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Biomass Suppliers Will Soon Be Hit by New Fees

12 Sep 14:00 by Steve Walia

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A new tariff will mean that biomass suppliers will be obliged to pay a new fee to cover the expense of operating the Biomass Suppliers List from next year. This list applies to suppliers who are eligible for the RHI incentive payment for biomass and wood fuels.

The users must check that their fuel type is eligible under criteria set by the government, such as greenhouse gas emissions over the life cycle. The fuel type must provide a C02 emission saving of at least 60pc against fossil fuels in order to claim the RHI payment.

The payment is both managed and funded by the government's Department for Business, Energy and Industrial Strategy and is estimated to cost around £550 million - which is around £63million more than the original estimated costs.

The latest changes to the scheme came into effect this summer and mean that some companies are receiving lower tariffs. This reduced incentive level, combined with longer-term uncertainty over tariffs, means that the industry has been less inclined to invest. Those firms that are locked into the original tariff levels are still receiving the more favourable terms.

The government confirmed that the new tariff structure will be in place by April of next year, following a consultation period. The government was due to announce its findings before the summer, along with a range of clean energy papers, but it is yet to so so. It is currently reviewing data that could lead to a 98pc reduction in biomass boiler support and a total subsidy removal for solar water systems. 

Industry analysts are concerned that the changes could make it increasingly difficult for smaller firms to invest in green energy, particularly while there is still uncertainty over government support.