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RHI gets approval following cut to biomass tariff

Green energy news – by Beth Glanvill
26th October 2011
The delayed Renewable Heat Incentive (RHI) will go-ahead, but not without cuts to the tariff for large-scale biomass.
The Department of Energy and Climate Change (DECC) said today the RHI for the non-domestic market had received the go-ahead from the European Commission following revisions to the regulations of the scheme. These changes will see the tariff for large-scale biomass cut by more than 60 per cent. Subject to Parliamentary approval, the scheme will now launch in late November, DECC said.

Originally due for launch at the end of September, DECC was prevented from launching the RHI, after the European Commission raised concerns the tariff for large-scale biomass had been set too high. To meet State Aid approval, DECC said it had to re-lay the regulations.

"We have now updated the RHI regulations to reflect the required change to large-scale biomass tariff by the European Commission," a spokesperson for DECC said. "The large scale biomass tariff has been revised from 2.7 pence per kilowatt hour (KWh) to one pence per KWh.

"The regulations have been laid before Parliament, and subject to Parliamentary approval we hope to open the scheme before the end of November."

Renewable Heat Incentive
The RHI is expected to expand the market for renewable heat generation and supplies in the UK. Heating is responsible for 46 per cent of UK carbon emissions and the RHI aim to cut this by 10 per cent by 2020. 

With a Government’s budget of £860 million, the RHI for non-domestic will provide funding through a reward-based scheme. The green subsidy will go towards those in the non-domestic sector who install renewable heat technologies and fuel uses such as solid and gaseous biomass, solar thermal, ground and water source heat-pumps, on-site biogas, deep geothermal, energy from waste and injection of biomethane into the grid.

Up to 123,000 industrial, commercial and public sector renewable heat installations could be up and running within the next decade, because of the scheme, according to the Government.

Buildings will have meters installed to measure the amount of heat generated, and the owner will be paid for the amount of usable heat generated. Solar thermal projects under 200 kilowatt hours (kWth) in size will receive the highest tariff at 8.5 pence per kWth.

Mixed reaction
Industry reacted to today’s news with a mix of relief that the scheme was finally launching, and concern about cuts to the subsidy.

"Industry will be relieved that the heat incentive will now go ahead," said Paul Thompson, head of policy at the Renewable Energy Association (REA), but he added that a cut of "more than 60 per cent" to one megawatt plus installations was "an extremely unwelcome surprise and will badly undermine projects at this scale." 

Tim Minett, chief executive of leading UK biomass supplier CPL Distribution, however, was more sanguine: "Today’s news is a much-needed injection of confidence for the UK’s renewables sector […] The overwhelming majority of businesses will be unaffected by the revision." 

A spokesperson for DECC acknowledged that the changes were "frustrating", however without them, he pointed out the scheme would not have been able to proceed.

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RHI gets approval following cut to biomass tariff
The RHI tariff for large-scale biomass has been cut by more than 60 per cent
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