Out-Law News 2 min. read
09 Dec 2013, 12:43 pm
It will set new tariff levels to boost the low levels of uptake for some technologies under the scheme including biomass, geothermal energy, ground-source heat pumps and solar technology. Subject to Parliamentary and EU state aid approval, the new tariffs will be available from spring 2014.
"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," said Energy Minister Greg Barker in a written ministerial statement.
"[The changes] are designed to stimulate considerable growth in the deployment of renewable heating technologies in the coming years and we expect that these tariffs will drive significant deployment so that the industry can grow and invest with confidence," he said.
The Government has also published its response to a number of recent consultations on expanding the scope of the non-domestic RHI entitled "Improving Support, Increasing Uptake"; as well as further details of the delayed domestic scheme, which is due to begin next year. The Government's response sets out its decisions and rationale for expanding the non-domestic RHI
The RHI is the Government’s principal mechanism for driving the deployment of renewable heat. Under the RHI, long-term financial incentives and support are available to successful applicants that use eligible and qualifying renewable technologies to generate heat. The first phase was introduced for non-domestic users in November 2011 and provides payments on a quarterly basis over a 20-year period. Qualifying technologies include ground source heat pumps, biomass boilers and solar thermal panels.
In its published response to a series of consultations and calls for evidence carried out over the course of this year, the Government said that it had "not so far seen the levels of uptake that were anticipated when the scheme was launched". Despite strong uptake in certain technologies, particularly biomass installations, and a 7% increase in renewable heat generated in 2012; the total heat generated in 2013/14 is expected to be around 1.2TWh – just over a third of what was originally expected.
Among the changes set out in the Government's response is the introduction of a new tariff for deep geothermal heat at 5p per eligible kilowatt hour (kWh) generated, and a specific tariff for biomass combined heat and power (CHP) of 4.1p/kWh. Support for air to water heat pumps will be set at 2.5p/kWh. Biogas installations with a thermal generating capacity of between 200 and 600kWth will receive 5.9p/kWh, and those over 600kWth will receive 2.2p/kWh.
Large biomass installations with generating capacity greater than 1MWth will receive an increased tariff of 2p/kWth, and the solar thermal tariff will also be increased to 10p/kWh. Ground source heat pumps will receive a single tiered tariff of 7.2p/kWH, rather than the previous banded tariff. There will be no tariff support bioliquid CHP, heating-only air to air heat pumps or biomass direct air heating.
Due to a fixed annual budget for support under the RHI, all tariffs are subject to a degression mechanism under which the available subsidy for each tariff is gradually reduced over time, depending on the uptake of that particular technology. Uptake is monitored on a quarterly basis against a series of 'triggers', with monthly updates published and one month's notice given before any cuts are made. Amendments to this mechanism will base reductions on 'refreshed' market intelligence rather than the expectations that were modelled before the scheme was introduced. Amendments will also include new triggers for lower volume technologies and those that could otherwise dominate the market.
According to the Government's response, the policy changes set out in the scheme could incentivise an additional 5,000 installations and 6.4TWh of renewable heat by the end of 2015/16.
