June 2018

Evaluating Government Renewable Heat Policy

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In 2011 the UK Government introduced the Renewable Heat Incentive (RHI), the world’s first long-term financial support programme for renewable heat. Scheme participants are paid a tariff per kilowatt hour of heat generated, with the aim of incentivising the installation of renewable heating technologies and moving the UK towards its target of achieving 12% of heating from renewable sources by 2020.

In 2014 the Department of Climate Change (DECC) wanted to know how effectively the non-domestic RHI was meeting its objectives in stimulating the renewable heat market. DECC therefore commissioned Eunomia as part of a consortium to provide an independent evaluation of the scheme’s performance to date, seeking to understand the types of operators and technologies applying for support and the factors affecting its delivery.

In interviews with applicants, we investigated their motivations, the basis on which they made their investment decisions and their perceptions of the technologies supported by the RHI. In addition, we also interviewed investors, installers and suppliers of technologies to understand how the whole supply chain perceived both the RHI and the renewable heat market more broadly.

Both quantitive and qualitative research methods were used to assess the RHI on three different levels: application, implementation and performance. The results were synthesised to build a comprehensive picture of how effective the RHI was and give some early insights in to its impact.

Key insights from the research we conducted included:

  • The majority of applicants to the RHI suggested that they would not have installed a renewable heating technology without the RHI;
  • Installers played an important role in informing businesses about the RHI and its benefits;
  • The majority of applicants found that the financial case was the single most important factor in their decision to install a renewable heating technology;
  • Upfront costs remain a barrier and RHI applicants tend to use their own finances to finance their installations;
  • The vast majority of non-domestic applicants were very or fairly satisfied with their installation

Because of the sheer number of applications involved and the complexity of the issues, DECC required that the findings be presented in a concise and accessible format. To this end, in addition to reports we produced innovative ‘slide packs’ that presented key information in headline and graphic form alongside more descriptive text.

Our report was published in February 2016, ahead of a consultation on potential changes to reform the scheme. The research provided stakeholders with the evidence needed to make an informed contribution to the consultation, and influenced Government policy when the RHI was subsequently reformed.

A member of the DECC team said:

“Both senior policy and analytical colleagues […] found the reports clear and engaging, the take home quote being ‘these are excellent, rich and accessible reports’… This speaks to their clarity and engaging presentation.”

Our lead consultant Sam Taylor said:

“The evaluation provided significant insights in to the functioning of the RHI and the renewable heat market in general. It’s an excellent example of how our research can inform and improve policy.”

Photo by Oregon Department of Forestry, via Flickr