Hello and thank you very much for inviting me to this excellent event hosted by the CHPA and the Energy Institute.
There are 3 key points I would like to make in my speech today:
Firstly, our genuine commitment to renewable heat and CHP as part of the UK’s competitive, low carbon energy mix.
Secondly, an update on our progress we have made so far on delivering the heat programme and Renewable Heat Incentive.
Thirdly, the need to go even further and raise the level of our ambition, placing the renewable heat sector at the centre of the UK’s drive towards green growth.
To begin with, I wanted to set a little bit of political context.
Since day one of coming into government, we have known that for millions of hardworking people the daily cost of living is one of the greatest worries that they face.
And I don’t need to tell you that right now delivering a better deal for energy consumers is our highest priority.
While it is right that we are looking at how to reduce the cost of energy on consumer bills…
….we all know that the best way to bring down prices is to help people to save energy, ensure fair tariffs and encourage competition.
That is exactly what this Government is doing.
We are working to deliver the Prime Minister’s pledge to ensure that consumers are on the cheapest tariff to suit their needs.
We are backing reforms to make sure that more electricity trading takes place on the open market.
We are putting in place an annual review of the state of competition in the electricity market.
And we are providing bankable certainty for new investors through our energy market reforms which are set to unlock £110 billion of low carbon investment.
To complement EMR, we also we need an explosion in consumer choice…
…and I have spoken in the past of my vision of an energy sector of the big 60,000 that rise to challenge the Big 6 energy companies.
A vision where companies, communities, public sector and third sector organisations grab the opportunity to generate their own energy…
…and start to export their excess on a competitive, commercial basis.
This is an ambition that happily unites the drive to get a better deal for hard pressed consumers with ambitions for a greener, more local energy sector.
I want to see CHP and renewable heat at the heart of this.
But to do this we also need to do even more to cut red tape and eradicate any remaining over complicated or overlapping government policy that stands in the way.
We also need a long-term approach and some of the big questions that we are looking at today give a great sense of the scope of the issue including:
What role there will be for house-by-house solutions like heat pumps, for local solutions like heat networks, or for national solutions involving low carbon gas in the existing grid?
How quickly does the transformation need to happen?
What does this means for customers and who will pay for it?
These are not all questions that we can answer today –
although I am sure lots of you will have opinions and judging by the stellar list of speakers, I am sure lots of constructive discussion will take place.
Make no mistake, I am clear that we need to get on with delivering what we can deliver now.
But we must extend our horizon beyond the here and now and plan for the longer term.
And that is exactly what we have been doing in Government.
Planning – not procrastinating!
Which brings me to my second point…
…I am very keen to give you an update report so that you can judge for yourselves what progress we have made.
Let me start back in 2009 when the Conservative Party was in opposition.
We produced two documents about energy policy, entitled The Low Carbon Economy and Rebuilding Security.
In both documents we stressed how important heat is –
and how neglected it had been in policy terms up until then.
The 2010 Coalition Manifesto had more pledges in the area of energy and climate change than in any other area…
…and one of the first things we did that summer…
…despite our need to find immediate cost-cutting measures to balance the books…..
…..was to commit to launching a Renewable Heat Incentive – the first scheme of its kind in the world.
In government we have made great progress –
In 2012, we published a comprehensive strategy document entitled The Future of Heating: A Strategic Framework –
kicking off a consultation period in which many of you will have taken part.
Exactly twelve months later, in March this year, we published the follow up document ‘The Future of Heating: Meeting the Challenge’.
For those of you who like musical or sporting analogies, this could have been our difficult second album, or our struggling second season.
But it wasn’t.
If anything, I think it went down even better than our first document.
Not least because it has a set of specific commitments and actions – a plan for delivery.
And we are now delivering that.
Nine months on, I am delighted to say that I can now give a really positive progress report:
We have registered over 3,500 applications for the RHI so far, with the 2,700 accredited applications representing 547 MW of installed capacity and half a terawatt hour of renewable heat already paid for.
The Renewable Heat Premium Payment has also supported over 17,000 renewable heat installations, with several thousands more expected this year in private and social housing up and down the country.
