RHI fails to secure top tariff

The UK’s Renewable Heat Incentive (RHI) had its tariff for large-scale biomass heating dropped from £0.027 (€0.031) per KWh to £0.010 after the European Commission (EC) ruled it was too high.

Initially the Department for Energy and Climate Change (DECC) had planned to put in place the RHI at the end of September but was forced to postpone after the EC said it was unhappy with the tariff price.

Paul Thompson, head of policy at the DECC says although the department expected the EC to drop the tariff slightly, such a significant drop was unexpected.

‘The government was clear that it wants to stimulate this area so I don’t really understand the cut. Taking a step back I think that the worrying thing is that people have ordered boilers and they didn’t expect one of the key planks of the policy to be blown out of the water,’ he says.

‘Over 60% in reduction is quite alarming and I think it will have implications on how people act towards future announcements because they will be very cautious now as they’ll realise they’re not necessarily certain. It’s such a huge change in the tariff figure.’

The scheme is being introduced in two phases:

  • The first phase: Long-term tariffs will be given to those in the non-domestic sectors that use the most heat – such as the industrial, business and public sectors. About £15 million will also be given to households under a payment scheme. After the delays, the scheme is now due to open for applicants at the end of November 2011
  • The second phase: The scheme will be expanded to include other technologies and to support more households. This is to be introduced in autumn 2012, although it could also be delayed.

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