We asked Lesley Rudd, Policy and Public Affairs Manager of the Sustainable Energy Association, for her views on the policy landscape for renewable heat. The Sustainable Energy Association (SEA) is a member based industry body offering innovative policy solutions that link up building-level technologies and the wider energy system to achieve a low carbon, secure energy future for the UK, benefits for UK consumers, and commercial growth for businesses working in the sector.


 Over the last few months - as disappointing announcements relating to the low carbon sector have been made - we have had calls from concerned members asking for advice.  Policies causing immediate impact on business include:

These announcements have caused considerable uncertainty in the market place and are having an immediate impact on business, with both investors and potential customers getting cold feet (excuse the pun)!

The proposed considerable reductions in the feed-in-tariff for solar PV is impacting businesses in the low carbon heating sector as  there is a knock-on effect which pervades other business activities and other businesses.  Customers are unwilling to close orders because those announcements already made have created a pessimistic outlook for them, pending new policies being announced on heat policy and energy efficiency (both of which Amber Rudd has indicated will not be concluded until after the Chancellor’s Autumn Statement).

Businesses are now facing the  very real prospect that customers, with whom they  have been in contractual discussions for some time, are considering pulling out as they are concerned that the Renewable Heat Incentive scheme (RHI) will close before contracts are in place, leaving their  investment facing fiscal uncertainty.

The SEA supports the Government’s aim to ensure value for money for the taxpayer and avoid cost overruns in its policies.  However, we believe that the cuts proposed to the FIT regime and rumoured to the RHI will be counterproductive for the Government’s long term economic plan.  We agree that subsides should be phased out over time and should only be in place for a period necessary to allow new industries to compete effectively.  However, there is a real risk that if the investment in a permanently lower future cost base for the provision of our country’s energy is removed before the transition to competitiveness is complete, not only will we lock the country in to a higher energy cost than necessary for the long term, but we will also render stranded the good work and public funds that have been invested so far. The RHI is a national investment which will lead to a more cost effective heating market tomorrow. Removal or significant cuts to the RHI now will hinder our efforts to reduce costs and negate much of the Government and industry’s investment to date.

We believe bringing industry and Government together to find a solution is the way forward.  To this end, the SEA has carried out a significant amount of modelling to assess the value for money delivered by government policies such as the RHI compared to other alternatives and to identify ways in which the scheme could be improved to cost less and deliver more.  

Much has already been achieved by industry and Government working together to develop a market and a supply chain for renewable products - so let’s finish the job. As the market develops, volumes increase, costs and emissions reduce, customers get cheaper energy and the UK gets a sustainable industry with lower costs locked in for the future, thereby permanently reducing future needs for imported fossil fuels, and providing the most cost-effective way of meeting the Conservative manifesto commitment to meet the carbon budgets set under the Climate Change Act.  A win-win!

 Our thanks to Lesley Rudd, Policy and Public Affairs Manager at the Sustainable Energy Association.


 

 You can have your say on renewable heat at the Heat Conference on Wednesday 25 November - click here to book your place.