Frustration at Cuts in Support for Biomass Heat despite RHI Seriously Under-performing

Biomass tariff cut dampens positive news of consultation on tariff increases

Government has made two announcements on the non-domestic Renewable Heat Incentive (RHI) today [1]: a degression to the tariff for mid-sized biomass and a new consultation on proposed tariff increases.

DECC has announced that the mid-size biomass heat tariff will be cut by 5% from 1st July, despite the scheme as a whole seriously under-performing

The Renewable Heat Incentive includes ‘triggers’ which, once breached, lead to a degression in the tariff for new projects. DECC has based these triggers on the deployment it expects for each band of each technology.

REA Chief Executive Gaynor Hartnell said:

“The REA has always argued that the market should determine the relative proportions of different renewables contributing to the target, not the Government. Without the aid of a crystal ball, the Government is always going to get it wrong. Its aim is to control spending, but the end result is market distortion.

“It is not an easy task. The only technology-neutral way of keeping within the spending limit is to let things run their course and close the scheme when the money runs out, whilst keeping a close eye on the tariffs to make sure they are correct. The worst outcome is constraining technologies the market wants to develop, particularly if they are the most cost-effective, whilst at the same time missing the overall target.”

REA Head of Policy Paul Thompson said:

“With the RHI massively under-performing, it’s deeply frustrating that Government is about to cut the one technology that is actually delivering. This can only undermine confidence in the biomass heat sector, with serious knock-on effects for other renewables.

“There’s no suggestion that biomass tariffs are too high – it’s just that the real world deployment has not matched DECC’s model. They should make their model fit reality rather than the other way round.

“To date, the RHI has paid out less than £12 million [2]. It’s clear that Government should stop worrying about the risk of over-deployment and start worrying that the policy could fail to deliver by a wide margin.”

DECC has launched a consultation on increasing a range of tariffs in the non-domestic RHI
However, the REA welcomes the publication today of a new consultation which proposes an increase to the tariffs for a range of technologies in the non-domestic RHI.

REA Head of Policy Paul Thompson said:

“We are pleased to see that DECC has responded positively to evidence from industry that a number of tariffs are too low. The increase to the large-scale biomass tariff is particularly welcome – even at the revised tariff it represents unbeatable value for money in terms of carbon savings and renewable energy. We also welcome the intention to use a broader range of evidence when setting tariffs, including direct experience from industry.”

The Renewable Energy Association represents renewable energy producers and promotes the use of all forms of renewable energy in the UK across power, heat, transport and renewable gas. It is the largest renewable trade association in the UK, with over 1,000 members, ranging from major multinationals to sole traders. For more information, see: www.r-e-a.net

Source: REA

For more information on: REA