Changes announced to the Renewable Heat Incentive scheme

After much speculation and following a consultation of almost a year, the Government have announced changes to the Renewable Heat Incentive scheme (RHI. Largely these have been welcomed and reaffirm commitment to meeting the nations obligations to reducing carbon emissions.

1. Changes to the Domestic RHI Scheme

Tariff rates to be increased

Under the Domestic RHI scheme, tariffs are to be amended as follows: –

Air source heat pumps have been the biggest beneficiary with a 25% increase in the tariff. The increase in the biomass tariff brings it back to tariff levels prior to the tariff degression at the end of 2015.

Tariffs for solar thermal have not been increased and remain at 19.74p/kWh. This is seen as a positive as it was anticipated, after earlier statements, support for this technology was to be withdrawn.

Heat demand limits

Whilst tariff payments are to remain linked to “heat demand” as stated on the relevant properties Energy Performance Certificate, to ensure the subsidy represents “value”, tariff payments are to be capped with limits based on maximum eligible heat demands. The cap is to vary dependant on technology.

Properties with “heat demand” in excess of the cap will be paid the same as if the heat demand were equal to the heat demand cap.

Solar thermal installations will not be subject to the cap.

Compulsory electric metering for air and ground source heat pumps

From April 2017, all new heat pump installations are to have electric meters fitted to. This will allow enhanced monitoring of air and ground source heat pump efficiency and help to improve the development of the technology.
Despite electric meters being required, for most installations that do not otherwise require heat metering (bi-valent, Non-domestic, etc.) tariff payments will remain based on deemed heat demand.

Future Changes

As part of the announcement the Government, with a view to increasing the accessibility to renewable technologies, stated they propose to permit the assignment of RHI tariff payments to third parties who would provide financial assistance towards the initial installation costs. Little detail has been provided and it is expected legislation will be made later in 2017.

2. Changes to the Non-Domestic RHI Scheme

Tariff Guarantees

Tariff guarantees are to be introduced for larger biomass (<1MW) and ground source heat pump installations (<100kW). This will provide certainty to investors prior to committing to to large capital expenditure.

Revised Tariff Structure for Biomass

The current biomass tariff structure with three separate tariff bands is to be replaced by a single tariff set at 2.91p/kWh (Tier 1) and 2.05p/kWh (Tier 2) with Tier threshold set at 35% of load factor.
There is to be no changes to tariffs for ground source heat pumps, air source heat pumps and solar thermal.

The detail of the changes for both schemes is yet to be released and will be subject to appropriate legislation being passed by Parliament.