UK government proposes to drop solar thermal support

04.03.2016
Will solar thermal systems thrive without an incentive? (Photo: The Solar Design Company)
Will solar thermal systems thrive without an incentive? (Photo: The Solar Design Company)

The UK government wants to remove support for solar thermal from 2017, when the Renewable Heat Incentive (RHI) regulations are revised. This applies to domestic and non-domestic solar thermal systems. The UK Solar Trade Association (STA) and other renewable energy organisations criticise the new plans.

The British support mechanism for renewable heating systems, the Renewable Heat Incentive (RHI), is under review, in an attempt to reduce its total budget of £ 700 million up to 2021.

Northern Ireland Renewable Heat Incentive has already been proposed to be closed at the beginning of February 2016, when the Department of Enterprise, Trade and Investment (DETI) declared that it would suspend the Northern Ireland RHI scheme to new applicants from 29 February 2016.

Solar thermal “poor value for money”

According to the UK Solar Trade Association (STA), since the domestic RHI began in April 2014 there have been only 2,000 accredited solar thermal systems, representing less than a quarter of the total solar thermal market in 2010.

While 17 % of the renewable heat plants accredited to the domestic RHI scheme until December 2015 were solar thermal systems, these systems supplied only 2 % of the renewable heat produced by supported plants. Additionally, solar thermal energy has the highest tariff in the RHI, which makes it the least cost-effective technology when compared to biomass and heat pumps. A survey apparently also showed that half of the owner-occupier applicants said they would have installed a solar thermal system regardless of the RHI support.

With this, the Department of Energy and Climate Change (DECC) concluded that “solar thermal represents poor value for money for taxpayers”. Even though the members of the government see the advantages of solar thermal energy such as low upfront costs and its contribution to the decarbonisation of heating, for them these reasons are not enough to justify ongoing RHI support. 

STA sees solar thermal reaching cost parity

Contrary to this, STA concluded in an analysis that with a boost of the sector solar thermal would reach cost parity with fossil fuels. According to STA, approximately 200,000 residential installations per year would cause the installation costs for solar thermal to drop by 30 %, thereby supplying heat at the same price as fossil fuels or electricity (with prices of 7.8 to 9.9 pence per kWh).  STA also stated that there had been an 88 % increase in monthly solar thermal sales enquiries amongst its membership compared to 2015.

In addition to asking the government to allow solar thermal energy to still qualify for the Renewable Heat Incentive, the Solar Trade Association is also calling on the government to extend the RHI support to solar thermal systems used for space heating, i.e. central heating systems, which had not been part of the support scheme.

Paul Barwell, CEO of the Solar Trade Association commented on the planned RHI changes: “This proposal simply doesn’t make sense. The government acknowledges the many benefits of solar thermal, yet proposes singling it out for the removal of financial support. With UK renewable heat deployment falling desperately behind target, government should be full square behind this technology as part of a strategic plan to permanently bring down heating costs for British families.” Barwell was also concerned about the message the new policy changes would send to householders and the risks for manufacturers of solar thermal equipment. Since the DECC rates solar thermal as a mature technology with a well-established global supply chain, the DECC does not share the STA’s worries that discontinuing the RHI support would harm the manufacturers of solar thermal systems.

No RHI, no changes?

However, the renewable heat incentive has often been ignored by the people installing solar thermal systems; either because the projects could not apply for the incentive anyways (e.g. solar thermal for space heating or pool heating) or because of additional costs for accreditation and complicated application procedures. Therefore it is quite likely that there is a market for solar thermal without government subsidies.

The Heating & Hotwater Industry Council (HHIC) commented on this in April 2015, when the DECC published their RHI quarterly statistic. With approximately 11,150 new installations which were covered by the RHI, about 1,000 renewable heating measures would be installed in the UK per month. But according to HHIC’s statistics, there were already around 1,000 heat pumps and about 500 solar thermal systems installed per month in the UK. Therefore a lot of these did not seem to be using the RHI.

Here you can find the full proposal of the RHI reforms published by the Department of Energy and Climate Change (DECC): “Proposed reforms to the existing Domestic and Non-Domestic Renewable Heat Incentive schemes” (89 pages).

Tanja Peschel

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