Non-domestic RHI Degression for small biomass

The small biomass tariff will be reduced by 5% from 1st July 2014. Forecast spend over the next 12 months for small commercial biomass is £58.4m. This is £24.4m over its individual technology trigger. The total forecast expenditure for the whole non-domestic RHI of £106.6 million exceeds the 50% threshold which can and has triggered a tariff reduction, as the “50% trigger” for the scheme as a whole as at 30 April is £96.4m. The small biomass tariff will therefore be reduced by 5% effective 1 July 2014. This is partly due to an increase in applications and load factors. Load factors have increased as metering data from winter months has been more prevalent this quarter compared to the previous quarter.

The new tariff for small biomass:

This is the last adjustment under the old regulations, the new amendment (anticipated to come into effect on 28th May) will increase the triggers by over 40% for small and medium biomass. These new triggers will apply to the 31^st July 2014 assessment date, and will be taken into account when DECC publishes the next quarterly announcement due by 1^st September. For a more detailed view of forecast RHI spends and triggers, have a look at the latest Quarterly forecast spreadsheet, available here.

Non-domestic RHI amendment coming into force

Last week the amendment to the non-domestic RHI went through Parliament and is awaiting the ministerial signature before it comes into force. Today, DECC has announced that they expect the amendment to come into effect Wednesday 28th May. The amendment will expand the non-domestic RHI support:

·         air-to-water heat pumps (2.5p/kWh)

·         biomass CHP (4.1p/kWh)

·         biogas >200kW (5.9 p/kWh and 2.2pkWh depending on size)

·         deep geothermal (5.0p/kWh)

·         Solid biomass other than that contained in municipal solid waste

At the same time, it will increase the support for:

·         Biomass Boilers >1MWth to 2 p/kWh

·         solar thermal to 10 p/kWh

·         ground source heat pumps - introducing a two-tier tariff similar to that available for sub 1MWth biomass (tier 1 8.7p/kWh, tier 2 2.6p/kWh)

It also makes some other administrative changes, including:

·         Implementing the changes announced in December 2013 to the cost control mechanism

·         Allowing for greater flexibility on repaying public grants

·         A series of changes to the treatment of biomethane injection:

o    Preliminary registration as an equivalent to existing preliminary accreditation

o    Setting a capacity limit to biomethane projects based on the Network Entry Agreement

o    Changing the ‘parasitic deduction’ rule for biomethane so that heat generated from the combustion of the biogas is not deducted

Public release of the Biomass Suppliers List

A significant number of applications has been submitted to the biomass suppliers list. It is DECC’s assessment that the uptake has been considerable, and they are therefore expecting to make the list of approved fuels available to the public in a couple of weeks’ time. We would consequently heavily encourage all fuel suppliers (both traders and producers) to apply for certification for their fuel, if you haven’t already started. Fuel suppliers on the Biomass Suppliers List may gain a commercial advantage over competitors not on the list, as this is by far the easiest way of complying with the sustainability requirements due to come into force later this year (and for domestic RHI the only way).