RHI feed-in tariff style plans not delivering investor certainty
A long-term budget plan, which will see the non-domestic Renewable Heat Incentive (RHI) scheme modelled on the solar feed-in tariff, has been unveiled by the Government today.
Following a consultation in July last year, the Department for Energy and Climate Change (DECC) has announced it will introduce a digression-based approach to RHI, meaning that if the uptake of renewable energy exceeds forecasts by 50% or more, the tariff will be automatically cut.
The Combined Heat and Power Association (CHPA) are concerned that DECC's plan did not introduce enhanced preliminary accreditation - a mechanism to allow investors to 'lock in' tariff rates to guard against further falls before the project has been completed.
DECC acknowledged that enhanced preliminary accreditation would help provide investor certainty, but say that concerns about how such a scheme would work in practice has prevented it from being implemented.
CHPA head of policy Dr Tim Rotheray said: "Investors need to know now that the RHI payments will be there when they complete the project. If the RHI fails to incentivise large scale renewable heat schemes, it will only make meeting the 2020 renewable heat target more difficult for Government and more expensive for taxpayers."
The Anaerobic Digestion and Biogas Association (ADBA) was pleased with the Government's commitment to delivering renewable heat through biogas and biomethane but agreed that the lack of preliminary accreditation was lamentable.
ADBA chief executive Charlotte Morton said: "We are concerned that today's announcement does not give developers the certainty they need.
"With tariff degression in place, preliminary accreditation is important and it is disappointing that it has not been brought in at this point. Further scheme reviews are a clear risk to certainty, and we believe the RHI instead needs to be given the chance to bed down so that developers can get projects off the ground."
The scheme was launched for the non-domestic sector in November 2011 and more than 1,300 applications have been received to date, with around £24m worth of RHI payments expected to be paid out in this financial year.
Energy and Climate Change Minister Greg Barker said: "This is just the first step on our journey to safeguard longevity, provide certainty to industry and sustain growth under this scheme.
"We are also continuing to explore whether the tariffs we offer are set at the best levels to encourage further uptake, looking at how we can open up the scheme to new technologies, and considering the right approach to encourage householders to invest in renewable heat.
"We are continuing to work with industry and others on our plans and will be making announcements about our proposals for support as soon as possible."
In the same announcement, DECC revealed that combined heat and power (CHP) schemes qualifying for the Renewables Obligation sustainability criteria will automatically qualify for sustainability criteria under the RHI. This was welcomed by the CHPA who see this as a step in reducing administrative burdens and costs on CHP plants.