Question

To ask the Secretary of State for Energy and Climate Change, what estimate he has made of (a) the total carbon savings and (b) the resulting value for money of the non-domestic Renewable Heat Incentive subsidy scheme since it began operation.

The December 2013 Impact Assessment (IA) provided estimates of net carbon savings from the non-domestic Renewable Heat Incentive (RHI) expected over carbon budget periods, and estimated savings of between 2.1 and 3.2 MtCO₂ over the second carbon budget period (2013-2017).1 This was based on take-up assumptions prior to scheme launch.

Estimated carbon savings have not been revised according to current take-up. Real world carbon savings will be affected by multiple factors including identifying the replacement technology, in-situ performance of the technology, and changes to heat use patterns. In order to address the complexity, a programme of benefits realisation is being developed to estimate carbon savings from the scheme.

Other sources which have been set-up to collect evidence that will allow us to calculate carbon savings in the long run, as well as to offer continued improvement in the performance of the scheme, include:

• A metering and monitoring programme - to measure the performance of technologies in everyday situations;
• The introduction of Biomass Sustainability criteria - to ensure a minimum level of carbon saving by restricting emissions to 34.8g of CO₂ equiv. per MJ of heat generated.

In terms of value for money, the RHI policy has been designed to provide renewable heat, which contributes towards the UK’s Renewable Energy Directive target, in the most cost effective way. As such we calculate value for money for the scheme in units of pence per kilowatt hour (p/kWh) of support, and look at comparative costs of producing renewable energy from other renewable sources.

The following table shows the value for money in p/kWh for biomass systems, non-biomass systems and all systems in the scheme as a whole. This is based on all payments received since the start of the scheme to the end of November 2014.

[1] Table 18, IA available at: https://www.gov.uk/government/consultations/renewable-heat-incentive-expanding-the-non-domestic-scheme