Last month's crucial meeting at the Department for Energy and Climate Change (DECC) about the Renewable Heat Incentive(RHI) was instructive in a number of ways.
The title of the meeting leaves little doubt about how the conversation is going to go: ‘Cost Control Proposals for the RHI’. In other words, they are going to try and make sure the RHI does not fall into the same trap as Feed-in Tariffs (FiTs) by running out of money
Cutting the FiTs was the right decision; it was just done in the wrong way. Our industry wants and needs stability; so it is rather bad news that the government lost its appeal over its decision to cut the tariff so suddenly. The legal tit-for-tat is now set to continue and more consumers will be clamouring to get PV systems fitted before a final decision about the deadline is made. Then business will fall off a cliff.
Yet, the market could fly very nicely, thank you, on the new reduced rate of 21p – that still offers a very decent payback considering the cost of installations has fallen dramatically in the past year. It is also a more sustainable level of payment and one that gives the necessary certainty for a long-term investment. At that level, we could envisage a very healthy and sustainable rate of growth in this market, but the dramatic and unmanaged nature of the cut from 43p has thrown the whole thing into confusion.
But what is done is done and the government has to clear up its own mess. What it must not do now is make the same mistake with the RHI. Decide what you can afford, put up the goalposts and then leave them alone…please!
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