In response to the March 2016 consultation to reform the Renewable Heat Incentive (RHI) programme in its current form, the BEIS (the Department for Business, Energy and Industrial Strategy) published a response on December 14, 2016 which included changes to the tariffs and conditions of both the domestic and non-domestic RHI schemes. It was assumed that these changes will take effect from spring of this year. However, no one could quite predict the political events that unfolded in the first half of 2017.
For now, the proposals have been filed away following parliament closure, a call for an election and, as of yesterday, Brexit talks. It will no doubt be put to the parliament again but no one is sure of when this is likely to take place, let alone the date of implementation. The Renewable Energy Association (REA) predicts that it is likely to be pushed back to September and the autumn of this year instead.
As we stand today, the RHI programme will continue in its current form, taking into account the degression that will be applied as of July 1, 2017.
How is domestic RHI scheme going to change?
The table below sets out the new levels of the domestic RHI tariffs as of July 1 and the proposed tariff following the reformation, alongside the new annual heat demand limits. Further inflationary adjustments to the tariffs may be made when the reformation to the RHI regulation takes effect.
| Technology | Tariff July-September 2017 (p/kWh) | Increament | New proposed tariff (p/kWh) | New heat demand limit (kWh) |
|---|---|---|---|---|
| Biomass boilers & stoves | 3.85 | 67.3% | 6.44 | 25,000 |
| Air source heat pump (ASHP) | 7.63 |
31.3% |
10.02 | 20,000 |
| Ground source heat pump (GSHP) | 19.64 | -0.46% | 19.55 | 30,000 |
| Solar thermal | 20.06 | -1.6% | 19.74 | n/a |
Other changes include:
- Annual heat demand limits on which the householder can receive support. Properties with higher heat demands are still eligible for the scheme
- Electricity metering required for new ASHP and GSHP installations (to monitor heat pump performance), although ‘deemed heat requirement’ remains the basis for RHI payments
- Metering and monitoring service package (MMSP) payments to be given in two parts: 50% of the total payment with the first tariff payment, and the remaining 50% paid over the remaining payment lifetime
- GSHPs with shared ground loops will not be eligible for the domestic RHI scheme, but will be eligible for the non-domestic scheme.
When will the domestic RHI changes be implemented?
The changes described above (other than tariff increases) will come into force when the scheme formally changes and will apply to applications made on or after that date – estimated sometime in the autumn of this year.
New applications from 14 December for biomass boilers and stoves, ASHPs and GSHPs will get upgraded to the improved tariff rate automatically when it comes into force. Therefore, anyone installing on or after 14 Dec will still enjoy the imminent uplift.
What will not be changing?
- Support for solar thermal. The government had considered removing support but the tariff for domestic solar thermal is to continue at the same level and with no capacity limit
- The option to assign rights to domestic RHI payments to third parties is deferred until consumer protection issues are resolved.
Will there be changes to the non-domestic RHI?
Yes. In fact, there are quite a few changes to the non-domestic RHI scheme:
- A tariff guarantee process is being introduced for larger projects, with the amount of heat covered limited to 250GWh per year. This relates to large biomass boilers (above 1MW in capacity), large biogas plant (above 600kWth), GSHPs (above 100kW, including shared ground loop systems) and all capacities of biomethane, biomass-CHP and deep geothermal plant
- Biomass tariff bands are reduced from three (small, medium, large) to one, which will be tiered according to heat use. The tier threshold is equivalent to a 35% load factor (see table below)
| Tariff July-September 2017 | Proposed Tariff | |||||
|---|---|---|---|---|---|---|
| Tier 1 (p/kWh) | Tier 2 (p/kWh) | Tier threshold | Tier 1 (p/kWh) | Tier 2 (p/kWh) | Tier threshold | |
| Small biomass | 2.71 | 0.71 | 15% | 2.91 | 2.05 | 35% |
| Medium biomass | 4.79 | 2.08 | 15% | |||
| Large biomass | 2.05 (not currently tiered) | |||||
What will not be changing?
- tariffs relating to non-domestic ASHP, GSHP, biomass-CHP, biogas, solar thermal and deep geothermal stay the same. Further inflationary adjustments to the tariffs may be made on 1 April 2017
- the scheme conditions relating to solid biomass CHP, deep geothermal plant, and solar thermal systems (up to 200kW capacity)
- wood fuel drying remains an eligible heat use but this is under review and is likely to change in the future
- the option to assign rights to RHI payments to third parties will not be extended to non-domestic installations.