Cuts to Biomass funding support

There has been lots of media coverage recently about the cuts in support for biomass heating…which has meant the phones in our office have been ringing off the hook with enquiries.

The Renewable Heat Incentive (RHI) is the world’s first long-term financial support programme for renewable heat for the non-domestic sector that pays participants of the scheme that generate and use renewable energy to heat their buildings. The RHI is a fixed, index-linked income for every unit of heat generated over a 20 year period. Heat generated by the biomass boiler is also energy saved from heating bills and therefore people gain from the inherent cost saving. By increasing the generation of heat from renewable energy sources (instead of fossil fuels), the RHI helps the UK reduce greenhouse gas emissions and meet targets for reducing climate change… which can only be a good thing, right?

However, the UK Government has made announcements recently on the non-domestic RHI; including a degression to the tariff, which once triggered support levels will automatically drop by 5% for new projects accredited in the medium tariff band under the scheme.

The RHI has been slow on the uptake, but like a lot of projects it can take time to develop new technology and should be monitored and developed by organisations that have an expert understanding on the industry, like the Renewable Energy Association.

REA Chief Executive Gaynor Hartnell said:
 “It is not an easy task. The only technology-neutral way of keeping within the spending limit is to let things run their course and close the scheme when the money runs out, whilst keeping a close eye on the tariffs to make sure they are correct. The worst outcome is constraining technologies the market wants to develop, particularly if they are the most cost-effective, whilst at the same time missing the overall target.”

It appears that the Government has seen that the RHI has been underperforming and like many things make cuts to save money before seeing the project through.  We say stop worrying about over development and support a technology that is actually delivering. We need to encourage confidence in the biomass heat sector and we have many clients who can show positive results; which has a major impact on our environment and saving the consumer money in energy consumption. The Government’s Department of Energy and Climate Change (DECC) has launched the Non-Domestic Scheme Early Tariff Review consultation that will be open until 28 June.

The good news is that the large tariff looks to be on the increase.  Earlier in the year the DECC indicated it intends to increase some tariffs, following evidence that they were originally set too low. The DECC proposes that installations accredited from 21 January 2013 would be allowed to move up to the higher tariffs when/if they are introduced.

So, although there are a lot of changes a foot we’re encouraging people to give us a call to find out more before any potential tariff changes take effect… we have already secured 3 new contracts on the back of the media coverage, so make sure you don’t miss the boat!

“converting your oil or LPG heating system to biomass you can expect a 25 – 35% return on your investment.  This equates to a 50% saving on your fuel bill each year and a guaranteed income from the Renewable Heat Incentive for the next 20 years” … “Natural gas systems can expect a 12-15% return on your investment depending on the cost of natural gas”.