2014-12-01  

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DECC Announces Lower Biomass Degression

In a surprise announcement the Department for Energy and Climate Change (DECC) have significantly reduced their load factor assumptions for the non-domestic Renewable Heat Incentive (RHI) scheme, resulting in a big decline in their forecast expenditure and a decrease in anticipated degression in January 2015.

Monthly forecast figures published by DECC up to 31 October 2014 had indicated that a 20% degression in the small biomass band would be triggered, with a potential further 5% degression if the total trigger (which is roughly the RHI budget) was hit. However, these changes mean that only a 5% technology degression has been triggered.

Windturbine

 

The total trigger for the whole RHI budget was hit, meaning every technology deploying above its individual triggers will be degressed by 5% in addition to any other degressions. So in real terms the small biomass tariff will be reduced by 10% in total from 1 January 2015 to 6.8p/kWh (Tier 1) and 1.8p/kWh (Tier2). An RPI increase on all tariffs with effect from 1 April 2015 will help mitigate some of this degression.

In addition to small biomass, the biomethane tariff will be degressed by 10% to 6.8p/kWh, no other technologies or tariffs will be affected.

Dan Thory, renewable energy advisor at Fisher German said
“This is great news for businesses and organisations looking to save money and generate income through the installation of a biomass heating system.

From 1 January 2015 income from the non-domestic RHI scheme for a small biomass boiler up to 199kW will remain attractive, with returns of approximately 15% available”.

DECC have also confirmed that the biomass tariff in the domestic RHI scheme will be reduced by 10% from 1 January 2015, from the current tariff of 12.2p/kWh down to 10.98p/kWh.

Fisher german

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