Wednesday, 26 October 2016
Department of Communications, Energy and Natural Resources
Renewable Energy Incentives
45. To ask the Minister for Communications, Energy and Natural Resources if he will expand on the measure announced in budget 2017 in relation to biomass, including the €50 million of capital spending to assist in the development of the renewable heat incentive; his plans to extend the renewable heat incentive to domestic energy users; and if he will make a statement on the matter. [32057/16]
The introduction of a Renewable Heat Incentive (RHI) is a commitment in the Programme for Government and will be the primary support mechanism in the heating sector designed to meet Ireland's renewable energy obligations. The aim of the RHI is to build on the progress already made in the renewable heating sector and to help reach Ireland's 12% target by 2020. In 2015, it is estimated that 6.8% of heat was derived from renewable sources.
Over the last few months, the Department has undertaken a detailed economic assessment on the design and cost of the RHI and this work is now almost complete. Once finalised, there will be an additional public consultation phase on the design of the new scheme, which I anticipate will be published shortly. Before the RHI is introduced, the overall costs and technologies to be supported will be subject to Government approval and State aid clearance from the European Commission.
I secured €7m funding for the RHI in budget 2017. This funding was secured based on the expectation that a new scheme will become available in the latter half of 2017. It is expected that this capital expenditure will need to increase in the coming years to meet our renewable heat target by 2020, and a multiannual budget commitment will be required in the years ahead to ensure certainty for investors in the sector. This will obviously be subject to discussion and agreement with the Minister for Public Expenditure and Reform.
The RHI is aimed at supporting larger industrial and commercial installations outside of the EU Emissions Trading System (ETS) to change to heating solutions that produce heat from renewable sources. From a national policy perspective, the focus on the non-ETS sector is likely to accrue a double benefit for the Irish taxpayer, helping to meet our renewable energy target and reduce emissions in the non-ETS sector, simultaneously.
The analysis suggests that it would not be cost effective, at this stage, to include the domestic heating sector in the RHI. This is due to a number of factors including the much higher support tariff per kilowatt hour of energy that would be required to incentivise households to change heating systems as well as the significantly greater costs associated with administering the scheme for a large number of households in what is an unregulated sector.