The ups and downs of domestic RHI tariffs

This week Ofgem has announced the domestic RHI tariffs which will come into effect on April 1st 2015. There are winners and losers, with inflationary RPI increases for some and the degression 'super trigger' reached for biomass which sees its tariff tumble.

To manage the finite domestic Renewable Heat Incentive (RHI) scheme budget, the Department for Energy and Climate Change has set fixed thresholds for each technology which, when reached, automatically trigger a cut or 'degression' in the tariff that will be paid to new applicants. The uptake is monitored and reviewed on a quarterly basis and any changes announced one month before they come into effect.

Until now, the only degression has been a 10% reduction to the biomass tariff in January this year. Other technologies have been left unscathed.

wood fuel for biomass

Here at Yorkshire Heat Pumps we've experienced a surge in interest in biomass in the last few months, so it was not really a huge surprise to us that the 'super trigger' had been reached. This sees a 20% reduction to the tariff from April 1st, down to 8.93p/kW hour from 10.98p/kW hour, and a start point of 12.2p when the scheme was launched in April 2014.

While degression triggers have yet to be reached for air source and ground source heat pumps and solar thermal panels, this is the time of year that the annual inflationary RPI increases to the tariffs are announced. This sees tariffs increasing slightly for these technologies. 

New domestic RHI tariffs from 1st April 2015

  • Biomass boilers and stoves: 8.93p/kWh (down from 10.98p)
  • Air source heat pumps: 7.42p/kWh (up from 7.3p)
  • Ground source heat pumps: 19.10p/kWh (up from 18.8p)
  • Solar thermal panels: 19.51p/kWh (up from 19.2p)

There was a real rush in the run up to Christmas with biomass customers wanting to beat the expected degression and we have yet to see if this will happen again, but a tariff drop of 20% could be the catalyst to a prospective customer considering a biomass installation now deciding to take urgent action. March could be a very busy month.

Meanwhile, householders with heat pump or solar thermal installations in the offing, will be benefitting from the slighlty higher tariffs from April.

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