UK delays green heat scheme

Reuters News

9/30/2011 7:28:46 AM - Reuters News

LONDON (Reuters) - Britain's will launch its renewable heat incentive (RHI) by the end of November, roughly one month after its intended start date, after complaints by the European Commission (EC) that subsidies for large biomass technology were too high.

"We hope to launch the scheme before the end of November, subject to parliamentary approval," a spokeswoman for the Department of Energy and Climate Change (DECC) said on Friday.

The ministry said on Thursday the program, a first of its kind which rewards the use of renewable energy technology for heating, would be delayed from its September 30 start date after the EC intervened.

"The EC are concerned that the tariff setting methodology used for the large scale biomass tariff differed from that applied for other technology bands, resulting in too high a tariff being set," the spokeswoman added.

The government will now have to revise the subsidy level, which was set at 2.6 pence per kilowatt-hour for twenty years, and pass it through the parliament for approval.

Minister of State for Energy Greg Barker said on Twitter he was "frustrated" at the delay, while the announcement took the industry by surprise.

"As heat demand is seasonal, delaying until the end of November will mean many customers will either put off a decision until next winter or buy a new fossil fuel boiler now - locking them in to higher carbon heat for years to come," said Paul Thompson, head of policy at the Renewable Energy Association.

The scheme will first be available for large industrial and commercial consumers and then apply to households.

The government expects the scheme will increase capital investment in green energy projects by 4.5 billion pounds by 2020 and support around 150,000 existing jobs throughout the supply chain.

(Reporting by Karolin Schaps)