Spending Review 2015: ‘Cheaper’ alternative to the ECO scheme also announced
The renewable heat incentive subsidy scheme has been spared the axe by chancellor George Osborne but has had its budget cut by £700m over five years.
Osborne said the government would spend £1.15bn on a “reformed” renewable heat incentive (RHI) scheme between 2016 to 2021, which he said represented a £700m saving from original internal government estimates of expenditure.
The RHI gives payments to households and businesses that install low-carbon heating systems such as biomass boilers and ground-source heat pumps.
Industry fears emerged ahead of the Spending Review that the RHI could be scrapped, with several sources telling Building it was “likely” the scheme would either be reduced or axed altogether.
Richard Twinn, policy advisor at the UK Green Building Council, said: “There were concerns RHI could have been scrapped altogether, so it is encouraging that it is still there.”
In the Autumn Statement and Spending Review document, the government says it expects RHI to have “incentivised enough additional renewable heat” for 500,000 homes over the period.
Osborne also announced in the Spending Review plans for a “cheaper” energy efficiency scheme to replace ECO after it ends in April 2017. The Spending Review document says that the new scheme will last for five years and receive £640m in funding per year, down from the current figure of roughly £800m. The new scheme will be designed to help the government retrofit 200,000 homes a year, helping it meet its target of retrofitting one million homes over the course of this parliament.