Last week, the government published a consultation proposing an end to support for solar thermal hot water heating, just as the UK market starts to recover. If the proposals go through the internationally recognised technology will be cut out of the Renewable Heat Incentive entirely next year.
DECC’s proposal comes as HMRC decides whether to hike VAT for solar thermal up from 5% to 20%, adding £675 to the cost of a typical residential install.
The shock proposal came after repeated statements from Energy Secretary Amber Rudd that renewable heat is the major focus for UK renewables policy, given the UK is off track on its 2020 renewables targets.
In 2014 green sources provided only 4.8% of the UK’s heat, which puts the UK way behind its self-imposed target of 12% renewable heat by 2020. It also follows warnings by the Committee on Climate Change that greater effort is needed on renewable heat.
‘This proposal simply doesn’t make sense. The government acknowledges the many benefits of solar thermal, yet proposes singling it out for the removal of financial support. With UK renewable heat deployment falling desperately behind target, government should be full square behind this technology as part of a strategic plan to permanently bring down heating costs for British families.’
Paul Barwell, CEO of the Solar Trade Association
Solar thermal is one of the most established and accessible renewable energy technologies, with over 350GW of global capacity. That’s considerably more than the global capacity for solar PV.
Its applications have expanded into space heating, community heating, district heating, hotels, hospitals and industrial processes. Solar thermal also works effectively alongside other renewable technologies.
The proposal is doubly surprising because of the government’s stated intention to ensure less-able-to-pay households can benefit better from the Renewable Heat Incentive scheme.
Unlike other renewable heat technologies, solar thermal has negligible running costs and can be added to existing heating systems. Its performance does not depend on investing in a highly insulated house, making it particularly well suited to homes in fuel poverty.
It also works effectively in built-up urban areas and on smaller roofs, broadening the opportunities for British homes to invest in renewables.
‘The use of solar thermal panels to provide hot water in some of our existing housing schemes helps to keep our customers’ gas bills down, and this technology and other renewables continue to be important options we consider as part of our stock development and improvement plans. Continuation of the Renewable Heat Incentive and the Feed-in Tariff is important for solar thermal and other renewables until these markets more fully mature.’
Gordon Watts, Sustainability Manager at South Yorkshire Housing Association
The UK solar industry is particularly aggrieved by the proposals, as the UK solar thermal market, which is dominated by domestic systems, slumped during a policy hiatus lasting from 2010 to 2014.
It was not until the first half of 2014 that the Renewable Heat Incentive was introduced for domestic solar thermal, by which time the market had halved in the UK, leaving the industry in a weakened position to promote sales.
Analysis by the STA shows that there has been an 88% increase in monthly solar thermal sales enquiries amongst its membership compared with this time last year.
Solar thermal is well established in colder and less affluent Eastern European countries because of its ability to provide effective heating.
Per capita, Poland has four times – and Slovenia seven times – the capacity of the UK’s solar thermal. Germany has 20 times the solar thermal per head of population. The technology is therefore popular with social housing associations in the UK to help tackle fuel poverty.
Earlier analysis by the Solar Trade Association shows that while solar thermal is already relatively affordable, costs can be reduced significantly given a strong domestic market. The proposals also put at risk precious domestic manufacturing in renewables as the UK has a number of excellent solar thermal manufacturers such as Viridian in Cambridgeshire, AES in Moray in Scotland, Thermatwin in Manchester and Solar UK in Sussex.
‘Discriminating against this globally important technology in the UK would send a terrible message to householders, and it would have very serious ramifications for the British solar thermal sector. Manufacturers of solar thermal equipment, including cylinder manufacturers as well as installers, risk a full scale winding-up of their sector. We are urging government to think again, particularly since sales inquiries are on the rise.’
Paul Barwell, CEO of the Solar Trade Association
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