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RHI Cuts: Round 2

Despite the RHI cuts in January 2015, the uptake of both the commercial and domestic schemes has continued to increase substantially. As a result, DECC have announced a second round of tariff cuts effective from 1st April 2015. Affected schemes are the Small Commercial Biomass and the Domestic Biomass technologies which will be subjected to a 15% and 20% degression respectively.

Small Commercial Biomass will be cut by 15% due to its forecast expenditure exceeding its expenditure threshold (or trigger) by £38.9 million and the category having already been reduced in the previous quarter. With the overall commercial RHI scheme also having surpassed the 100% expenditure threshold, a further 5% degression contributes to the overall 15% cut in the small commercial biomass RHI tariff. The tariff as of 1st April 2015 will be as follows:

Tier Current RateRate from 1st April 2015
1 6.8p/kWh 5.87p/kWh
2 1.8p/kWh 1.56p/kWh

Since the tariff reduction last quarter in the Biomass Plant category did not slow growth in the domestic RHI scheme, domestic biomass technologies will be subject to the greater degression of 20%. Domestic biomass plants exceeded the super trigger/expenditure threshold by £5.76 million bringing the actual forecast expenditure as of 31/01/15 to £17.76. The new domestic biomass tariff as of 1st April 2015 will be as follows:

Category Current RateRate from 1st April 2015
Small Domestic Biomass 10.98p/kWh 8.93p/kWh

Unless these latest cuts have the desired effect in reducing the rapidly increasing popularity of uptake in both RHI schemes, come 1st July 2015, a third round of tariff cuts could be expected in July 2015. Whilst Duncan Renewables will endeavour to keep you updated on the latest RHI developments, if you’re considering investing in renewable energy soon, you need to decide whether it is worth gambling further cuts to the scheme by delaying your RHI application.

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