Committee for Enterprise, Trade and Investment

Report on the Energy Act 2011 Legislative Consent Motion

Correspondence from DETI regarding inclusion of a renewable heat incentive in the Energy Bill (August 2010)

On 17 June 2010, the ETI Committee discussed a briefing paper, provided by DETI, on EU Energy Policy and, as a result, members agreed to explore with the Department the possibility of introducing a renewable heat incentive (RHI) in Northern Ireland through amendments to the Energy Bill.

Following the Department of Energy and Climate Change (DECC) decision to incentivise renewable heat in GB, DETI has been working on a study to determine the most appropriate method of developing and supporting the local renewable heat market. This study is now complete and indications are that a targeted incentive for domestic and commercial customers, similar to the GB model, could be appropriate. However further economic analysis will be required.

Inclusion of provisions for RHI in primary legislation would bring Northern Ireland into line with the rest of the UK following the introduction of an amendment incorporating RHI into the 2008 Energy Bill in GB. Further secondary legislation will also be needed in both GB and NI to implement a renewable heat incentive.

The Department has investigated the possibility of introducing RHI through amendments to the Energy Bill with the Office of Legislative Counsel (OLC). As the Bill is principally about the natural gas industry, with a very limited application to the electricity sector, a provision for renewable energy is deemed to be outside the scope of this Bill.

Furthermore, even if deemed within the scope of the current Bill, it should be noted that there is a statutory duty on the Department to consult upon new policy issues. The inclusion of a new and significant provision, such as RHI, in the Energy Bill would require a policy consultation exercise to be undertaken. In addition, the equivalent GB legislation on the subject of RHI is substantial and drafting the required provisions for NI legislation would require additional time and resources. Therefore, any attempt to include provisions on RHI in the Energy Bill could considerably delay the progress of the Bill and could potentially mean that the Bill, if not enacted within this Assembly, would fall.

It will therefore be necessary for a separate piece of primary legislation to be introduced in order to provide enabling powers for a renewable heat incentive, along with other miscellaneous provisions, which could go through the Assembly legislative process next year.

I would be grateful if you would bring this matter to the attention of Enterprise , Trade and Investment Committee.

Yours sincerely

FIONA HEPPER
HEAD OF ENERGY DIVISION
20 August 2010