DECC has announced a consultation that is likely to dramatically reduce the benefits of biomass and renewable heating projects. Titled ‘The Renewable Heat Incentive: A reformed and refocused scheme’ it proposes changes to both domestic and non-domestic Renewable Heat Incentive (RHI).
In simple terms, the RHI was created to support consumers to switch from conventional to renewable sources of heating. It acts in a similar way to the feed-in tariff (FiT) in the electricity market which itself was vastly reduced at the beginning of 2016.
Heat accounts for almost half of the UKs energy consumption and a third of our carbon emissions. Transitioning to low-carbon heating solutions will help the UK achieve its target of 15% of energy demand from renewables by 2020.
The UK will still invest heavily in the scheme with spending rising from £430m in 2015/16 to £1.15bn in 2020/21. What is changing, though, according to the consultation, is the balance to ensure each pound contributes to the Government’s vision of secure, affordable and clean energy throughout the UK.
DECC estimates that by 2020/21 the scheme will support 23 TWh of renewable heat generation.
There are two phases to the changes.
Stage 1 was introduced on 1 April 2016.
This changed how the RHI budget is managed and included a new budget cap mechanism. The aim is to ensure ongoing affordability of the scheme.
Stage 2 will be introduced on 1 April 2017.
This second phases of amendments include the introduction of a single tariff for biomass, ranging from 2.03 – 2.90 p/kWh. Compared to current RHI levels of up to 5.18 p/kWh this is a significant fall in support for projects. The number of biomass installations supported is predicted to fall from 3,023 in 2015 to just 65 systems in 2021 to favour larger scale facilities.
Non-Domestic RHI supported technologies:
- Heat pumps (ground, water and air source)
- Deep geothermal
- Solar thermal collectors – support to be removed from April 2017
- Biomethane and biogas
- Combined Heat and Power (CHP) systems
Richard Tandy, Energy Solutions Manager at Utilitywise comments “Given the DECC consultation now is the perfect time to consider renewable heating solutions such as biomass. Many projects won’t be as commercially attractive if you wait until next year so our advice is to use 2016 wisely and investigate the options open to you before it’s too late. Our experts are ready to support businesses, charities and schools so contact us today for some free independent advice”.