Heating for homes, businesses and industry is responsible for a third of the UK’s greenhouse gas emissions, and decarbonisation of heat is one of the biggest challenges we face in meeting our Net Zero climate targets.

This consultation by the Department for Business, Energy and Industrial Strategy (BEIS), sets out proposals for:

• Green Gas Support Scheme (GGSS): increasing the proportion of green gas in the grid through support for biomethane injection
• Clean Heat Grant: support for heat pumps and in certain circumstances biomass, through an upfront capital grant to help address the barrier of upfront cost
• Budget control and financial management of the spending proposals for green gas and buildings technologies
• Participant compliance

BEIS are working with devolved administrations to implement these proposals across Great Britain and have published the Impact Assessment to accompany these proposals.

Interaction with the Renewable Heat Incentive (RHI) schemes

In the March 2020 budget, the government announced:

• An extension to the domestic RHI for a further year to 31 March 2022
• The introduction of a flexible, third allocation of tariff guarantees on the non-domestic RHI. The non-domestic RHI will close to new applications on 31 March 2021

Alongside this consultation BEIS has also published:

• Consultation on the Non-domestic Renewable Heat Incentive: ensuring a sustainable scheme
• An outline of Changes to the Renewable Heat Incentive (RHI) schemes

Key points

Energy Systems Catapult believes on their own these two new policies would clearly be insufficient to drive heat decarbonisation at the scale and pace required to meet Net Zero climate targets.

These two new schemes can be useful intermediary steps to address short-term supply chain disruption provided additional steps are taken in parallel, and at pace, to increase market and supply chain readiness and support further innovation, including:

• The need for long-term heat and building decarbonisation strategy:
  • See here our: Six Steps to Zero Carbon Buildings.
• The design of these two new schemes is an opportunity to begin shaping the low-carbon heat market to deliver high quality outcomes and drive future innovation:
  • Developing improved property assessment procedures and standards.
  • Introducing post-installation quality control
  • Supporting skills, training and knowledge building across supply chains
  • Raising customer awareness about low-carbon technologies
• Green Gas Support Scheme’s focus on developing biomethane production from waste feedstock (potentially useful long-term option) rather than bioenergy crops to support agriculture and waste emission reduction:
  • Needs long-term focus on market-based mechanism such as legal supplier obligation to supply volumes of green gas as a path to foster innovation in the sector.
• Considerations for Clean Heat Grant policy design:
  • Reducing the risk that installations take place in properties which are not suitable for certain solutions (e.g. heat pumps), with the resulting potential for significant customer dissatisfaction
  • Reducing the risk that a voucher / grant scheme results in higher margins/prices for installations and equipment.
  • A whole house approach supporting energy efficiency as well as technology deployment should be encouraged
  • Our Innovating to Net Zero work suggest a potentially important role for hybrid systems to support heat delivery during cold weather events
  • Hybrid heating systems and innovative business offerings as a way to support consumer journeys away from gas boiler systems
  • Monitoring, performance and verification
  • Innovative solutions added to Clean Heat Grant scheme, such as those being developed by SMEs in our Energy Launchpad:  leveraging data from end users, enabling interoperable control systems and deploying innovative low-carbon technologies (e.g. infrared heating or heat storage).