Legislation introduced in August this year to reduce tariffs for certain projects will be amended in favour of a transitional period as the sector moves towards a lower tariff, Jessie Norman MP, Parliamentary Under-Secretary for Industry and Energy acknowledged yesterday.
During the transitional period until 31 March 2017, the Renewable Heat Incentive (RHI) tariff reductions will only apply to plants that produce 10 per cent power efficiency, with the remaining 90 per cent being heat. The previous reduction applied within 21 days of notification and affected projects with up to 20 per cent power efficiency.
The Renewable Energy Association (REA) suggested that the changes put £140 million of low-carbon investment at risk but that the new transitional phase will allow many projects to be completed and restore investor confidence in the sector.
REA renewable heat analyst Frank Aaskov said: “Transparency in government decision-making is key to maintaining the confidence of investors developing the UK’s much-needed low carbon infrastructure.
“We welcome the proposed compromise announced today by Mr Norman. Critically, the transition period should create a runway in which projects that have been under development or construction, some for as much as two years, can be completed.
“This proposal is a constructive step towards restoring the previously damaged confidence of investors in the biomass CHP sector.”