is the delayed start date.
The FIT legacy, together with the lack of clarity over how RHI will come to market, means that landlords, particularly those with homes not connected to the gas network, cannot pursue projects unless they can self-fund.
Uncertainty is always a threat to action and makes the building of momentum difficult. No one wants to repeat the confusion that has undermined the FIT regime, but delay may similarly dilute the success of the RHI.
Landlords looking to develop integrated green deal and renewable energy strategies to improve their stock, tackle fuel poverty and secure best value will have to fund the renewable energy elements out of existing budgets and with no certainty over how the RHI numbers will end up.
The delay will restrict social landlords’ capacity to make their homes energy efficient and reduce the cost of heating and electricity. Holistic whole-house energy improvements need support. The RHI delay will do nothing for joined-up energy solutions.
No - Matthew Rhodes, managing director, Encraft
The announcement of a delay to the domestic renewable heat incentive should surprise nobody, because it is consistent with the UK government’s track record in managing micro-renewable and low carbon funding and incentive schemes for as long as I can remember. This behaviour is sufficiently systemic to be predictable, so it shouldn’t be a setback if you plan for change.
There are three ways to ensure these kinds of delays don’t affect your plans.
First, don’t build plans on single funding streams. By looking at the green deal, energy company obligation, feed-in tariffs and RHI at the level of your whole stock and for individual retrofit projects, you spread risk, minimising the chances of setbacks when a scheme changes.
Second, focus on the most attractive projects first. The delay to RHI doesn’t affect ‘non-domestic’ projects, a category that includes shared heating systems for sheltered accommodation and tower blocks. On a block of sheltered housing with 41 units in Liverpool we found that a biomass scheme funded by non-domestic RHI paid for itself within five years, a level of return sufficient to support 100 per cent external finance.
Finally, be proactive. Those who wait will miss opportunities to attract funding from a government which, despite vacillating on RHI, remains committed to challenging carbon budgets and must deliver politically on retrofit. For example, £200 million is available to green deal ‘early adopters’, including group schemes that should cover social landlords. There is also the £190 million new community element of ECO, announced last month.
Whitehall is looking for ideas: those showing initiative could find they attract subsidies for renewable heat and related projects.