06/12/2014

What is the RHI doing in 2015? The official announcement

What is the RHI doing in 2015? The official announcement
The Department of Energy & Climate Change (DECC) and Ofgem announced on Friday 28th November the tariff changes that will come into effect in January 2015 in regard to the Renewable Heat Incentive (RHI) scheme.
 
In the run up to the announcement, the renewable heating industry voiced their concerns for the worst, maybe even a 20% drop on the Small Biomass tariff, but the changes being implemented in the new year are not going to be as extreme as expected.
 
The Figures
 •  The Domestic Biomass tariff will be reduced by 10% as of the 1st of January 2015
 •  The Small Biomass tariff will also see a 10% reduction as of the 1st of January 2015
      •   5% of this is from technology degression and 5% from total overall RHI trigger degression
      •   There are no changes being made to Medium or Large Biomass at this time
 
  Existing Tariff New Tariff*
Domestic Biomass 12.2p/kWh 10.98p/kWh
Small Biomass Tier 1: 7.6p/kWh Tier 1: 6.8p/kWh
Tier 2: 2.0p/kWh Tier 2: 1.8p/kWh
* for installations accredited on or after January 1st 2015
 
The Facts
DECC has significantly reduced their expenditure estimate for the Small Biomass tariff. They have achieved this by reducing their load factor assumptions and through some housekeeping activities, such as removing dormant applications.  Previous figures suggested a 20% degression was likely but the reduced forecast has triggered only a 5% technology degression for Small Biomass. The Non-domestic RHI has also reached its overall scheme trigger, adding an extra 5% onto tariffs that have already reached their trigger.
 
Medium and Large Biomass
These segments in the RHI scheme were well below degression trigger levels up to now, though it is worth noting that there has been a considerable increase in the expenditure forecast for the Large Biomass Tariff. This could result in the individual tariff trigger being reached by the end of the next quarter, with a potential degression in April 2015.
 
RHI Payment Rights
DECC has also published proposals to make changes to the RHI legal powers to allow incentive payments to be assigned to third parties rather than solely to the equipment owner. A consultation process is expected as well as changes to RHI regulations.