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Renewable Heat Incentive Gets EU Seal of Approval

By Katie Anderson on October 26, 2011

After some delay, the Renewable Heat Incentive (RHI) scheme has finally been given the EU seal of approval, and will launch at the end of November.

RHI tariffs for large scale biomass have been cut

The green heating scheme had initially been scheduled to kick off for business users at the start of October, but was subjected to a delay at the last minute because the Government failed to get the green light from Brussels under State Aid regulations. However, the minister for climate change Greg Barker announced earlier today that the EU has finally approved the scheme.

Negotiations with Brussels has, however, resulted in the tariff levels for large biomass installations with over 1MW of capacity being cut from the 2.7p per kilowatt hour (kWh) previously approved by Parliament to just 1p/kWh.

Following the announcement, the Renewable Energy Association (REA) said the reduction would come as a shock to developers but the heating industry would ultimately be “relieved” that the RHI had got the go-ahead.

“I wouldn’t downplay the sense of relief it is going ahead,” REA’s head of policy, Paul Thompson told BusinessGreen. “But this is not just a bit of trimming for larger projects, this is a drastic reduction.”

Responding to the news, Tim Minett, Chief Executive of the UK’s leading biomass supplier CPL Distribution, said the majority of businesses would be unaffected by the revision, with most comfortably under 1MW and therefore still able to take advantage of tariffs of up to 7.9p/kWh.

“While the tariff reduction for larger users might seem to be a negative, the incentive will remain and they will still benefit. We calculate that with a revised tariff level of 1p/kWh an average sized hospital could still save more than £140,000 per year, alongside a fuel saving for biomass compared to oil of £190,000, giving an overall benefit of £330,000 every year for 20 years.”

A spokeswoman for the Department of Energy and Climate Change (DECC) said that whilst the reduction is frustrating, without the change the RHI scheme would not have been able to proceed.

“The regulations have been laid before Parliament and, subject to Parliamentary approval, we hope to open the scheme before the end of November,” said DECC.