In April 2019, the Department for the Economy (‘DfE’) implemented a long-term tariff structure for the Northern Ireland Non-Domestic Renewable Heat Incentive Scheme (‘NIRHI’). The Northern Ireland (Regional Rates and Energy) Act 2019 introduced a revised tariff structure applicable to all small and medium-sized biomass installations (0-199kW). The revised tariffs (‘2019 Tariffs’) were calculated on the basis that the typical boiler on the Scheme would achieve a prospective 12% internal rate of return (IRR), as per the EU State Aid approval, granted by the EU Commission.
However, it has always been recognised that there are costs involved in the operation of renewable heat installations which will change over time, such as the price of biomass and the alternative fossil fuel and service and maintenance costs. Hence, when bringing forward the tariffs in 2019, the Department committed to keeping the underlying variables under review, with a view to revising the tariffs should it be justified by movements in those underlying variables.
Also, following an inquiry by the Northern Ireland Affairs Committee, DfE committed to an independent review of the variables which underpin the tariffs. Energy consultants Cornwall Insight (‘Cornwall’), were engaged to carry out the review. Cornwall completed the work in February 2020 and their report is published alongside this document.
Following a thorough analysis of the underlying variables, Cornwall have advised on where there have been changes. Based on these changes, Cornwall have recommended corresponding increases to the tariffs levels.
This consultation puts forward the Department’s preferred option in response to Cornwall’s report which is to implement the recommended tariff increases.