RHI Degressions from DECC

In DECC's recent email to stakeholders, it outlined the degressions in the Renewable Heat Incentive.

Dear Stakeholder,


The latest RHI degression announcement was published on Friday, firstly apologies for not getting this email out last week.


The headlines of this quarter’s announcement are as follows:

Three tariff reductions will come into effect on 1 October 2015.
The small non-domestic biomass tariff will be reduced by 5%.
Biomethane tariffs in the non-domestic scheme will be reduced by 10%.
The domestic biomass tariff will be reduced by 10%.

Further detail on why these reductions have occurred:

Non-domestic scheme

The total forecast expenditure as at 31 July 2015 was £388.2m. This represents the amount of tariff payments we anticipate we are committed to based on application data up to 31 July 2015.
The “100% trigger" for the scheme as a whole for the 31 July 2015 degression assessment date is £306.2m – total forecast expenditure of £388.2m is £82m above the trigger
Forecast expenditure over the next 12 months for the small biomass tariff category was £146.1m. This is £49.7m above its individual technology trigger of £96.4m
Despite being over its trigger, small biomass did not meet the growth requirements over the quarter for a subsequent reduction after being reduced by 25% last quarter. However, with the 100% total scheme trigger exceeded, all technologies deploying above expectations receive an additional 5% reduction, therefore small biomass tariffs will be reduced by 5% from 1 October 2015.
Forecast expenditure for the biomethane tariff category was £167m. This is £82.8m above its individual technology trigger of £84.2m. As biomethane has exceeded its trigger it will be subject to a 5% tariff reduction. With the additional 5% reduction from the 100% trigger being applied, biomethane tariffs will be reduced by 10% from 1 October 2015.
The figure for forecast expenditure for biomethane has grown due to known biomethane plants in the pipeline coming forward into the scheme and regulations which have been introduced improving how we forecast biomethane expenditure to better reflect operational realities and reduce fluctuations in future forecasts.
All other technologies remain well below their triggers.

Domestic

Forecast expenditure for domestic biomass is £32.43m. This is in excess of the expenditure threshold for biomass for the quarter ending 31 July 2015 (£11.9m).
As the tariff was reduced last quarter, according to the scheme rules expenditure needs to grow by a specific amount (set out in the regulations) to be reduced again, not just exceed the trigger. This quarter biomass expenditure grew enough to meet the requirements for a 10% reduction but not for the maximum 20% reduction. Therefore the biomass tariff will be reduced by 10% from 1 October 2015.
All other technologies remain well below their triggers.

RHI Team

DECC