The UK government has chosen to cut the mid-size heat tariff for biomass by 5 percent from 1st July despite the fact that the Renewable Heat Incentive (RHI) is seriously under-performing. The scheme includes several ‘triggers’ which, once breached, lead to a degression in the tariff for new projects. These triggers are based on the deployment expected by the Department of Energy and Climate Change (DECC) for each band of each technology covered by the scheme.
“The REA has always argued that the market should determine the relative proportions of different renewables contributing to the target, not the Government” said Gaynor Hartnell, REA Chief Executive. “Without the aid of a crystal ball, the Government is always going to get it wrong. Its aim is to control spending, but the end result is market distortion. It is not an easy task.”
The REA’s Head of Policy, Paul Thompson, added that it is deeply frustrating that the government is about to cut the one technology that is actually delivering and that this can only undermine confidence in the biomass heat sector, with serious knock-on effects for other renewables.
“There’s no suggestion that biomass tariffs are too high” continued Mr Thompson, “it’s just that the real world deployment has not matched DECC’s model. They should make their model fit reality rather than the other way round. To date, the RHI has paid out less than £12 million. It’s clear that Government should stop worrying about the risk of over-deployment and start worrying that the policy could fail to deliver by a wide margin.”
The REA is, however, pleased at the publication of a new consultation which proposes an increase to the tariffs for a range of technologies in the non-domestic RHI.
“We are pleased to see that DECC has responded positively to evidence from industry that a number of tariffs are too low” Paul Thompson added. “The increase to the large-scale biomass tariff is particularly welcome – even at the revised tariff it represents unbeatable value for money in terms of carbon savings and renewable energy. We also welcome the intention to use a broader range of evidence when setting tariffs, including direct experience from industry.”
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