A long-term plan to ensure the Renewable Heat Incentive stays within budget has been set out by the Department of Energy and Climate Change.
The DECC is also making a number of other improvements to the scheme following consultation in July last year.
Energy and climate change minister Greg Barker said: “I am fully committed to ensuring our Renewable Heat Incentive helps as many organisations as possible get on board with a range of exciting sources of renewable heat, and at the same time stays within its means.
“That’s why we are introducing a new, flexible way to control spending, alongside some further improvements to the scheme.”
There is a fixed annual budget for each year of the RHI and the DECC says it is essential that appropriate controls are in place to ensure the scheme remains financially sustainable and offers value for money for taxpayers.
The DECC is looking to introduce a degression-based approach similar to the regime adopted for the Feed-in Tariffs scheme.
This will involve tariffs available to new applicants being gradually reduced if uptake of the technologies supported under the RHI is greater than forecast.
This will be done by monitoring uptake on a quarterly basis against a series of ‘triggers’. Monthly updates on progress towards triggers will be published online and one month’s notice will be given before any reductions are made to the tariffs for new applicants.
The new policy also sets out the conditions under which an earlier review would be undertaken and confirms that the DECC is planning to consult in the Spring on changes to some of the tariffs.
This follows work carried out by the Sweett Group for the department on the initial assumptions and data used to set the current tariffs under the RHI non domestic scheme.
This planned early review is intended to drive increased uptake and ensure the scheme continues to provide value for money.
The DECC said that where tariffs increase as a result of the current review, installations accredited from 21 January 2013 (the date the possibility of review was published) would benefit from that increase once the new tariffs come in to force.
Sustainability requirements will be introduced for all existing and new installations using solid biomass as a feedstock.
This means that from April 2014, in order to be eligible for the RHI, biomass installations will be required to demonstrate, either through reporting or sourcing from an approved supplier, that their biomass meets a greenhouse gas lifecycle emissions limit target and (from no later than April 2015) land criteria.
The DECC will work with industry through the course of 2013 to promote early reporting on a voluntary basis and to develop the “approved suppliers” approach.
Metering requirements will also be simplified to reflect feedback received from participants and to reduce burdens on industry.
The changes to both air quality and metering will be in place no later than the end of 2013 subject to parliamentary approval and will apply to all new installations only.