UK government proposes compromise deal to biomass industry on RHI cuts

The UK government has proposed a compromise deal to the biomass industry, intended to soften the blow of the sudden changes to incentives for certain biomass combined heat and power (CHP) plants.

In July, the government introduced changes to the Renewable Heat Incentive (RHI) tariffs for biomass CHP plants with under 20% power efficiency with no formal consultation with industry and only 21 days notification.

The Renewable Energy Association (REA), a UK renewable energy trade association, has conducted research concluding that the changes put over £140 million (€157m) of low-carbon investment at risk.

Jessie Norman, parliamentary under-secretary for industry and energy, acknowledged on Wednesday that a transitional period is required as the sector moves towards a lower tariff.

During this transitional period – until 31 March 2017 – the tariff reductions will only apply to plants that produce 10% power, known as power efficiency, with the remaining 90% being heat.

Before the tariff reduction applied nearly immediately to projects with up to 20% power efficiency.

Frank Aaskov, renewable heat analyst at the REA underlined the importance of transparency in governmental decision-making as “key to maintaining the confidence of investors” developing the UK’s low carbon infrastructure.

“We welcome the proposed compromise. Critically, the transition period should create a runway in which projects that have been under development or construction, some for as much as two years, can be completed,” Aaskov said.

“This proposal is a constructive step towards restoring the previously damaged confidence of investors in the biomass CHP sector.”

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