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BEIS response to RHI consultation

The Department for Business, Energy & Industrial Strategy (BEIS) has published their response to the Renewable Heat Incentive (RHI) consultation. Through its response BEIS intends to deliver a set of RHIs that focus on long-term decarbonisation, offers better value for money and protection to customers, and supports supply chain growth and challenges the market to deliver.

Key points from the response are as follows:

Both Schemes

  • Both the domestic and non-domestic scheme will continue to support solar thermal.

Domestic RHI

  • The tariffs for new ASHPs will be increased to 10.02 pence per kilowatt-hour (p/kWh).
  • The tariffs for new GSHPs will be increased to 19.55p/kWh.
  • All new ASHPs and GSHPs applying for support under the scheme will be required to have electricity metering to monitor their heating system.
  • The tariff for new biomass installations will be increased to 6.44p/kWh, the level available between October and December 2015, adjusted for inflation.
  • Heat demand limits will be introduced, to limit the level of annual heat demand in respect of which any household can receive support. The heat demand limits will be set at 20,000kWh for ASHPs, 25,000kWh for biomass boilers and stoves and 30,000kWh for GSHPs.
  • The Government intended to introduce the option for households to assign their rights to payments through the scheme to a third party but this will be implemented at a later date to provide extra time to implement adequate consumer protection.

Non-domestic RHI

  • Tariff guarantees will be introduced for: large biomass boilers (above 1MW capacity); large biogas plant (above 600kW); GSHPs (above 100kW, including shared ground loop systems with a total installed capacity above 100kW); and all capacities of bioethane, biomass-CHP and deep geothermal plant.
  • The tree 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 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. (Tiering for biomass-CHP will not be introduced)
  • 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). Biomethane levels 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.
  • Deep geothermal plant of all sizes will continue to be eligible for the scheme with a tariff of 5.14p/kWh.
  • 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.

Budget Management

  • The budget cap: The budget cap was introduced at the beginning of 2016/17 and will continue to operate from 2017/18 onwards.
  • Degression: The reforms will introduce minor changes to the way degression operates in both the domestic and non-domestic schemes, and set the triggers for the schemes up to 2020/21.
  • Degression and tariff guarantees: Following the reforms, estimated spend on tariff guarantees will be counted towards degression triggers from the point at which they are granted (rather than at the point that the plant commissions).
  • Tariff Guarantees: The Government will retain the discretion to close the scheme to additional applications for tariff guarantees separately to, and in advance of, any decision to close the scheme overall.

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