In yesterday’s Government Budget announcement, a number of policy decisions were confirmed to support the low carbon heating industry, including a range of measures to support heat pumps. The biggest headline, certainly in the short to medium term, is that the Renewable Heat Incentive scheme has been extended to March 2022.
Extending the Renewable Heat Incentive
The Renewable Heat Incentive (“RHI”), is the Government incentive which rewards homeowners and businesses who install ground source heat pumps and air source heat pumps, by paying them for the renewable heat they generate. Up until now, the RHI had only been guaranteed for new entrants up to March 2021. As announced in the Budget, this has now been extended to March 2022.
This is obviously great news for customers planning heat pump projects over the next couple of years, as it provides security that the policy is not going to be withdrawn.
Here at Alto Energy, we have always been confident that the RHI would be extended, or another policy would be announced to replace it. This Government has signalled their intent when it comes to tackling climate change, so we’ve felt it was a matter of when, rather than if, this announcement would be made. Unfortunately, there have been a number of organisations over the past few months trying to pressure sell heat pumps on the basis that the RHI was being cancelled soon - this was always nonsense! At Alto Energy we pride ourselves on just providing good advice when it comes to heat pumps, and we will never use pressure sales techniques like these.
Here is the specific text from the Budget:
“The Renewable Heat Incentive (RHI) – The government will extend the Domestic RHI in Great Britain until 31 March 2022. It will also introduce a new allocation of flexible tariff guarantees to the Non-Domestic RHI in Great Britain in March 2021, helping to provide investment certainty for the larger and more cost-effective renewable heat projects.”
Low Carbon Heat Support
In addition to the extension to the RHI scheme, the Government also confirmed it’s long term support for heat pumps in the form of a proposed grant scheme. This will need to be consulted on in due course so that the exact nature of the grant scheme can be decided, however this is a great signal of intent that heat pumps will continue to be at the forefront of home energy policy for years to come.
“Low carbon heat support – The government will consult on introducing a new grant scheme from April 2022 to help households and small businesses invest in heat pumps and biomass boilers, backed by £100 million of new Exchequer funding.”
A New Tax On Boilers
As well as supporting heat pumps, the Government also made it clear that we need to move away from fossil fuel boilers. The Government will be consulting on the introducing of a “Green Gas Levy”, which will be a levy raised on energy suppliers who supply gas. As with all levies, the costs will be passed down to gas bills. With this new policy on the horizon soon, this represents yet another reason to switch away from gas and choose a heat pump for your home!
“Green Gas Levy – The government will consult on introducing levy-funded support for biomethane production to increase the proportion of green gas in the grid.”