The Department of Energy and Climate Change (DECC) has outlined today (27 February) a long term plan to ensure that the Government's renewable heat scheme for commercial, industrial and community organisations stays within budget.
Following the consultation in July last year, DECC is also making a number of other improvements to the scheme.

The Renewable Heat Incentive (RHI) was launched for the non-domestic sector in November 2011 and so far more than 1,300 applications have been received, with around £24m worth of RHI payments expected to be paid out during this financial year.

Greg Barker, Energy and Climate Change Minister, said: 'I am fully committed to ensuring our Renewable Heat Incentive helps as many organisations as possible get on board with a range of exciting sources of renewable heat, and at the same time stays within its means. That's why we are introducing a new, flexible way to control spending, alongside some further improvements to the scheme.'

He continued: 'We are also continuing to explore whether the tariffs we offer are set at the best levels to encourage further uptake, looking at how we can open up the scheme to new technologies, and considering the right approach to encourage householders to invest in renewable heat. We are continuing to work with industry and others on our plans and will be making announcements about our proposals for support as soon as possible.'

A number of changes to the scheme have been proposed, as follows:

In terms of budget management, there is a fixed annual budget for each year of the RHI and DECC says controls need to be in place to ensure the scheme remains financially sustainable and offers good value for money for the tax payer. DECC intends to introduce a degression based approach similar to the regime adopted for the Feed-in Tariffs scheme. This will involve tariffs available to new applicants being gradually reduced if uptake of the technologies supported under the RHI is greater than forecast. This will be done by monitoring uptake on a quarterly basis against a series of 'triggers'. Monthly updates on progress towards triggers will be published online and one month's notice will be given before any reductions are made to the tariffs for new applicants.

DECC says that the new policy published today confirms its commitment to provide certainty for investment through scheduled reviews of the non-domestic RHI, currently proposed for 2014 and 2017. It also sets out the conditions under which an earlier review would be undertaken and confirms that it is planning to consult in the Spring on changes to some of the tariffs. It will provide an update shortly on which tariffs will be included.

As regards biomass, sustainability requirements will be introduced for all existing and new installations using solid biomass as a feedstock. This means that from April 2014, in order to be eligible for the RHI, biomass installations will be required to demonstrate, either through reporting or sourcing from an approved supplier, that their biomass meets a greenhouse gas lifecycle emissions limit target and (from no later than April 2015) land criteria. DECC will work with industry throughout 2013 to promote early reporting on a voluntary basis and to develop the 'approved suppliers' approach.

Air quality requirements will form part of the RHI for all solid biomass installations including CHP installations which burn biomass and this will apply to all new installations only. Metering requirements will be simplified to reflect feedback received from participants and to reduce burdens on industry. The changes to both air quality and metering will be in place no later than the end of 2013 subject to parliamentary approval and will only apply to all new installations.

Click on the link to read the Government response to the RHI non domestic consultation http://bit.ly/WhA4Bl