Press release: Government proposes compromise on biomass heat and power tariffs
- In July 2016 the Government introduced changes to the Renewable Heat Incentive (RHI) tariffs for Biomass Combined Heat and Power (CHP) plants with under 20% power efficiency with no formal consultation with industry and only 21 days notification,
- REA research concluded that the changes put over £140m of low-carbon investment at risk,
- Government today announced a “transitional period” which will allow many biomass CHP projects under construction to be completed and will support the restoration of investor confidence in the sector.
Jessie Norman MP, Parliamentary Under-Secretary for Industry and Energy acknowledged yesterday (19 October 2016) that the Department for Business, Energy, and Industrial Strategy would soften changes introduced to tariffs for certain biomass CHP plants introduced in August 2016.
The Renewable Energy Association has spoken out on this issue over the past three months. The Association has been frustrated that the changes, laid before Parliament in July 2016, were introduced with no formal consultation with industry. Companies developing this much-needed heat and power infrastructure were given only 21 days’ notice before the changes took effect, despite many of the projects being under development for up to two years.
Mr Norman acknowledged yesterday afternoon in a Seventh Delegated Legislation Committee Debate on the Renewable Heat Incentive (RHI) Scheme (Amendment) Regulations 2016 (S.I. 2016, No. 718) 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), whereas before the tariff reduction applied nearly immediately to projects with up to 20% power efficiency.
Frank Aaskov, renewable heat analyst at the Renewable Energy Association said:
“Transparency in Government decision-making is key to maintaining the confidence of investors developing the UK’s much-needed low carbon infrastructure.
“We welcome the proposed compromise announced today by Mr. Norman. 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.
“This proposal is a constructive step towards restoring the previously damaged confidence of investors in the biomass CHP sector.”
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Notes to editors:
- The Government has decided to introduce amending legislation to the terms of support for biomass-Combined Heat and Power (CHP) as soon as is practicable.
- The legislation that the Government will now introduce will reduce the 20% power efficiency requirement for biomass CHP plant to 10% for a transitional period. This will be applied to all biomass-CHP plant with a tariff start date on or after the 1 August 2016. The intention is that the threshold will revert to 20% after 31 March 2017.
- Plant with a power efficiency of 10% or above will continue to receive the biomass-CHP tariff for all heat produced. For plants with a power efficiency of below 10% the level of heat receiving the biomass-CHP tariff will reduce proportionately. The remaining heat will receive the relevant biomass tariff.
- Early day motion 395 was tabled in relation to this issue on September 5th
- You can view the original research and briefing compiled on this topic by the WHA website here.
About the Wood Heat Association (WHA)
The WHA is the UK trade association for the modern wood heating and related biomass heating industry including wood fuel suppliers, biomass boiler and stove installers and distributors, and anyone involved in the supply chain. The WHA is a fully owned subsidiary of the Renewable Energy Association. Members range in size from major multinationals to sole traders.
About the Renewable Energy Association (REA)
The Renewable Energy Association represents renewable energy producers and promotes the use of all forms of renewable energy in the UK across power, heat, transport and renewable gas. It is the largest renewable energy trade association in the UK, with approximately 700 members, ranging from major multinationals to sole traders. For more information, visit: www.r-e-a.net