DECC proposes new tariff levels for Renewable Heat Incentive

By U.K. Department of Energy & Climate Change | May 31, 2013

Office blocks, factories and community centres could be among a number of buildings across Great Britain to benefit from more cash for renewable heat under proposals set out by the Department of Energy and Climate Change on May 31.

DECC is consulting on increasing the tariff levels for heat generated by ground source heat pumps, large biomass and solar thermal kit accredited under the Government’s Renewable Heat Incentive scheme.

The RHI is a world first and is designed to revolutionise the way homes and businesses across the nation are heated, cut carbon emissions and help meet renewables targets. The scheme was launched for the non domestic sector in November 2011.

Energy and Climate Change Minister Greg Barker said “Over 1,300 innovative renewable heat technologies have already been installed under this scheme and are generating cash for the heat they produce.

“The Renewable Heat Incentive has been running for nearly eighteen months, so now is a timely moment to look again at the tariffs.

“We need to make sure they are set at the right level to continue bringing forward investment and growth and at the same time keep costs to the taxpayer to a minimum. That’s what our proposals set out today are designed to do.”

The proposed levels follow on from a review of the evidence base used to set tariffs earlier this year and are designed to increase uptake of heat pumps, large biomass and solar thermal technologies by increasing the tariff on offer. DECC is not proposing to increase the tariffs for small and medium biomass as part of this review, based on the current high level of demand for these technologies. Biomethane and biogas combustion are outside the scope of this review.

The consultation will run for four weeks and will close on 28 June 2013.

As part of a wider approach to ensuring the RHI scheme stays within its budget and continues to provide value for money, DECC has today confirmed that the medium commercial biomass tariffs will be reduced by 5%. The revised rates, available to new applicants from 1 July 2013 are:

Current ratesNew rates (from 1 July 2013)
Tier 1: 5.3p/Kwh Tier 1: 5.0p/Kwh
Tier 2: 2.2p/Kwh Tier 2: 2.1p/Kwh

As set out in February this year, DECC has introduced a degression based approach similar to the regime adopted for the Feed-in Tariffs scheme, reducing tariffs available to new applicants if uptake of the technologies supported under the scheme is greater than forecast. All technologies supported under the RHI are subject to this budget management regime.

This announcement is the first to be made under the new budget management approach. Future announcements on potential tariff reductions under this regime will be made online by the 1st of September 2013, December 2013 and March 2014. Uptake data will be published online on a monthly basis so progress towards the pre-determined trigger points can be assessed.