RHI tariffs for business to rise

6th June 2013

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The government is planning to raise the tariff levels for heating technologies that fail to meet forecast demand under the non-domestic Renewable Heat Incentive (RHI) scheme.

Existing tariffs for heat generated by ground source heat pumps (GSHPs), large biomass (at least 1MW) and solar thermal kit accredited under the scheme are the subject of a consultation from Decc, which closes on 28 June.

Demand for all three technologies under the RHI has failed to match expectations when the non-domestic scheme went live in November 2011.

Figures from the energy department reveal that in the 12 months to the end of April 2013, actual expenditure on small (up to 100kW) and large (100kW and over) GSHPs was just 1% and 10%, respectively, of expected levels.

Similarly, expenditure on solar thermal (up to 200kW) was well below forecasts, at just 1%, while payments for large biomass boilers were running at 23% of expected levels. By contrast, expenditure on small (up to 200kW) and medium-sized (200kW to 1MW) biomass boilers had exceeded government expectations by 26% and 69% respectively.

The proposed changes could see tariffs for large biomass boilers double in 2014/15, from 1.0 to 2.0p/kWh. Support for GSHPs would rise from 3.5–4.8p/kWh to 7.2–8.2p/kWh, and incentives for solar thermal installations from 9.2p/kWh to 10.0–11.3p/kWh. The consultation makes it clear the proposed tariffs, which were set after discussions with industry, are designed to drive more widespread deployment of these technologies.

“The RHI has been running for nearly 18 months, so now is a timely moment to look again at the tariffs. We need to make sure they are set at the right level to continue bringing forward investment and growth,” said energy and climate change minister Greg Barker.

The installation of relatively high numbers of medium-sized biomass boilers means the degression mechanism will kick in for this tariff, with subsidies falling from 2.2–5.3p/kWh to 2.1p–5.0p/kWh from 1 July.

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