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RHI rate for domestic biomass boilers falls again

Posted by Cathy Debenham on 18 March 2015 at 10:55 am

The popularity of biomass boilers has led to a second drop in the rate of the domestic renewable heat incentive. The rate fell 10 per cent from 12.2p per kWh to 10.98p on 1 January this year. Following a bumper number of installations in December, it will reduce again on 1 April 2015 - this time by 20 per cent to 8.93p. Biomass boiler installers are likely to be busy this month as people rush to install before the deadline.

Unlike the feed-in tariff which comes out of energy bills, the RHI comes out of general taxation. To manage the RHI budget, the Department of Energy and Climate Change (DECC) keeps an eye on the cost of paying out on RHI on a quarterly basis. Tariffs are reduced as estimated spend reaches certain triggers. Hitting a trigger means a reduction of 10 per cent; hitting a super trigger will lead to a 20 per cent fall. As you can see from the graph below biomass has proved much more popular than budgeted for - the blue dotted line is the basic trigger, the purple one the super trigger:

The reductions in tariff only apply to new applicants to the scheme. If you have already been accredited onto the RHI scheme you will continue to receive the same rate, with annual cost of living increases.

Just because the installation rate is much higher than anticipated doesn’t necessarily mean that another degression (reduction) in the rate will happen in the next quarter. DECC says: “If a degression takes place in any quarter, then in the following quarter we will test the growth in spend against the growth between the triggers in those quarters, as well as considering the actual level of forecast spend. If the growth rate is higher than, or the same as, the growth in the triggers a further reduction in the tariff would occur; if it is lower the tariff would stay the same. This will ensure that we do not over-reduce a tariff.”

You can find out more detail about degression here. Clicking the link will download a pdf from DECC.

The rate for non-domestic RHI small commercial biomass will also reduce on 1 April to 5.87 pence per kWh for tier 1 and 1.56 pence per kWh for tier 2. 

Photo: SuperHomes

More information about the Renewable Heat Incentive (RHI) on YouGen

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