The Department for Business, Energy and Industrial Strategy (BEIS) has laid a surprise cut to Renewable Heat Incentive (RHI) support for biomass CHP systems in a move which the Renewable Energy Association (REA) has decried as “abrupt” and “very negative”.
The changes were included within an amendment laid in parliament and are specifically aimed at biomass-fuelled combined heat & power systems which use less than 20% of fuel for electricity production.
The reduced levels of support will come into effect for all plants applying for RHI support on or after 1 August 2016, and the REA has slammed the short notice afforded to both the renewables industry and businesses interested in such systems.
James Court, head of policy and external affairs at the REA, noted that while the amendment claimed that “no impact on the private or voluntary sectors is foreseen”, such an abrupt cut to support threatened to “significantly impact” the biomass CHP sector.
“It is the suddenness and the lack of consultation that is the core issue here. Over £140 milion worth of investment is affected by this change, with a planned renewable energy capacity totalling 203MW heat and 20MW power,” he said.
The REA surveyed 36 companies currently developing biomass CHP projects in the UK, the vast majority of which – 34 – have already signed procurement contracts. 25 of those companies said the changes would have a “very negative” impact on their project.
“The industry was preparing for a new tariff structure from spring 2017, as outlined in the recent RHI consultation, but no one was warned about this change. The industry has invested in good faith in these projects, some which have been in preparation and construction for up to two years. Over £22m has been paid in non-refundable deposits.
“This unexpected cut will prove damaging to investor confidence. Of the companies surveyed, 92% stated that the changes will a negative or very negative impact on their projects. This significantly reduces the likelihood that many companies and investors will be keen to invest in this low-carbon technology in the future,” Court added.
An overhaul of the domestic and non-domestic RHI was first proposed in March this year, with a public consultation running into late April. The government was expected to announce its response to the consultation before summer recess – along with numerous other clean energy documents – but failed to do so.
When contacted by Clean Energy News earlier this month the Department for Business, Energy and Industrial Strategy could only confirm that the consultation response would be published “in due course”.