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Government Offers Compromise Solution for Biomass Subsidies

  • Publish Date: Posted over 7 years ago

After strong lobbying from organisations that included the Wood Heat Association, the Renewable Energy Association, the National Farmers' Association and others, the government has announced that it will embed a transitional period towards the new tariff system for CHP technologies, extending the transition to the end of the financial year. After 31st March 2017, there will be lower tariff payments for CHP technologies that include biomass.

BEIS, the government department formerly called the DECC, said that they would act to close a loophole in the Renewable Heat Incentive which existed for biomass-CHP installations. The new requirement means that a minimum standard must be set for the efficiency of heat conversion - set at 20pc - for the plant to qualify entirely for the new higher tariff for biomass CHP.

Consumer and trade group bodies were angry at the way that the changes to the Renewable Heat Incentive tariff payments were rapidly put into place, causing difficulty for projects that were already heavily committed and progressing towards commissioning. Such investments were seriously compromised as a result of the government's about-turn.

The move would also appear to reduce innovation in low-carbon technologies where heat conversion might be less than 20pc - such as the small CHP systems that are being used to heat livestock housing in agricultural applications, as well as for horticulture.

Jesse Norman, the Energy Minister, announced this week that the biomass-CHP legislation amendment would be implemented as soon as was 'practicable'. The 20pc energy-efficiency requirement for any biomass-powered CHP system will be lowered to 10pc until 31st March. Those below the 10pc efficiency level will receive a proportional reduction in tariff payment. The news has been met with a mixed response from the agriculture and horticulture industries in particular.