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Tariff uncertainty leads to construction businesses 'failing', minister told

The minister for climate change has defended the government’s commitment to renewable heat incentives, after accusations that the lack of detail on the tariffs was causing construction businesses ‘to fail’.

Speaking to CN at the launch of a sustainable energy system at new shopping centre One New Change in the City of London, minister Greg Barker said the government’s commitment to the tariff was “absolute”.

But he would not put a date on when the full details of the incentives would be published, saying only it would be “later this year”.

Land Securities unveiled the sustainable heating and cooling system at One New Change, Cheapside, which is estimated to reduce carbon emissions by at least 15 per cent and could save £300,000 on energy bills a year.

Geothermal International operations director Karl Drage told CN the lack of clarity on RHI was costing the construction and energy industry jobs and seeing businesses fold.

He said: “Businesses are failing because there is no certainty of what level of tariffs there will be. We are asking: how do we prepare our business?We can’t invest in being ready to deliver until we know what the incentives will be.”

Mr Drage said all members of the ground source heat pump association were awaiting the announcement on RHI with baited breath as “all companies have mouths to feed and paypackets to deliver”.

Scottish and Southern Energy chief executive Ian Marchant said it was important to get signature buildings such as One New Change using pioneering energy technology to lead the way in terms of future construction.

He added that the technology installed by Geothermal International, in whom SSE own a 20 per cent stake, should become the preferred choice for future commercial and residential new build.

Mr Marchant also told CN that Scottish and Southern Energy are expected to announce details of investment in a similar Geothermal International system for a new landmark building imminently.

Land Securities head of sustainability and engineering Neil Pennell said construction of the technology at One New Change would help to deliver the company’s commitment to reducing carbon emissions by 30 per cent by 2020.

He added that the renewable heat incentives would help to drive investment and development in the industry.

“We are able to take a long-term view when other, smaller developers can’t so we want to lead the way on developing buildings driven by renewable energy,” he said.

“Smaller developers cannot afford to invest in these systems so they don’t think long-term but if they are given assurances about payback schemes they can begin to think longer-term and invest in the industry.”

One New Change was developed at a cost of £540m, of which £270m was in its construction.

Underneath the shopping and leisure centre, 60km of pipework – enough to wrap around the London Eye 140 times – will both warm and cool the building by transferring heat efficiently to and from the ground itself and two water wells 150m below the surface.

Mr Barker hailed the development as “British innovation at its best, using the earth’s natural resources to solve our energy needs.”

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