RHI reforms - what it means for tariffs and renewable heat

The Department for Business, Energy and Industrial Strategy has just released the results of the consultation into RHI reforms. While we take time to digest all 161 pages, a summary of the main points is below.

The consultation proposed several changes to the existing non-domestic RHI scheme, which the Government intends to implement in spring 2017. 

  • Tariff guarantees, providing investors with greater certainty regarding their tariffs earlier in the project cycle, will be introduced for: large biomass boilers (above 1MW in capacity); large biogas plant (above 600kW); GSHPs (above 100kW, including The Non-Domestic RHI 21 shared ground loop systems with a total installed capacity above 100kW); and all capacities of biomethane, biomass-CHP and deep geothermal plant. However, the Government will limit the amount of heat that will be covered by a single tariff guarantee to 250GWh per annum, or for biomethane, the equivalent volume of injection. The Government will also retain the ability to close the tariff guarantee process if take-up of tariff guarantees risks early closure of the RHI schemes. The tariff guarantee process is described below. 
  • The three current biomass tariff bands will be replaced with a single tariff, which will be subject to tiering. The Tier 1 tariff will be set at 2.91p/kWh and the Tier 2 tariff at 2.05p/kWh. Each plant will have a tier threshold equivalent to a 35% load factor. 
  • There will be no further changes specific to support for biomass-CHP as a result of the March 2016 consultation. Changes were introduced in August 2016 which set a minimum power efficiency which plant need to reach in order to claim the biomass CHP tariff for all their eligible heat use. 
  • The tariff for ASHPs will remain at 2.57p/kWh. The tariff for GSHPs will remain at 8.95p/kWh for Tier 1 and 2.67p/kWh for Tier 2 with no change to the tier threshold. 
  • GSHPs sharing a ground loop will continue to be eligible for support through the non-domestic RHI. However, for domestic properties sharing a ground loop payment will be made on the basis of deemed heat use, as in the domestic scheme. Electricity metering will be required for GSHPs sharing a ground loop where they are installed in domestic properties. 
  • The biomethane tariffs will be reset to the levels between April and June 2016: Tier 1 – 5.35p/kWh; Tier 2 – 3.14p/kWh; Tier 3 – 2.42p/kWh. 
  • For biogas, the tariff level will be maintained at the current levels (4.43p/kWh for small scale; 3.47p/kWh for medium and 1.30p/kWh for large). Degressions which impact on the biogas tariffs between now and the date the regulations come into force will be reversed on that date. 
  • New biogas / biomethane plant will only receive support for all biomethane produced or heat generated from biogas if at least 50% of the biogas or biomethane is derived from feedstocks that are wastes or residues. The proportions of biogas derived from waste and residue will be confirmed as part of the annual sustainability audit for plants over 1MW. Furthermore, new participants will no longer be able to claim support for heat used to dry digestate. 
  • Solar thermal systems will remain eligible for support under the scheme and the capacity limit of 200kW will continue to apply. • Deep geothermal plant of all sizes will continue to be eligible for the scheme with a tariff of 5.14p/kWh. All plant will be eligible for tariff guarantees. 
  • The Government will be doing further detailed work to assess whether wood fuel drying should remain an eligible heat use, due to concerns about the value for money of RHI support in this area. The Non-Domestic RHI 22 Tariffs stated above are in 2016/17 prices and do not take account of any inflationary adjustments which will be made to tariffs on 1 April 2017.

Download the full consulation here


Share this post