I’ve just written a letter to Salix Finance who are running the Government’s renewable funding programme for the public sector, including both central and local government.
In the letter, I’m calling for a 6-month extension to Phase 2 of the funding programme to account for worldwide equipment shortages in renewable heating equipment.
But it’s not just renewable heating that’s in danger of not meeting the March deadlines. The global shortage of semiconductors is affecting fan motor production across Europe and have a knock-on effect on countless industries.
And don’t forget that closer to home, materials like steel , concrete , insulation and other essential building materials are holding up projects across the construction industry.
We’re calling on anyone involved in commercial heating projects to write to Salix themselves
Reducing carbon emissions
The Salix scheme is aimed at improving energy efficiency in commercial public buildings, to reduce both carbon emissions and lower energy bills.
It’s part of the Public Sector Decarbonisation Scheme (PSDS) which is a major government policy designed to help the country on its road to net zero. Whilst this is a good start and should rightly be applauded, there is much more to be done by everyone involved in the built environment.
As Salix Funding’s own website states, the policy is:
“Reflecting the importance of the public sector's role in meeting the Government's commitment to Net Zero by 2050, the Net Zero Strategy and Heat and Buildings Strategy have confirmed that Phase 3 of the Public Sector Decarbonisation Scheme will receive £1.425 billion of funding over the period 2022/23 to 2024/25. Further detail will be published in due course.”
Timing undermines scheme’s intent
Given the unprecedented supply chain pressures currently facing so many manufacturers we believe that strict adherence to the 31 March 2022 cut-off date of, undermines the Scheme’s intent and prevents renewable technologies from being installed where they can make a positive impact on carbon reduction.
It’s worth remembering that these projects have already been approved and the finance has already been committed, so this is just an issue of timing.
As an executive non-departmental public body, Salix Finance Ltd is sponsored by the Department for Business, Energy & Industrial Strategy (BEIS) and funding for Phases 1 and 2 of the PSDS is now all allocated for these two schemes.
Phase 3 opened for applications in October 2021, with the Application Portal closing four weeks later on 3rd November 2021. These applications are for projects starting from this April 2022.
Phase 2 aimed at taking a ‘whole building’ approach to heat decarbonisation and the focus for Phase 3 remains the decarbonisation of heat.
Phase 2 saw £75 million of funds available as long the projects are underway by the end of March 2022, and herein lies the problem.
The past year has seen major global disruption to manufacturing and supply chains which means that manufacturers of renewable heating cannot supply the products and equipment that will deliver that renewable heating in the time left until the end of Phase 2.
So, we have viable, planned projects for public buildings that have been approved for funding and that will make a difference, but few can get hold of the equipment before the deadline due to the global pandemic.
The money has already been allocated and, the projects all approved and signed-off, so we are calling for a 6-month extension for project completion, which should give equipment manufacturers enough time to produce and deliver the required renewable heating equipment.
Everyone can get involved
In addition to writing directly to Salix ourselves, we’re working with trade bodies to lobby government for what we believe is a sound and reasonable extension. These include the SEA (Sustainable Energy Association); BEAMA (the UK trade association for manufacturers and providers of energy infrastructure technologies and systems); the HPA (Heat Pump Association); HEVAC (Promoting the interests of manufacturers and distributors of Heating, Ventilating and Air Conditioning equipment.); and BESA (Building Engineering Services Association).
We’re also calling on anyone involved in these projects to write to Salix themselves (Salix Finance Ltd, 75 King William Street, London, EC4N 7BE) and below, I’m happy to reproduce my letter, should that be useful as a template for others.
We are writing to you in good faith requesting a specific change to Phase 2 of the Public Sector Decarbonisation Scheme.
Given the unprecedented supply chain pressures currently facing so many manufacturers we are asking for a 6-month extension to the cut-off date for Phase 2 project completions. We believe that strictly adhering to a cut-off date of 31 March 2022 will undermine the Scheme’s intent and prevent renewable technologies from being installed where they can make a positive impact on carbon reduction.
There is also a possibility that funds would be left over at the end of Phase 2.
We believe there is already a precedent for this 6-month extension as there is a government consultation open on extending the non-domestic RHI for the reasons outlined above.
Instructions as to how to respond are at the foot of the notice itself:
We would like to see a consistent approach adopted across these Schemes as they both have the same goal – the uptake of renewable products in buildings leading to a reduction in carbon emissions.
From an installer and end user client perspective, the lack of available renewable products in the run up to this hard deadline of 31 Mar 2022 is causing considerable concern, after what has already been an exceptionally difficult 21 months.
A 6-month extension to allow the right products to be supplied for Phase 2 projects would be a welcome relief for the industry and its stakeholders.
Philip Ord, Head of Marketing and Strategy
Philip Ord is Head of Marketing and Strategy