U.K. delays £860M subsidization program for renewable heating systems hours before it was to take effect, blaming EU's objection to hefty biomass tariff, but hopes to implement revised scheme in two months

LOS ANGELES , October 6, 2011 () – A £860 million (US$1.3 billion) subsidy program for renewable heating systems was delayed in the U.K. hours before it was to be implemented, due to the European Commission’s (EC) objection to the hefty biomass tariff, reported the Guardian on Sept. 30.

Britain’s Dept. of Energy and Climate Change (DECC) said that it hopes that the Renewable Heat Initiative (RHI) will be started up in about two months, with a new subsidy scheme.

The department said in a statement that it expects to receive confirmation from the EC of its approval of state aid for the RHI “very soon,” subject to a cut in the biomass tariff; but what this means for the biomass tariff and the launch date for the program is still uncertain, the Guardian reported.

A change in the heat tariff from it currently proposed £0.027 per kilowatt hour would require amending the RHI regulations and receiving parliament’s approval.

DECC said it would launch the program “as soon as possible to minimize disruption to stakeholders,” according to the department’s statement.

The Renewable Energy Association (REA), however, said that any delay will cause significant interruption, reported the Guardian.

For the past half year, the renewable energy industry has been “gearing up” for the RHI, said Paul Thompson, the REA’s head of policy, adding that the delay also adds to the low confidence in the sector, as well as to the uncertainty about feed-in tariffs and renewables obligations such as for green transport fuel.

“Many” members of the Country Land and Business Association, such as farmers, who have invested ahead of the program, “will face cash-flow problems” because of the RHI postponement, said William Worsley, the association’s president, the Guardian reported.

Britain might also delay its Green Investment Bank as a result of EU state-aid rules, according to the BusinessGreen website.

Other changes or holdups regarding renewable heat and energy policies in the U.K. have further stymied the renewables industry, including failure to set a date to begin reviewing the renewable obligation subsidy program.

Earlier this year, the DECC upset solar energy companies when it announced it would review the feed-in tariff in April 2012, reported the Guardian.

The primary source of this article is the Guardian, King’s Cross, England, on Sept. 30, 2011.

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