Commercial degression simplified

3 minute read

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The Renewable Heat Incentive (RHI) is a government-funded initiative for those who use renewable energy to heat their homes and businesses. These payments come from taxpayers’ money and therefore the onus is on the government to ensure that the budgets surrounding the incentive are sustainable.

The tariffs dropped by 10% in January 2015 for RHI Small to Medium Phase 1 Commercial Biomass and is set to be reviewed and could drop again on April 1, 2015. This basically translates to mean that if you got in there by December 31, 2014, you were the few who acted quickly before the new rates kicked in. However, with the anticipated and imminent drop in tariff on April, you can still benefit from the higher tariff and better RHI payments for years to come if you were quick enough.

What is RHI degression?

Some technologies linked to renewable energy are likely to become cheaper as the years progress. This is true of any relatively new and developing industry, and RHI degression was introduced to protect the incentive and allow it to prosper.

However, contrary to traditional degression, RHI degression is triggered by deployment levels. This means that only particular movements and developments in the market will set off a degression. Although anyone who’s already registered in the scheme won’t be affected by a drop in tariff.

Beat the clock

This upcoming degression means that if you can get your system ordered and installed before the end of March 2015, you will still receive RHI payments at the current levels. Making the most of these higher rates now can mean a difference of thousands of pounds to your annual RHI income. If you’ve been thinking about installing a biomass heating system, there has never been a better time.

We’ll ease your burdens

When you’re trying to achieve something by a certain date, paperwork can be your biggest enemy. RHI applications are, by their very nature, a little complicated. If you want to implement a commercial biomass boiler project but aren’t sure about how to get RHI accreditation, you can talk to us. As well as supplying and installing a huge range of biomass boilers, we have an in-house RHI application team who have managed hundreds of successful applications, getting them signed off far more quickly due to years of experience and industry know-how.

What can you expect?

If you’re still considering whether to start your project now or wait until later in the year, it might be helpful to have a look at the figures. Let’s take a 100kW project as an example. At the current rate of 6.8p per kWh, it will yield a commercial enterprise around £8,935 in annual RHI payments. Because no one is sure of what the degression will be this time round, we can only make assumptions based on previous degression patterns as well as taking into account worst case scenarios. Assuming the tariff drops at the minimum rate of 10% to 6.1p per kWh, this will result in RHI payments of £8,015 – a loss of a little over £900. However, if we were to experience a 20% degression, this will bring this figure down to around £7,096. That is a loss of nearly £2,000.

And on a bigger scale, a 199kW project would bring in around £17,781 on the current RHI tariff. After a potential 10% drop, said commercial enterprise would be looking at around £15,951 RHI payments, and £14,120 with a 20% degression. A significant difference I’m sure you’d agree.

If you want to see some specific figures relating to your proposed project, you can use our RHI payment calculator to see how your RHI payments could stack up.

Start planning

You can start planning your biomass heating project today and beat this drop in tariff. Let us take care of your entire project from start to finish, streamlining the process and ensuring that you’re home and dry before the RHI degression hits.

So, what are you waiting for? Time is money!

Do you have a biomass or low carbon project?

Speak to our biomass team today

01884 250 790

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