Tariff Degression


RHI Biomass tariff degression

What is it, and how does it affect you?

The Renewable Heat Incentive is a government backed scheme that seeks to turn us all away from using fossil fuels for our energy needs. To keep the scheme on budget they implemented a mechanism called degression, whereby when quarterly expenditure figures are reached this triggers a reduction in tariff for new applicants according to a strict formula.

It’s a less than perfect mechanism, because each tariff reduction fuels a sudden uptake, which then produces another set of figures that trigger a further reduction in tariff, sending the whole mechanism into a downward spiral. Rather than have a nice steady uptake, we have been seeing these lurches in demand in the small biomass category and sudden rushes to deadlines in order to beat the next drop. This is likely to be repeated in the domestic market and the non-domestic medium category.

So how does it affect you? The lowering of the tariff means if you are borrowing money to fund the installation the sums don’t add up as well as they used to. As the tariff reduces the payback period lengthens. Even so, it is still an attractive investment, especially while the government is allowing businesses 100% AIA

You can find further reading on the Domestic RHI degression mechanism here

You can find further reading on the Non-Domestic RHI degression mechanism here

If you are planning a biomass boiler installation in the future it would pay you to get on with it as soon as you possibly can, while the rates are still relatively high.

If you would like any help or advice, or would like to enquire about having a boiler fitted or maintained by us, please click on the contact page link and send us your query, or call us on 01935 476927.