Government confirms continuing support for Renewable Heat Incentive
The Government’s confirmation of the available budget for the RHI (Renewable Heat Incentive) up to 2020/21 in its response to the consultation on the RHI has been widely welcomed by the industry. In her foreword in the response, Baroness Neville-Rolfe, Minister of State for Energy & Intellectual Property, says, ‘We will be reforming the scheme to ensure it focuses on long-term decarbonisation, promotes technologies with a credible role to play in that transition and offers better value for money.’
The changes are expected to come into effect in spring 2017 and are intended to provide the level of certainty needed for consumers and industry to invest in renewable heating and for the market to transition toward being sustainable without Government support in future.
The dropping of plans to remove solar thermal from the RHI has been welcomed by the Solar Trade Association following its concerted effort. 92% of respondents to the consultation opposed the changes, and support at 19.74 p/kWh for seven years will remain. Applications of solar thermal up to 200 kW will continue to be supported.
The Heat Pump Association (HPA) has broadly welcomed the intended reforms. Mike Nankivell, president of the HPA, said, ‘Considering there was a genuine risk to the continuance of the RHI scheme due to Brexit, Government changes and the state of the economy, this has to been seen as a largely positive outcome.
‘The tariff increase for air-source heat pumps (10.02 p/kWh) will help to counterbalance the new total gross heat demand limit of 20 MWh, with the result that any application under 26.7 MWh from spring onwards will be better off under the new scheme.
‘The larger heat-demand of 30 MWh for ground-source heat pumps will help to offset the more modest rise in the tariff to 19.55 p/kWh.’
The HPA is also pleased to see that mandatory heat metering will not be introduced.
Support for biomass heating will be at the same level for all sizes of project — 2.91 p/kWh for Tier 1 and 2.05 p/kWh for Tier 2. The tiering thresholds have been changed to significantly increase the amount of heat available under tier 1 from 15% to 35%.
Peter Solly, managing director of biomass wood-fuel supplier Forest Fuels, comments, ‘These new RHI rates show a headline reduction for small and medium-sized projects and increased support for larger projects. However, when you look into the detail for small and medium-sized projects, the changes mean that biomass heat is still going to be viable across the full range of size of projects — from schools and hotels through to process steam and district-heating networks, particular those with higher heat use.
‘The move to increase the tiering levels and decrease the gap between Tier 1 and Tier 2 payments is also very encouraging because it will help ensure that projects that are genuine users of sustainable heat will still have an attractive return on investment. As a natural consequence, it will help ensure that biomass boilers are correctly sized for projects and optimise the combination of capital investment, running cost savings and carbon savings.’
You should be able to access and download the Government response to the consultation using the link below.