RHI legislation approved in Parliament

1 September 2017

We have been keeping you informed about the proposed Renewable Heat Incentive (RHI) reforms when we last discussed the changes proposed to the RHI and RHI reforms. We imagine you must be on the edge waiting for some more updates on the proposal. The Renewable Energy Association (REA) is quick to update us to say that this week the RHI legislation was laid before Parliament, to be implemented on September 20, 2017. This includes new non-domestic biomass tariffs, new domestic tariffs, domestic heat demand limits, and provisions to extend these to anyone accredited since December 14, 2016.

Despite forecasting the RHI degression for the next quarter, the Department for Business, Energy and Industrial Strategy (BEIS) has announced that no tariff degressions will be applied to either the domestic or non-domestic scheme on October 1, 2017, with the next potential degressions being applied January 1, 2018.

However, the legislation does not include all changes announced in the RHI reform, such as the tariff uplift for biomethane and biogas, tariff guarantees, feedstock restrictions, degression methodology changes, and assignment of rights. These policy changes will be introduced in separate legislation later this year, autumn 2017.

A quick snapshot of what this all means:

1.   From September 20, 2017 the new tariffs will be:

  • Non-domestic RHI scheme – There will no longer be the different scales (small, medium or large) with every boiler on the same tariff regardless of output. Tier 1 is 2.96p/kWh and Tier 2 is 2.08p/kWh, and payments are based on submitted meter readings. The load factor has been increased from 15% (1,314 hours) to 35% (3,066 hours).
  • Domestic RHI scheme – The tariff will increase to 6.54p/kWh. This is still deemed and based on customers EPC, but with a maximum of 25,000kWh per annum.

2.   There will be no quarterly review and degression of the new tariffs on October 1, 2017, so the next possible time one can take place is the January 1, 2018.

3.   Provision to extend the new tariffs to systems installed from December 14, 2016 is only for large scale systems of over 1MW. Seeing as the new proposed RHI tariff is better than the old large scale tariff, BEIS want to encourage the uptake of biomass as a renewable energy source for those that required the larger systems installed whilst awaiting for the new scheme to start.