Public Accounts Committee Report
on Renewable Heat Incentive
16 May 2018
The Public Accounts Committee published its critical report on the RHI on 16 May 2018.
The PAC is highly critical of the Renewable Heat Incentive scheme for its:
- failure to address the high upfront cost of installing low carbon heating technology
- failure to address the threat of air pollution, which some RHI-funded installations have contribute to
- failure to reduce significantly carbon emissions from heating
- failure to develop the low carbon supply chain
The introduction to the report reads:
The RHI was set up in 2011 to boost rates of low-carbon heating in Great Britain but it has failed to meet its objectives or provide value for money for the £23 billion expected total cost to taxpayers.
BEIS's forecasts of take-up were wildly over-optimistic. Over nearly four years, only 60,000 renewable appliances were installed under the Domestic RHI, compared to 6.2million gas boilers. Gas boilers are usually replaced when they break down or when consumers extend or remodel their house.
BEIS does not appear to have considered the reasons for consumer heat choices or developed an inclusive and flexible heat strategy. An effective heat strategy needs to join up policy across heat networks; energy efficiency; heat decarbonisation research and development; product quality and building regulations.
It may be that for many homes and families heat pumps or biomass boilers are not the answer and other alternatives should be considered by BEIS. The RHI simply does not work for households and businesses unable to pay the high upfront costs of low-carbon heating equipment – particularly as gas and oil boilers are cheaper and remain popular heating choices across the country.
As a result, BEIS has had to cut back its expectations of how much renewable heat will be produced by the scheme by almost two-thirds, and of the reductions in carbon emissions due to the scheme by almost half. This means other policies are having to work harder to enable the government to meet its legal obligations.
Poor air quality is a significant threat to the health of the nation, and some RHI-funded installations contribute to air pollution. Yet the Department still does not have a robust system in place to monitor this impact. Current rates of non-compliance among scheme participants are too high and despite well-publicised problems with other, similar schemes, BEIS has no estimate of the amount of money overpaid to participants who have manipulated the scheme's rules.
BEIS is now rethinking its future policy framework to support low-carbon heating. In the remaining three years of the current RHI, it must learn as much as possible and ensure it does not repeat the same mistakes in future.
See the full PAC Report on the RHI published on 16 May 2018.
The following are extracted highlights from the main conclusions of the report:
- BEIS's forecasts of take-up of the RHI were wildly optimistic
- Take-up of the RHI was woefully low in large part because BEIS failed to understand what consumers want and the barriers to participation in the scheme
- Despite the scheme having a clear objective to develop Great Britain's supply-chain for low-carbon heat, BEIS has no specific goals, measures or milestones to assess progress
- BEIS and Ofgem do not understand the impact on air quality of installations funded by the RHI
The following paragraphs are extracted from the detailed section of the report:
The Department accepted that it has had less success with developing the market for heat pumps, a strategically important sector for the future.
While BEIS accepted that the market for heat pumps was currently flat, the Ground Source Heat Pump Association went further and described the RHI as "shrivelling and unappealing". The Association told us that the size of the market for ground source heat pumps reduced following the launch of the RHI and has remained, every year since, below the levels recorded in the three years leading up to the launch of the RHI in 2011.
The GSHPA provided written evidence to the PAC.