The Renewable Heat Incentive (RHI) has been delayed due to amendments required to the tariff for larger biomass plants.
The Department for Energy and Climate Change (DECC) failed to meet the 30 September deadline to launch the RHI because the European Commission said the large biomass tariff had been set too high.
A statement on the DECC website said: “We understand that the Commission has given state aid approval for the RHI, subject to a reduction in the large biomass tariff, and we expect to receive written confirmation of this very soon.
“Changing the large biomass tariff will require the RHI regulations to be amended and submitted to Parliament for approval. We are unable to launch the scheme as a whole until this process has been completed. Therefore, unfortunately, we will not be able to open the scheme for applications on 30 September 2011 as we had originally planned.”
DECC said it was committed to launching the scheme as soon as possible to minimise disruption to stakeholders.
The Renewable Energy Association head of policy Paul Thompson said: “This last-minute announcement is desperately disappointing. The industry has been gearing up over the last six months to deliver on the government’s ambitious plans for renewable heat.
“As heat demand is seasonal, delaying until the end of November will mean many customers will either put off a decision until next winter or buy a new fossil fuel boiler now – locking them in to higher carbon heat for years to come.
“This further adds to low confidence levels in the renewables industry as a whole, added to uncertainty around the feed-in tariffs, the Renewables Obligation and the Renewable Transport Fuel Obligation.”
Anaerobic Digestion and Biogas Association chairman Lord Redesdale said it was “yet another frustration for the industry”.
Why does it matter?
UK biomass (wood pellet) supplier CPL Distribution chief executiveTim Minett said: “While we recognise that introducing a new tariff-based system and gaining the necessary approvals takes time, it is hugely disappointing for the renewables industry that the start of the non-domestic scheme has now been delayed until November.
“The primary frustration is the timing – everyone had geared up for the well-publicised launch date and then at the 11th hour it is postponed, meaning many businesses will have been caught out. The good news is that the tariff Brussels has an issue with is for the largest installations, those over 1,000 kWth, which is enough for major heat users like prisons and hospitals, and therefore the investment plans for the vast majority of installations will be unaffected except by the postponement.
“The RHI will still be a game-changer in the transition towards a low-carbon economy. The reality is the cost of buying in your energy in the traditional way is getting more and more expensive and that trend is only going to continue. When it kicks in, the Renewable Heat Incentive will enable businesses to take control of their costs by generating their own heat, for workspaces and for water, and thereby insulate themselves and their balance sheets from inevitable future price rises.”