RHI degression forecasts

The latest Renewable Heat Incentive (RHI) deployment data shows a familiar story for biomass and biomethane with substantial growth in both technologies and the potential for tariff reductions in September.

Based on our analysis of historical RHI data and deployment data in June we would expect the following tariff reductions, or degressions, in September 2015:

  • 10 per cent for small biomass under Non-Domestic RHI
  • 20 per cent for biomass under Domestic RHI

Unfortunately there is not enough historical biomethane data and too many variables to be able to reliably predict any degression amount.

Small biomass – Non Domestic RHI

There was usual jump in accreditations in a pre-degression month but much less than we have seen before and hence a lower degression than seen recently.  This adds further evidence to the case that degressions are having an effect on the business case for the sub 200kWh biomass market.

A 10 per cent reduction would reduce the tariff for installations accredited on or after 1 September 2015 to tier 1: 3.96 pence per kWh and tier 2: 1.05 pence per kWh.  Tier 1 relates to the first 1,314 hours per annum and tier 2 for every kWh produced after that.  The 10 per cent is comprised of 5 per cent based on continued growth in small biomass deployment and 5% for overall growth in the Non-Domestic RHI scheme.

Biomass – Domestic RHI

Over 1,000 new installations in June compared to 129 in the month before shows a similar story but growth is decreasing reflecting continual degressions every quarter.

A 20 per cent reduction would reduce the tariff for installations accredited on or after 1 September 2015 to 5.71 pence per kWh.

Biomethane – NDRHI

There were 10 additional applications in June which is a sizeable increase and would indicate a risk of degression in September 2015.

Ofgem webinar

Ofgem will be holding a webinar to go through the recent RHI legislation changes and answer questions soon. Contact amumford@regensw.co.uk if you would like to be part of the seminar.