UK renewable energy sector gives thumbs up to RHI reform

The UK renewable energy industry has reacted positively to the government’s renewable heat incentive (RHI) scheme plans.

Changes to the scheme were proposed in a public consultation in March. At that time, the renewable heat industry was deeply concerned that the revised tariffs would result in a steep fall in the deployment of many renewable heat technologies. Proposed tariff reductions of 45% for parts of the biomass heat sector, for example, were projected by the Government to lead to a 98% drop in installations.

Other technologies, such as solar thermal, were to be removed from the RHI altogether. The proposals resulted in significant outcry from sectors of the renewables industry.

The REA’s analysis of the Government’s finalised scheme, released last week, indicates that the reformed Renewable Heat Incentive moves the UK closer to meeting its legally binding 2020 renewable heat target. However, there will be certain key sectors which may struggle, including biogas and non-domestic biomass boilers.

ADBA chief executive Charlotte Morton said: “It’s great to see that the new ministers in the Department for Business, Energy and Industrial Strategy (BEIS) remain committed to decarbonising heat in the UK and continuing to support the UK’s burgeoning green gas industry.

“We are pleased to see that tariff levels have been reset – this should support higher levels of deployment. We do not believe, however, that the restrictions on feedstock for new plants, which could have unintended consequences, are justified.

"The introduction of tariff guarantees is extremely welcome and we will continue to work with the UK Government and with our members to ensure the UK AD industry keeps growing and reaches its full potential – for example by calling for urgent action on food waste collections in England.

“Biomethane and biogas have been real success stories from the RHI, and the continuation of this scheme will allow the UK AD industry to build upon its success to date, decarbonising heat without any changes for the consumer.”

‘Heat is a very complex issue’

Nina Skorupska, chief executive at the Renewable Energy Association, said: “The reforms made today to the Renewable Heat Incentive are an improvement to the earlier consultation and will go some way to grow an effective renewable heat sector in some cases to 2021.

“As recognised in this consultation response, heat is a very complex issue and we need all technologies on board to achieve our long-term goals. Renewable gas, biomass boilers, solar thermal, heat pumps, heat networks, hydrogen and other technologies will all have a role to play.

“The next step is for Government to lay out a long-term energy strategy so industry can prepare for low-carbon heat deployment in the 2020’s and 2030’s. As of now, this policy only takes us to 2021 and there is little indication of the Government’s vision beyond.”

John Baldwin, Chair of the Renewable Energy Association’s biogas group and Managing Director of CNG Fuels said: “The biomethane tariff reset is most welcome. Government has acknowledged the strategic role biomethane can play across heat and transport and the resetting of the biomethane tariffs should enable continued deployment of the most competitive projects.

“Unfortunately, the biogas combustion tariff isn’t likely to enable many new biogas CHP projects to come forward. With the closure of the RO, and rapidly falling tariffs for the Feed-In Tariff, this sector still faces many challenges.”

Key elements of the announcement include:

• • Increased tariffs for new heat pumps

• Biomass remains a key part for the scheme and will continue to be supported with increased support for large and industrial projects

• Introduction of tariff guarantees will be introduced for large biomass boilers; large biogas plant; ground source heat pumps; and all capacities of biomethane; biomass-CHP and deep geothermal plant.

Among other measures, the Department for Business, Energy, and Industrial Strategy (BEIS) will reset biogas and biomethane tariffs under the non-domestic RHI.

The new levels will be banded in three tiers, the first of which applies to the first 40,000MWh of eligible biomethane injection to the gas grid by a plant each year, the second of which applies to eligible biomethane injection between 40,000 and 80,000MWh each year and the third of which applies to all eligible biomethane injection in excess of 80,000MWh each year.

The tariffs for each of these bands will be set at 5.35p/kWh, 3.14p/kWh and 2.42p/kWh respectively.

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