DECC have announced that the RHI Regulations have been laid before Parliament and DECC now hope to have the RHI open for applications by the end of November. The delay to the RHI, which was due to be open for applications on 30 September 2011, came following the Commission's concern that the large scale biomass tariff was set too high. The Large scale biomass tariff is for biomass installations with a capacity of 1MWth or above. The tariff for large scale biomass has now been revised from 2.7p per kWh to 1p per kWh. This is clearly a big reduction (63%) for those projects wishing to incentivise investment through the RHI and could be damaging to the biomass industry. DECC's statement reads as follows:
"We have now updated the Renewable Heat Incentive
Regulations to reflect the required change to large scale biomass
tariff by the European Commission. The large scale biomass tariff
has been revised from 2.7p per kWh to 1p per kWh. The regulations
have been laid before Parliament, and subject to Parliamentary
approval we hope to open the scheme before the end of November.
The full press release can be read by clicking here.
Whilst to a large degree this was out of DECC's hands, this reduction in tariff is contrary to the encouraging consultation released last week on the banding review under the Renewables Obligation which showed great support to biomass as a key technology to helping the UK meet its 2020 target. Under the RO banding review consultation DECC have proposed continued support for CHP generating stations at 2 ROC/MWh accredited before 1 April 2015. The value of the 0.5 ROC/MWh is approximate 2-2.5 p/kWh. The proposals are that there would be a one off choice for CHP generating stations to take the 0.5 ROC/MWh CHP ROC uplift under the RO or get support for the heat element under the RHI until 1 April 2015, after this point it is proposed that any new generating stations would only be able to receive support for the heat element under the RHI and there would no longer be support by way of the CHP uplift under the RO. With the proposals for the RO banding probably not being confirmed until September 2012, many large scale biomass projects not guaranteed to get in before the 2015 change date may be put off from proceeding on this lower tariff; the only hope for these projects would be to extend the transitional window to 2017.
Ofgem is ready to start accepting applications as soon as the Regulations come into force. The exact date the Regulations will come into force is dependent upon the Parliamentary timetable.
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