Latest RHI Guidance – January 2015

Posted by on Jan 3, 2015 in Biomass Boilers, Latest News, RHI | 0 comments

The UK government (latest RHI guidance) has introduced the RHI scheme to encourage the switch to heat generated by renewable sources. This subsidy applies to qualifying biomass installations:

  • Up to 6.8p paid per kWh of useful heat for small biomass.
  • Up to 5.1p paid per kwh of useful heat for medium biomass.
  • Large biomass receiving 2p paid per kwh of useful heat.
  • Heat output to be metered and the support calculated from the amount of eligible heat, multiplied by the tariff level

Tariff is dependent on the size of boiler

  •             Payable to owner of the equipment
  •             Payable on a quarterly basis, guaranteed for 20 years.
  •             Immediate eligibility (equipment commissioned on or after 15 July 2009)

Tariff (based on OFGEM guidance, issued January 2015)

Tariff name

Eligible size

Tier 1 rate

(pence/kWh)

Tier2 rate

(pence/kWh)

Small biomass

Less than 200kWth

6.8

1.8

Medium biomass

200 kWth and above; less than 1,000 kWth

5.1

2.2

Large biomass

1,000 kWth +

2.0

Tier 1 is on output below the Tier Break; Tier 2 is on output above the Tier Break

Tier Break (annually) = installed capacity x 1,314 peak load hours

Renewable Heat Incentive (RHI) Scheme

Increasing renewable heat is key to the UK meeting its renewable energy targets, reducing carbon emissions, ensuring energy security and helping to build a low carbon economy. 

The introduction of the Renewable Heat Incentive (RHI) scheme by the UK Government is intended to increase significantly the proportion of heat that is generated from renewable sources. By encouraging a switch from fossil fuels, this will contribute towards the UK’s wider carbon reduction goals.

Eligible biomass installations

In order to be eligible to claim the RHI, equipment must be

  • A new installation
  • First commissioned on or after the 15 July 2009
  • Generating heat for an eligible use (see below)

Eligible uses of heat

The RHI will only support ‘useful’ heat. This is defined as follows

  • Heat supplied to meet a justifiable heating requirement
  • Load should be an existing or new heating requirement i.e. not created artificially, purely to claim the RHI.

Acceptable uses:

  •  Space
  •  water
  •  process heating

Payments

RHI payments will:

  •          only be made to the ‘owner’ of the biomass installation through an application made directly to Ofgem;
  •          be calculated by multiplying the appropriate tariff by the amount of eligible heat; and
  •          be made over a period of 20 years on a quarterly basis following the submission of the required periodic information

Example – medium biomass 

Boiler Capacity 995kw  X 1,314  X 5.1p / kwth (Tier one) = £66,678 per annum for 20 years, index linked for inflation.

Any heat generated above this would be paid for at the lower Tier 2 Tariff of 2.2p/ kwth (tier two)

Combined with a significant fuel cost saving by converting to straw, we would expect the likely pay-back to be in the region of 4 years.

Tariff (based on OFGEM guidance, issued January 2015)

Tariff name

Eligible size

Tier 1 rate

(pence/kWh)

Tier2 rate

(pence/kWh)

Small biomass

Less than 200kWth

6.8

1.8

Medium biomass

200 kWth and above; less than 1,000 kWth

5.1

2.2

Large biomass

1,000 kWth +

2.0

Tier 1 is on output below the Tier Break; Tier 2 is on output above the Tier Break

Tier Break (annually) = installed capacity x 1,314 peak load hours

ARG Biomass is a specialist supplier of straw fired boilers on industrial, agricultural and horticultural sites. Our expertise lies in setting up RHI eligible installations, maximising return on investment. For information, advice or to discuss your specific requirements, please contact us.

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