UK's RHI is a win-win policy

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17 April 2014, Nuclear, Solar, Wind

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The RHI will help to pay for the green conversion of the domestic heating sector, which is responsible for 38% of the UK's emissions. Introduced this spring, domestic renewable heat incentives will directly help UK households that wish to heat their houses by renewable means instead of with gas or electricity produced with fossil fuels.

According to the Office for National Statistics, at least 25% of UK households are in fuel poverty while nearly three-quarters are classified as vulnerable. Most domestic heating is reliant upon fossil fuels and subject to soaring energy bills. The RHI could directly reduce heating costs for consumers, reduce emissions and dependence on fossil fuel imports, and stimulate the local economy through the creation of new supply chains and jobs in a sustainable manner.

The alternatives to domestic fossil fuel heating include ground and air-source heat pumps, solar thermal collectors, and biomass boilers. These technologies will all be eligible for payments, subject to meeting the required criteria, which include having adequate insulation in the property.

Households that take advantage of the RHI by installing renewable heating will receive payments for seven years to compensate for the costs of change, calculated to give a generous 12% return on investment. These payments will be based on the amount of energy a household consumes for heating. In effect, by heating the house to a desirable temperature (a temperature that is likely to be higher than previously judging by the high fuel poverty proportions) households may receive larger payments. Many a household that has been under-heated in the past may finally feel the warmth of the government's generosity.

The success of the scheme will ultimately depend upon its marketing, and early adopters are likely to receive the greatest benefits before tariffs (as for so many other renewable incentives) are reduced. But as a method of reducing emissions and fossil fuel consumption, improving energy security, stimulating the domestic economy in a sustainable manner, and improving quality of life for UK households, the RHI ticks all the boxes. Other countries are likely to take inspiration from the scheme. / / @DatamonitorEN

Source: MarketLine

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