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Changes to Renewable Heat Incentive tariffs from Spring 2017

Posted by Trish O'Flynn on 20 December 2016 at 11:20 am

On 14 December the government (BEIS) published its response to the March 2016 consultation on reform of the Renewable Heat Incentive (RHI). This includes changes to the tariffs and conditions of the domestic and non-domestic RHI schemes. These will apply, according to the response, from spring 2017, although we at YouGen predict this will be from 1 April 2017 (note our disclaimer below).

This is on top of the recent announcement of reductions in Renewable Heat Incentive tariffs between 1 January and the end of March 2017.

How is the domestic RHI scheme going to change?

The new levels of the domestic RHI tariffs as of 1 January and 1 April 2017 are set out in the table below, alongside the new annual heat demand limits. Further inflationary adjustments to the tariffs may be made on 1 April 2017.

 Tariff

Tariff January-March 2017 (p/kWh)

Percentage Increase (%)

New tariff from

 1 April 2017 (p/kWh)

Heat demand limit (kWh) (new)

Biomass boilers and stoves

4.21

53

6.44

25,000

 

Air source heat pump

7.51

33

10.02

20,000

 

Ground source heat pump

19.33

1

19.55

30,000

 

Solar thermal

19.74

0

19.74

Doesn’t apply

 

Other changes include:

  • annual heat demand limits on which the householder can receive support (see table above). Properties with higher heat demands are still eligible for the scheme
  • electricity metering required for new air source heat pump (ASHP) and ground source heat pump (GSHP) installations (to monitor heat pump performance), although ‘deemed heat requirement’ remains the basis for RHI payments
  • metering and monitoring service package (MMSP) payments to be given in two parts: 50% of the total payment with the first tariff payment, and the remaining 50% paid over the remaining payment lifetime
  • ground source heat pumps with shared ground loops will not be eligible for the domestic RHI scheme, but will be eligible for the non-domestic scheme.

When do the domestic RHI changes come in?

The changes described above (other than tariff increases) will come into force when the scheme formally changes and will apply to applications made on or after that date – estimated as 1 April 2017.

New applications from 14 December for biomass boilers and stoves, ASHPs and GSHPs will get upgraded to the improved tariff rate automatically when it comes into force. Therefore, anyone installing on or after 14 Dec will still enjoy the imminent uplift.

What is not changing?

  • support for solar thermal. The government had considered removing support but the tariff for domestic solar thermal is to continue at the same level and with no capacity limit
  • the option to assign rights to domestic RHI payments to third parties is deferred until consumer protection issues are resolved.

How is the non-domestic RHI changing?

There are quite a few changes to the non-domestic RHI scheme:

  • a tariff guarantee process is being introduced for larger projects, with the amount of heat covered limited to 250GWh per year. This relates to large biomass boilers (above 1MW in capacity), large biogas plant (above 600kWth), GSHPs (above 100kW, including shared ground loop systems) and all capacities of biomethane, biomass-CHP and deep geothermal plant
  • biomethane and biogas tariff levels are increased (see table)  

 Tariff

Tariff January-March 2017 (p/kWh)

Percentage Increase (%)

New tariff from

 1 April 2017 (p/kWh)

Small biogas

3.32

33

4.43

Medium biogas

2.60

34

3.47

Large biogas

0.98

33

1.30

Biomethane injection

Tier 1: 3.89
Tier 2: 2.29
Tier 3: 1.76

 

38
37
43

 

Tier 1: 5.35
Tier 2: 3.14
Tier 3: 2.42

 

  • biomass tariff bands are reduced from three (small, medium, large) to one, which will be tiered according to heat use. The tier threshold is equivalent to a 35% load factor (see table)

 

Current tariff

Reformed tariff

 

Tier 1 (p/kWh)

Tier 2 (p/kWh)

Tier threshold

Tier 1 (p/kWh)

Tier 2 (p/kWh)

Tier threshold

Small biomass

3.10

0.82

15%

 

2.91

 

2.05

 

35%

Medium biomass

5.24

2.27

15%

Large biomass

2.05

Not currently tiered.

 

  • ground source heat pumps with shared ground loops serving domestic properties will be eligible for the non-domestic scheme on the basis of deemed heat use and subject to electricity metering
  • new biogas and biomethane plants only eligible if at least 50% of biogas and biomethane comes from waste or residual feedstocks
  • the drying of digestate at biogas and biomethane plants is no longer eligible for support.

What is not changing:

  • tariffs relating to non-domestic ASHP, GSHP, biomass-CHP, biogas, solar thermal and deep geothermal stay the same. Further inflationary adjustments to the tariffs may be made on 1 April 2017
  • the scheme conditions relating to solid biomass CHP, deep geothermal plant, and solar thermal systems (up to 200kW capacity)
  • wood fuel drying remains an eligible heat use but this is under review and is likely to change in the future
  • the option to assign rights to RHI payments to third parties will not be extended to non-domestic installations.

IMPORTANT DISCLAIMER:
In its consulation response the government says only that the change will come into effect in spring 2017. At the time of writing this blog our contact at Ofgem could not confirm a precise date for the change, so we're making the bold call that it will come into effect on 1 April which is when we'd normally expect the quarterly change to the RHI tariff to go live. If, in 2017, it turns out that spring arrives early (or late), we'll update you as soon as we know! 

Image credit: Sandia Labs

Sources:

1. BEIS response to RHI reform consultation

See also: Introduction to the Renewable Heat Incentive

More information about Energy Saving and Renewable Energy on YouGen.

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About the author: Trish is a web content writer with the National Energy Foundation.

If you have a question about anything in the above blog, please ask it in the comments section below.

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