The UK’s leading sustainable biomass supplier CPL Distribution has welcomed DECC’s review of tariff levels available to large-scale biomass installations under the Renewable Heat Incentive (RHI), announced today by DECC.
However, CPL said it regretted DECC’s decision to digress the medium scale tariff, the one technology currently performing strongly and called for DECC to re-consider the digression.
CPL welcomes DECC’s proposal to increase the tariff band for large biomass installations above 1MW, but calls for DECC to go further.
Tim Minett, CEO of CPL, said: “We are very pleased to see that DECC has listened to CPL and the wider industry and shown it is committed to making the RHI work. The primary reason for the low uptake to date in the commercial sector has been that the tariffs have been too low to provide an incentive.
“It is high time that tariffs for large-scale biomass installations (over 1MW) were revised upwards as they were set too low following European intervention. However our modelling suggests that DECC will have to go further in order to fully invigorate the Renewable Heat Incentive for large biomass and believe the optimum rate to stimulate take-up is actually 2.7p. (DECC’s original tariff before Brussels intervened)
However, CPL have criticised the decision to degress medium scale biomass as premature and that they rejected calls from industry to change the tariff banding for medium-sized biomass installations (200KW– 1MW).
Tim Minett, CEO of CPL, said: “The decision to cut the one technology that is performing is frustrating, we have previously warned DECC that any early digression of the tariff, could damage the fragile confidence in the renewable heat market, which had been damaged by the solar pv hangover.
“Whilst we accept the need for digression when appropriate deciding to digress the most successful technology when the overall scheme has achieved 50.3% of budget spend (50% is the trigger level for digression to be considered) seems misplaced.”
“Other technologies have not yet been significantly deployed and will require time. It now seems likely that the scheme will be c50% under spent (C£100m in the 2013/14 year) against a background of spending (uptake) being at c 20% of DECC projections in the first year of the scheme (2012/13).”
“This is the situation that CPL and the Industry have cautioned against whereby successful technologies are restricted and the RHI as a whole delivers only a fraction of the CO₂ savings required. (Savings from the heating sector represent c 40% of the Governments binding 2020 emissions reduction targets.”
“Overall CPL still considers the RHI to be a very well structured scheme but a careful balance of tariff structures both for biomass and other technologies is required and CPL urges DECC to reconsider splitting the medium biomass tariff band.”
“Overall the problem for the RHI remains one of under deployment and not overspending.”