Renewable heat projects may have be scrapped after the Government delayed a critical subsidy announcement, energy firms have warned.
The Renewable Energy Association (REA), which represents green power producers, said investors could be put off by the wait for publication of Renewable Heat Incentive (RHI) tariffs for non-domestic technologies.
Ministers were due to announce this summer whether biomass technologies with a capacity above 1MW would receive new incentives from spring 2014 - but this decision has been delayed to the autumn.
The REA said some projects currently in development would “have to be scrapped” as investment decisions could not be made in time. It warned that some of the most cost-effective technologies, such as direct air heating from biomass, could suffer.
REA head of policy Paul Thompson told MRW: “Some projects, which take longer to develop, will be looking nervously to March 2016 – which is the last point for which RHI has budget confirmed.
“A delay of a few months to announcing tariff rates could make these timetables uncomfortably tight, even if the implementation date is unchanged.”
He added: “The other examples are where some investment needs to take place but the choice is between renewable and fossil heat; or between combined heat and power (CHP) and power-only.
“The risk here is that companies grow tired of waiting and decide not to do renewable heat. If this happens then the opportunity is lost until a similar choice is required in future – maybe 20 or more years down the line.”
Peter Butt, executive director of trade body the Wood Recyclers Association (WRA), said: “The WRA is disappointed in delays to the RHI that could lead to a reduced uptake in demand for our members’ products and services.”
The Back Biomass Campaign last year warned that without a “proper regulatory framework and clearly defined support levels”, the sector would be unable to deliver potential economic and environmental benefits. It has been estimated that the UK wood fuel industry has the potential to grow to £1bn.
A spokesperson for the Department of Energy and Climate Change said this week: “We are aware of concerns raised as a result of changes to the timetable on the confirmation of expansions to the non-domestic scheme.
“However, final decisions on technologies and tariff levels need to take into account responses received and considerations from both the tariff review and expansion consultations.”
The department said it would confirm the way forward alongside the outcome of the tariff review for other renewable technologies in the autumn. It insisted the Spring 2014 implementation date for RHI tariffs was unaffected.
A Government consultation over a proposed RHI tariff for biomass combined heat and power (CHP) and the introduction of support for bioliquid CHP took place in September 2012. However, there was no confirmation that the technologies would receive any tariffs at all.