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RHI reforms update

The U.K. Department for Business, Energy and Industrial Strategy recently announced changes to the renewable heat incentive in its response to the consultation that closed April 27 and attracted criticism for proposing to slash tariffs for biomass heat by 45 percent, which was projected by the government to lead to a 98 percent drop in installations.
“The reforms made today to the Renewable Heat Incentive are an improvement to the earlier consultation and will go some way to grow an effective renewable heat sector in some cases to 2021,” stated Nina Skorupska, chief executive at REA. “As recognized in this consultation response, heat is a very complex issue and we need all technologies on board to achieve our long-term goals. Renewable gas, biomass boilers, solar thermal, heat pumps, heat networks, hydrogen and other technologies will all have a role to play.”
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Within the non-domestic RHI reforms, the three current biomass tariff bands will be replaced with one level of support for all new non-domestic biomass boiler deployment, which will be subject to tiering. Under this approach, each installation will be eligible to receive an initial higher ‘Tier 1’ tariff (2.91 pence per kilowatt hour (p/kWh)) for a given amount of heat use each year. Beyond this, further heat use will receive a lower ‘Tier 2’ tariff (2.05 p/kWh). Each plant will have a tier threshold equivalent to 35 percent of its load factor. The government’s consultation included that there will be no further changes specific to support for biomass combined-heat-and-power (CHP) as a result of the March 2016 consultation.
In regards to the domestic RHI scheme, the reforms introduce a cap to the annual payments for new domestic biomass systems to make sure owners of larger properties are not overcompensated. Also, there will be a slight increase to the tariff for new domestic biomass systems, increasing to 6.44 p/kWh (the current tariff is 4.68 p/kWh). Heat demand limits will be introduced to limit the level of annual heat demand in respect of which any household can receive support, with a cap of 25,000 kWh for biomass boilers and stoves.
 
 

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