To achieve net zero, it is crucial that we transition away from fossil fuel-based heating systems which are significant contributors to greenhouse gas emissions and embrace renewable heat alternatives. To that end, the government created the Renewable Heat Incentive to encourage homeowners and businesses to adopt new, more environmentally-friendly heating systems. It is one of the first policies in the world to provide subsidies for the adoption of these new technologies.
Winning Moves joined CAG Consultants to evaluate both the domestic and non-domestic schemes. Evidence demonstrates that the policy was successful in stimulating the take-up of renewable heat technologies for both audiences, with long timeframes and policy certainty important factors of that success. The research also found noteworthy differences in the outcomes between the two schemes.
Domestic RHI scheme
The domestic scheme provided payment for the renewable heat produced over a 7-year period through a pre-specified tariff. The programme required the installation to be done by an accredited installer and supported several types of renewable heat, including ground and air source heat pumps, solar panels, biomass boilers and pellet stoves.
The requirement for equipment, installers and installations to be MCS accredited was an integral part of the domestic RHI, as it introduced mandatory product and installation quality standards where industry standards had previously been voluntary.
Key findings and learnings on the domestic scheme include:
- Homeowners who were already considering and could afford RHT were most likely to adopt the technologies.
- Because the scheme did not help with capital costs, participation was limited to those who were better able to pay for installation.
- As intended, the RHI made most progress in areas that were off the gas grid.
- The main perceived barriers to further use of RHTs in the domestic sphere include the high costs of the technology and lack of familiarity with it, as well as the cost and hassle of retrofitting buildings with suitable levels of insulation.
- A common challenge for homeowners was finding independent, trusted information and advice on heat pumps and other renewable heating options.
Non-domestic RHI scheme
The non-domestic scheme was designed as a 10-year policy that would make a significant contribution to the development of a sustainable market for renewable heat, providing subsidies over a 20-year period. This scheme covers commercial, public sector and industrial installations. The key findings and learnings differed from the domestic scheme, in part reflecting pre-existing knowledge of the technologies and the capital available to invest:
- More than 50% of the applicants said they would not have installed RHTs without the government incentives.
- There was progress towards a sustainable market in several parts of this space, including social housing schemes, large-scale commercial and horticultural developments, agricultural and forestry businesses, and new builds.
- Government subsidies were critical for the adoption of other applications including large-scale biomass installations and heat pumps and biomethane.
Both evaluations have been published: The domestic report can be found here and nondomestic report can be found here. You can read more on the research methods used on this project here.