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Another major month for the RHI!

Once the domestic RHI scheme had launched, the last major milestone for the scheme, it would be understandable to think that the RHI conversations would settle down along with the scheme. However, so far this has proven to be far from the case as this world first scheme continues to evolve and develop.

Firstly, we have been monitoring the regular updates on scheme deployment for the domestic scheme. Ofgem provides a useful weekly summary on their website featuring interactive charts and graphs. The pattern of uptake so far has been slow and steady but on w/c 26th May, seven weeks into the scheme, the 1,000 installations milestone was reached. This number may not be as high as some would have hoped but is largely what could be anticipated at this early stage for the scheme. Biomass currently makes up 25% of all installations, just behind Solar Thermal at 28%, whilst ASHP surge ahead at 38% and GSHP make up the remaining 10%. Another interesting breakdown, not currently given, would be the split between legacy and new applications. The current presumption being that most of these are legacy applications who have eagerly been awaiting the scheme launch since as early as 2009. In which case there is more work to be done to target new applicants.

Also, in the same week, the changes to the non-domestic RHI scheme came into force. Amongst other changes this means an increased tariff for large scale biomass, now 2p/kWh and changes to the budget management mechanism that should be favourable for biomass (currently the most deployed technology). These changes are of importance since at the last quarterly statement, the small biomass tariff reached pre-determined trigger points for expenditure (including the overall scheme trigger) meaning the tariff will be reduced by 5% on 1 July 2014. Small biomass has narrowly avoided degression before because despite exceeding its own trigger the overall scheme trigger was not met. As mentioned, biomass is the most deployed technology and the last few months have seen very rapid deployment. Monitoring deployment over the next few months will be crucial to determine whether this rapid growth is partly related to seasonal factors (i.e. the winter months) and also whether the new budget limits will be effective. If either of these prove to be incorrect then it is possible that small biomass could approach trigger limits again within the year.

We are also awaiting news on the timelines and scope for the formal non-domestic review scheduled to take place this year. In addition, the Biomass Suppliers List is currently receiving applications from suppliers and later in the year will be made available to the public. So many a milestones met but many more interesting updates to follow.