The Renewable Heat Incentive (RHI) has failed to provide value for money for the £23 billion that it is set to cost taxpayers, the Public Accounts Committee (PAC) has concluded.
The select committee’s final report into the Business, Energy and Industrial Strategy (BEIS) department’s renewable heat support scheme, published today (16 May), finds that the cost-effectiveness of the RHI and the value for money of some of the installations it has funded is “still uncertain”.
It says BEIS has “no estimate” of the potential cost of participants gaming the RHI, which is administered by Ofgem.
“Some of the installations funded by the RHI would have been built regardless of whether the scheme was in place; that rates of fraud and non-compliance are too high; and that the costs of people manipulating the scheme’s rules through ‘gaming’ are not known.”
The PAC also finds energy efficiency measures are a better value for money way of reducing carbon emissions than the RHI, although they do not contribute to the UK’s obligations under the EU’s 2009 Renewable Energy Directive.
The report concludes the department’s forecasts for take-up of the RHI were “wildly optimistic”.
The RHI is on track to install barely one-fifth of the 513,000 new heating systems expected to be delivered by the scheme, according to the report.
And forecasts of renewable heat production and carbon emissions reductions it delivers have been cut by 65 per cent and 44 per cent respectively.
As a result, the government will have to find other ways to make up for the shortfall in carbon savings delivered by the RHI. The report states: “Other policies are having to work harder to enable the government to meet its legal obligations.”
Responding to the report, an Ofgem spokesperson, said: “We are committed to making sure people taking part in the Renewable Heat Incentive scheme follow the rules so that public money is spent properly.
“Our systems are designed to detect error or fraud and we take action in any cases identified, including by stopping further payments, withdrawing accreditation and recovering previous payments.
“We are continuing to make improvements to our monitoring and compliance processes to make them even more robust, including changes in line with the PAC’s recommendations.”