The future of the Non-Domestic Renewable Heat Incentive Scheme

The preferred option is to establish a new set of tariffs for all small and medium sized biomass boilers accredited to the Scheme.  The basic payment structure will remain the same with a Tier 1 tariff applied to the first 1,314 hours of heat generation each year, with a Tier 2 tariff applied to the remainder.The tariffs are set out in the table and will apply from 1 April 2019.Richard Rodgers, Head of Energy at DfE, said:The new tariffs are a variant of the ‘Base Case’ tariff structure from the Ricardo Tariff Review, consulted upon by DfE in the summer of 2018.  That original option involved a negative Tier 2 tariff for medium sized boilers. However, the responses to the public consultation highlighted potential issues with this option and hence it has been amended to deliver the same prospective rate of return, set at 12%, without the need for a negative second tier.The tariffs will subsequently be adjusted annually in line with inflation as measured by the Consumer Price Index.A key consideration in coming to this preferred option has been to ensure that the NIRHI is compliant with State Aid rules.Alongside the new tariff structure, NIRHI participants will also be able to apply for a voluntary buy-out.  This recognises that a small number of installations with very low usage requirements or higher-than-average capital costs could see low rates of return under any of the tariff options that were consulted on. The voluntary buy-out will provide participants with a one-off payment equivalent to a 12% return on the additional capital cost of their biomass boiler, taking account of RHI payments already received and the timing of the payment.  In return for the one-off payment, participants would not receive any further ongoing NIRHI payments. It will be entirely up to participants to decide whether or not they wish to apply for the voluntary buy-out.Following the findings from the Ricardo Tariff Review, which found that public subsidy was not required in respect of Combined Heat and Power plants, the preferred option does not include tariffs for this technology.Implementing the preferred option will require legislation.  In the continued absence of the Northern Ireland Assembly, the Department has written to the Northern Ireland Office requesting that the Secretary of State for Northern Ireland sponsors legislation in Westminster which would give effect to its preferred option.A policy summary document outlining the proposals in greater detail can be found at the future of the Northern Ireland non-domestic renewable heat incentive scheme.For more information, click here.