Friday 18th of March 2016 | Posted In: Renewable energy, Generate, Comply, Generating energy, Compliance

Changes to RHI will affect all participants

The Government has released a consultation document, announcing the reform of the Renewable Heat Incentive (RHI). There are proposed changes that will be implemented in April 2016 and Spring 2017. At the moment, the government has not confirmed whether these changes will effect RHI eligible installations that are in an early stage of development, existing RHI participants, or both.

Here is our overview of the document; we would like to encourage you to send your feedback and comments to us regarding these changes, and we will take them into consideration in our response to DECC.

To be implemented April 2016

  • Degression will still operate as the main cost control mechanism. a single budget cap will apply from April 2016, for both domestic and non-domestic schemes. Once the cap has been reached, both schemes will close until at least the beginning of the next financial year.
  • Future installations (accredited after 1st April 2016) will have annual tariff inflations linked to the Consumer Price Index, rather than Retail Price Index.
  • There will be an alignment of the sustainability requirements of the RHI and RO schemes, and biogas plants over 1MW will be allowed to comply with RO to meet the RHI sustainability requirements.

To be implemented Spring 2017

Biomass

  • The three tariffs for small, medium and large biomass will be removed, and single lower tariff for all biomass boiler sizes has been proposed. The tariff will be tiered, with an installation receiving tier 1 rate (to be set between 2.03 and 2.90 p/kWh), before moving on to the tier 2 rate (to be set between 1.80 and 2.03 p/kWh) for the remainder of the year.
  • The tier 1 threshold will be based on a boiler running at full capacity for 35% of hours in a year (this is currently 15%).
  • A single budget, for all of the biomass technologies (biomass combustion and biomass CHP), with a single set of degression triggers is suggested.
  • While the CHP tariff is currently a single rate, regardless of how much heat is used for eligible purposes, a tiered tariff is to be introduced. Tier 1 rate is proposed to be 4.17p/kWh (based on a 35% load factor). Above this use, tier 2 rate would apply (proposed to be between 1.80 and 2.03p/kWh).

Anaerobic Digestion (AD)

  • There is a proposal to incentivise biogas and bio-methane producers, to uptake waste based Anaerobic Digestion (AD) over crop based systems. The Government is proposing to either:
    • Restrict RHI payments to only wastes and residues. This won’t affect existing installations, or;
    • Gas not derived from residues and wastes will receive RHI payments limited to up to 50% of total biogas yield.
  • DECC has openly stated that the second option would be the preferred option. Gasification and pyrolysis will be exempt from the above.
  • As uptake of bio-methane is currently extremely high, a degressed tariff for next year could prove too low to stimulate further development. Therefore, DECC proposes to reset the tariff to January 2016 levels from Spring 2017.
  • Digestate drying will no longer be an eligible process. As the primary objective of RHI is to replace the use of fossil fuels, and digestate drying is not be viable with fossil fuels,  they consider that there are better value areas in which to provide financial support.

Tariff Guarantee

  • Tariff guarantees could be introduced for particular technologies and sizes, such as:
    • Deep geothermal.
    • Biomethane - all capacities.
    • Large biogas – 600kWth and above.
    • Large biomass - 2MW and above.
    • Biomass CHP – all capacities.
    • Ground and Water Source Heat Pumps - 100kW and above.
  • Plants, which have been granted a tariff guarantee, would be protected from any subsequent closure.
  • Tariff guarantees will be applicable from the point of scheme closure.

Other notable mentions

  • Reversible Air or Water Heat Pumps will be allowed on the scheme.
  • Support for solar thermal will be removed.
  • The 12 month rule for additional capacity will be removed. This means that the rate an initial accredited installation received will not be affected by additional capacity.
  • Relevant planning permissions will be a requirement for all installations.
  • Sustainability audits for installations under 1MW may be introduced.

We will be providing a response to the consultation shortly.

If you would like any views to be shared, please let us know by emailing [email protected].

Click here to view the consultation in full.