The British government has re-evaluated its changes to the Renewable Heat Incentive plan, and is offering a compromise solution for biomass combined heat and power businesses.
Speaking in the House of Commons on Wednesday, industry and energy minister Jessie Norman acknowledged a transitional period is needed as the sector moves towards a lower tariff. He promised the government would now introduce amending legislation “as soon as is practicable”.
In July 2016 the Government introduced changes to the Renewable Heat Incentive (RHI) tariffs for Biomass Combined Heat and Power plants with under 20% power efficiency with no formal consultation with industry and only 21 days notification.
Renewable Energy Association research concluded that the changes put over £140m of low-carbon investment at risk.
The amendment will see the power efficiency threshold reduced to 10 per cent for a transitional period until 31 March 2017, and will apply to all plants that have qualified for the scheme since the beginning of August 2016.
“We recognise that this revised approach will not remove all the impacts of the change from all projects,” said Norman, “But we feel it achieves the right balance between delivering value for money and ensuring the efficiency benefits that CHP is supposed to deliver, and making sure that those benefits are indeed delivered, while also reducing the impact on projects that are under way.”
Frank Aaskov, renewable heat analyst at the REA, called the proposal a “constructive step” towards restoring previously damaged investor confidence in the biomass CHP sector.
“Transparency in government decision-making is key to maintaining the confidence of investors developing the UK’s much-needed low carbon infrastructure,” he said in a statement. “We welcome the proposed compromise announced today by Mr. Norman. Critically, the transition period should create a runway in which projects that have been under development or construction, some for as much as two years, can be completed.”