The UK government will provide funding to continue the Renewable Heat Incentive (RHI) until 2020, according to the Comprehensive Spending Review announced by chancellor George Osborne on Wednesday.
The government said it will increase funding for the RHI to GBP 1.15 billion (USD 1.73bn/EUR 1.63bn) by 2020/21, while reforming the scheme to save GBP 700 million.
The industry cautiously welcomed the continuation -- coming after concerns that the scheme could be abandoned -- and said that more detail was needed on the planned savings. The Renewable Energy Association (REA) said that with this budget level, meeting renewable heat targets would remain a challenge.
The UK Solar Trade Association (STA) warned that the UK was well behind on renewable heat targets. "The latest statistics for renewable heat show that in 2014 it provided 4.8% of the UK’s heat, against a DECC [Department of Energy and Climate Change] target of 12% in 2020," it noted.
Elsewhere, the DECC's resource budget has been cut by 22% by 2019/20, which the STA said it understood could lead to 200 redundancies in the department.
DECC's innovation programme has been doubled to GBP 500 million over five years. The government said this would help "position the UK as an international leader in small modular nuclear reactors, and deliver commitments on seed funding for promising new renewable energy technologies and smart grids."
The spending review also includes changes to tax reliefs on renewable investments, which Scottish Renewables said were another cut in support for the sector. "Overall, the spending review still leaves us with no real clarity on the crucial issue of how government will support the growth of renewables beyond 2020," said the trade body's chief executive Niall Stuart.
(GBP 1.0 = USD 1.507/EUR 1.421)
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