On industrial heat, we are on track to deliver on our commitments to:
Work with BIS to create long-term decarbonisation ‘roadmaps’ for the six most heat-intensive industrial sectors.
Develop a bespoke policy to support new, good quality, natural gas fire CHP.
And support the development of industrial CCS.
On heat networks, we have:
- Established a £6 million Heat Network Delivery Unit and provided £1.5 million for the first tranche of funding.
And I can also announce today that the second round is now open. The deadline for applications is the 31st January 2014.
- We have committed to looking at providing extra financial incentives for renewable heat networks via the RHI, as part of the 2014 review.
And to help set the scope of the review more widely, we are about to exploit the power of the social media by launching an on-line discussion about priorities for the review.
We have worked to endorse an industry-led consumer protection scheme for heat network users.
We have consulted on options for implementing heat metering and plan to publish our response in the coming weeks.
We have started work with the Low Carbon Innovation Coordination Group.
And finally, on heat networks, I am delighted to announce that that the Green Investment Bank, encouraged by the formation of the Heat Network Delivery Unit and the flood of applications, has decided to look more actively at heat network opportunities.
The bank will be liaising closely with the Unit, and is looking for refinance and new-build projects with both the public and private sectors.
Representatives from the Green Investment Bank are here today and would be keen to hear from any organisation with heat network development plans.
On heat for buildings, we have:
Extended the Renewable Heat Premium Payment scheme.
Announced that we will use the 2014 RHI review to examine the case for other renewable fuels such as sustainable, heating-only bioliquids, biopropane injection, gas driven heat pumps and reversible air-to-air heat pumps.
Introduced a voucher scheme and green apprenticeships for installer training, with nearly 800 existing engineers already registering.
Launched a Consumer Guide to low carbon heating technologies.
And plan to host major stakeholder event next week to discuss options for transforming the way we heat our homes in the coming decades.
On grids and infrastructure we:
Are examining the strategic interaction between lower carbon electricity generation and heat production.
Have announced the successful Phase 2 demonstration projects for its Advanced Heat Storage competition.
So on balance – as this report card shows – I am very proud of what we’ve achieved.
However, I know we can do even better.
It is vital that we get the level of support right so that the market can invest with confidence….
….cost reductions can be achieved and the market can grow sustainably.
That’s why we’ve been gathering new data on the assumptions used to set tariffs…
…and are using this in conjunction with evidence from the industry to develop a more appropriate set of tariffs for a wider range of technologies.
I’ll be confirming these new tariff levels shortly alongside some other policy improvements for the RHI…
…which I’m sure will be a boost for the renewable heating industry.
We also need to do far more across the board to integrate our new policies that help consumers produce their own renewable energy.
We need to make sure that the incentives to help people generate renewable heat work hand in glove with the range of new Green Deal energy efficiency measures - which help hardworking consumers keep their homes warmer for less…….
…….and Feed in Tariff scheme that helps make small scale renewables affordable for householders.
Expect more on this in the coming months.
So in conclusion, I hope that I have reassured you of the good progress we are making and of our ambition to go even further.
After three years of this government, new low carbon technologies are going into homes…
…landlords are installing renewable heating systems alongside energy efficiency measures….
…biomass CHP plants are being built…
…local authorities are working up detailed plans for heat networks…
….and of course we have created a dedicated new unit, the Heat Network Delivery Unit, to help make this happen.
Today I have also announced the launch of the second round for heat network bids into the Unit…
…the Green Investment Bank decision to prioritise heat network projects…
…and the use of social media to scope the 2014 RHI review.
This is all great news.
But I know there is still more to be done.
We will continue working to unleash unprecedented competition and consumer choice in a way that allows us to affordably meet our vital, legally binding climate change targets.
We can build the Big 60,000 with renewable heat and CHP at the centre.
It requires vision, ambition and a coherent strategy to deliver it.
Government must continue to be a genuine partner with industry.
The prize is growth. Green growth.
The prize is local jobs and, SMEs supply chains to help the UK to compete in the global race.
The prize is a better deal and peace of mind for worried consumers…
…and a cleaner, greener, safer environment and energy security for decades to come.