Biomass boiler sales have, for the first time, triggered tariff regression. From this coming January the RHI rate will undergo a series of cuts until the subsidy ends in about two year’s time. The rate cut does not affect those people whose boilers are up and running, and registered, by the end of the year, so we now have a sudden rush of orders on our hands.
The rate cut should only be around five percent maximum, which isn’t all the world, especially considering the tariff will be raised by the rate of inflation shortly afterward. We are currently on 86p per Kw/h. This will drop to 82p, but then go up to 84p (rough figures).
What’s more worrying is the regression won’t stop there — from now on we will get a cut every quarter, so there will be a 10% reduction in March, another cut in June, another in September, another at the end of the year. By the end of 2014 the rate will be at least 20% less than it was at the start of the year.
Sadly, this is not going to be a repeat of the Solar feed-in tariff story, where the material cost of panels dropped through the floor. Biomass boilers and pipefitting materials get relentlessly more expensive as time goes by. Also, with the installation process far more labour intensive with biomass than it is with solar PV, labour rates will have more of an effect on price. Labour rates tend to rise year on year.
2014 is going to be a very busy year for us installers. I can see there being a rush to deadline at each drop in tariff, with everybody scrambling to get a foot on the ladder.
We are already booked solid right up to Christmas and our order book is filling-up for the New Year, too.