On 20 July 2012, DECC launched its ‘Renewable Heat Incentive: Providing certainty, improving performance’ consultation. The key proposals within the consultation are as follows:

  • Central budget management proposal and periodic reviews: DECC have proposed that the current interim cost-control mechanism be replaced with a flexible degression-based system. Under the proposal automatic tariff reductions would occur if pre-determined deployment triggers are reached, with degression assessments to be made by DECC on a quarterly basis with one month's notice being given for any reductions. The size of possible tariff reductions is proposed to be determined in advance, with the size of actual reduction enforced dependent upon the extent to which the deployment triggers are exceeded. In addition to the degression-based system, DECC have proposed that periodic reviews of the RHI be conducted, commencing in 2014, in order to assess the operation of the scheme.
  • Pre-accreditation:  DECC have proposed the idea of 'enhanced preliminary accreditation', whereby a generator would be guaranteed to receive the tariff that applied as at the date of its application for preliminary accreditation if certain conditions are met. This is to address the need to provide greater certainty of the likely tariff that a project may receive if it has a long lead time.
  • Biomass sustainability: DECC have put forward proposals for biomass sustainability criteria, in order to make the RHI consistent with the Renewable Obligation and ensure the sustainability of the RHI, in line with the UK Bioenergy Strategy which was published in April 2012. The criteria proposed are as follows:
    • Biomass used for heat must achieve a lifecycle greenhouse gas (GHG) saving of 60% against an EU fossil  heat average.
    • In relation to wood-fuel, documentary evidence must be available showing that the wood has emanated from a legal and sustainable source, or is from a licensed Forest Law Enforcement, Governance and Trade (FLEGT) partner.
    • For non wood-fuel biomass the land criteria set out within the EU Renewable Energy Directive must be met.
    • Installations below 1MWth capacity must, from April 2014, purchase their biomass from an approved supplier list.
    • Installations above 1MWth capacity would need to provide reports to Ofgem on the sustainability of their biomass.
  • Air quality: DECC have proposed that the emissions limits set out in the March 2011 RHI policy document be imposed. These limits will apply to all installations with an installed capacity of <20MWth and will apply to those installations accredited after the point at which these limits come into force (expected to be between November 2012 and March 2013).
  • Metering: DECC have stated its aim to simplify the complex metering requirements which are currently in place under the RHI. It is, therefore, proposed that heat transported in external pipes insulated to a specified standard will be deemed to be eligible heat use and where all heat uses are eligible, only the eligible renewable heat generation would be required to be metered.
  • Biomethane:  DECC have proposed to allow biomethane clean-up plant to be accredited under the RHI, and therefore treat biomethane more consistently with the other technologies under the RHI.
  • Eligibility of ground source heat pumps: DECC intend to clarify the regulations for ground source heat pumps, to ensure that the RHI acts as a support for the efficient use of renewable heat.
  • Allowing renewable heat plant to be moved: At present only 'new' equipment is eligible under the RHI. DECC have proposed that an installation can be relocated and continue to receive the RHI, provided it meets other eligibility criteria at the new location. This is particularly important for heat generation due to the fact that it relies on supplying to a nearby user.
  • Eligible heat use: DECC have proposed, in order to allow intended heat uses to benefit from the RHI,  to remove the requirement that using heat to carry out a process must take place within a building.
  • Biomass boiler oversizing: DECC have set out plans to introduce an eligibility requirement to prevent installations that are sized incorrectly in order to claim the tier 1 tariff, from benefitting from the RHI.
  • Tariffs - RPI: DECC have proposed a change to the regulations so that tariffs are calculated to the nearest twentieth of a penny, i.e. to .05p, in order to prevent a re-run of this year, whereby the tariff for large biomass did not increase in line with the RPI, due to the fact tariffs are currently calculated to the nearest tenth of a penny.

The closing date for responses to the consultation is 14 September 2012.

To read the full consultation, please click here.