The Department for Energy and Climate Change has announced that the large biomass tariff has been reduced by almost two thirds, from 2.7 pence per kW to 1 pence per kW. This cut has been made in order to secure state aid approval for the Renewable Heat Incentive (RHI) scheme, as referred to in our e-update of 15 October.
Such a drastic cut could have a significant effect on planned large biomass projects (those producing 1000 or more kW per hour), for example any projects for which the planned funding was predicated on the 2.7 pence per kW figure.
Scottish Renewables has voiced its disappointment, saying that it is, "fearful that [the reduction] will lead to a number of projects being cancelled and a host of systems being downsized to the lower band. Large systems are typically more efficient due to the high number of operating hours and are the most cost effective way of achieving carbon reduction and renewable energy targets."
The lower bands for commercial biomass (small - up to 200 kW, and medium - 200 kW up to 999 kW) attract higher tarrifs, depending on size, ranging from 2 pence up to 7.9 pence per kW, which will make projects within those bands more attractive in terms of the RHI.
The revised regulations implementing the RHI scheme have been re-laid before Parliament, and subject to approval of those the scheme is expected to be open for applications by the end of November 2011.