Department confirms intention to seek extension to 2017 RHI Regulations

The Renewable Heat Incentive Scheme (Amendment) Regulations NI) 2017 ("the 2017 Regulations") introduced capping and tiering for small and medium sized biomass boilers accredited before November 2015. This brought the compensation to Scheme participants closer into line with the original intention of the Scheme which is to provide them with a target 12% return on their capital investment and compensation for other additional costs to support the switch away from fossil fuels. It also brought forecast Scheme expenditure back into line with the budget provided by the UK Government.

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The 2017 Regulations were never intended to settle the long term tariff arrangement for the boilers in question but were intended as a temporary measure to allow long term arrangements to be designed and introduced.

The 2017 Regulations are currently subject to legal challenge with the Court hearing due at the beginning of October. The Department for the Economy ("the Department") must await the judgement of the Courts before proposing any such long term arrangements. 

However the arrangements in the 2017 Regulations only extend until 1 April 2018. There is not now sufficient time between the expected conclusion of the Judicial Review and 1 April 2018 to complete formal public consultation and secure EU State Aid approval for any long term arrangements settled upon to be in place by this date.

In order to ensure that compensation remains more closely in line with the original intention of the Scheme and that expenditure continues to be brought back into line with the budget, the Department intends at the appropriate time and subject to the decision of the Courts in the present Judicial Review and to Assembly approval, to extend the 2017 Regulations for up to a further year until the 31st March 2019. It must be emphasised that this is a temporary measure which will give the Department the opportunity to develop the long term arrangements needed.

Notes:

1. For medium size biomass boilers (20kW to 199kW), the 1st tier of 6.7 pence per kWh applies to the first 1,314 hours each year.
2. The 2nd tier of 1.5 pence per kWh applies thereafter up to a limit of 400,000kWh in each year.

3. It should also be noted that the allowance of 1,314 hours to be paid on the first tier applies each year before stepping down to the second tier tariff.

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